Veterans Administration Loans
Veterans Administration (VA) loans are available to qualified veterans, active duty, reserves and National Guard personnel. Loans are residential mortgages, allowing for the purchase or refinance of an owner-occupied home.
Best if you
- Are a retired veteran, active duty military, National Guard or reservist buying or refinancing a home
- Would like to make a low down payment
- Are interested in 100% financing1
- Lack credit history
- Have income limitations
- Low- or no-down-payment options
- Financing of Veteran Administration funding fee1
- Unlimited seller contribution to buyer's closing costs
- Gift funds allowed
- 15-year fixed rate loan2
- 30-year fixed rate loan3
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Benefits of refinancing to a Veterans Administration loan
Veterans Administration (VA) mortgages are among the primary perks of military service, and the benefits don't stop when it's time to refinance.
Because repayment is guaranteed by the VA, you can refinance up to 100% of the value of your home without paying mortgage insurance. That is a huge advantage over conventional lending, which typically requires you to hold at least some equity in your house, and requires costly mortgage insurance if your equity is less than 20%.
The VA provides the following main types of refinancing loans, each with its own eligibility requirements.
Interest Rate Reduction Refinancing Loans (IRRRL)
Veterans who already have a VA mortgage can refinance up to 100% of their home's value with an IRRRL, typically at a lower interest rate. These loans come with very low fees that can be wrapped into the loan. And the VA requires no extensive credit checks or property appraisals, although individual lenders may have stricter requirements. An IRRRL loan is limited to refinancing first mortgages only. If you have a second loan on your house, you will need to discuss your options with a mortgage professional.
Intended for homeowners who currently have a VA loan along with some equity and/or a second mortgage, a VA cash-out refinance will generally let you borrow enough to pay off your existing mortgage and take some cash out as well. VA rules allow cash-out loans up to 100% of a home's value; however, lenders' rules may vary. The fees on VA cash-out loans are also higher than the fees on IRRRLs.
Conventional to VA conversions
If you currently have a conventional mortgage, you might be able to refinance into a VA loan with all of the advantages that can bring. As with standard VA loans, VA refinances are available to active-duty military, veterans, reservists and National Guard members, along with the spouses of military members who have died on active duty or from a service-connected disability. The fees on VA conversion loans are generally the same as fees on cash-outs, and the chief advantage is the same: You can typically borrow up to 100% of your home's value with no mortgage insurance fees required.
The US Department of Veterans Affairs (opens in a new tab) provides detailed information on benefits, eligibility and how to apply.
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