VA Refinance Cash Out Limits
The VA Loan is the best possible loan product for Cash Out over 80% of the value of the home. VA allows the veteran to use the equity up to 100% of the value of the home. However, VA leaves it up to the lender to put restrictions on their loans based on their own market research. As of March, 2010, we believe all lenders have lowered their limits to 90%. However, if you are only looking to refinance out of mortgage insurance and the loan to value is still above 80%, you’re in luck. You can refinance into a VA loan from a Conventional Loan or FHA Loan up to 100% of the value of your home. You can even get cash out up to the full value of your home.
FHA and Conventional – Less Attractive than VA Loans
One of the big downsides of FHA is the cash out limit. With an FHA loan, a borrower is limited to 85% of the value of the home. On top of that, FHA charges a monthly mortgage insurance premium which can raise the payment by well over $150 per month depending on the loan size.
The biggest downside to conventional loans is qualifying in most cases, due to the higher credit score requirements and lower debt to income restrictions. In addition, if you get past the first tier of qualifying, the Private Mortgage Insurance (PMI) companies have their own credit restrictions as well. In addition, if you meet the lender and PMI credit restrictions, be prepared to pay a huge mortgage insurance premium each month…even higher in most cases than FHA.
In the end, being a veteran definitely pays off. VA loans are still the best overall loan product for cash out purposes with higher LTV limits and NO mortgage insurance…and with NO LENDER FEES, there’s no question.