Borrow More Than the Value of Your Home with a VA Refinance If you currently own a home and want to refinance it, you can borrow more than 100% of the home value, but only in specific circumstances. Even homeowners without a VA loan can use a VA refinance. The VA cash loan is available to eligible veterans who do not currently have a VA loan. As the name suggests, a VA cash-out refinance can be used to convert your home's equity into cash.
Simply apply for a larger loan than you currently owe. The difference is sent to you at the close. With a refinance, VA renewal loans are technically add-on loans. If a VA loan is approved for a property and the borrower, they may also be able to get a supplemental loan to repair the property on top of that.
The financing fee is an unavoidable expense on VA loans, and you could end up paying more for it on your second loan. If you make a down payment of less than 5 percent of the purchase price the second time you apply for a VA loan (and any other time thereafter), the financing fee will be 3.6 percent. However, if you can make a down payment of more than 5 percent or more than 10 percent, the financing fee drops to more affordable levels of 1.65 percent and 1.4 percent, respectively. VA rehabilitation and renewal loans offer veterans and service members a low-cost, no-down payment way to purchase repairs or homes that need a little extra care.
Because the down payment is often the biggest obstacle to homeownership for borrowers, especially those buying a home for the first time, VA loans can make homeownership much more accessible to those who qualify. However, borrowers will struggle to find a lender, as few offer VA rehabilitation loans. First-time VA borrowers who make a down payment of less than 5% will pay a fee equal to 2.3% of the loan amount.
