If you’re eligible for a VA loan and looking to utilize your home equity to take cash out for any reason, you can now get a loan for up to the 100% of the appraised value of your house in many cases. Until recently, Quicken Loans clients had to leave 10% equity in their homes when doing a VA cash-out refinance.
This is great for clients, because it means more money for home renovations and repair, boosting a college or retirement fund or whatever else you might use it for. We’ll go over what you need to know to take advantage of this opportunity.
The ability to fully utilize your home equity to convert it to cash is just one of the various benefits a VA loan offers eligible active-duty service members, veterans and their families. We’ll talk about another one as well.
Increases To VA Cash-Out Limits
You no longer need to leave 10% equity in your home in most cases if you’re using a VA loan to take cash out. While having the ability to convert 100% of your home’s value into cash this can give you increased financial flexibility, there are some restrictions you should know about.
You can fully cash out your equity on loan amounts up to $453,100. For loans above that amount, the amount of cash you can take out is based on the maximum conforming loan amount in your area.
Also, in order to qualify to take all the equity and convert it into cash, the lowest median FICO score of all clients on the loan can be no lower than 680.
Other than those restrictions, all the usual VA loan guidelines apply. If you’re getting a fixed mortgage, your debt-to-income (DTI) ratio – a measure of your monthly debt payments compared to your monthly income, should be no higher than 60%, for adjustable rate mortgages (ARMs), this limit is 50%.
The Benefits Of A VA Streamline
If you’re looking to lower your rate, change your term or both, it could be worth your time to look into a VA Streamline. You may also see this referred to as an interest rate reduction refinance loan (IRRRL) or Earl.
The first major benefit of these loans is that you can refinance to lower your rate or change your term even if you owe more on your home that it’s worth. You can get a VA Streamline loan amount for up to 120% of your home’s current value. If you’re currently a Quicken Loans client, you can do this with a median FICO score as low as 620.
The other big benefit of the IRRRL is the reduced VA funding fee. Instead of a monthly mortgage insurance charge, VA loans have a one-time funding fee that may be paid up front or built into the loan. On Streamlines, this fee is only 0.5% of the overall loan amount.
As with all VA loans, the funding fee on Streamlines can be waived if you’re receiving VA disability or are applying as a surviving spouse of a veteran who died while in service or as a result of a service-related disability. If you're a Purple Heart recipient serving in an active-duty capacity, you're also exempt from the funding fee.
If you have any interest in a cash-out refinance loan or VA Streamline, we can certainly help. You can apply for a full refinance approval online through Rocket Mortgage by Quicken Loans or give one of our Home Loan Experts a ring at (800) 785-4788.
Apply Online with Rocket Mortgage