Regardless of the loan amount, if you can afford it, the VA will back it.
If you have a VA Jumbo loan, there are 2 options available to refinance your VA loan:
- VA Jumbo IRRRL
- VA Jumbo Cash-out
VA Jumbo IRRRL
If you’re a veteran with a VA Jumbo loan, you may be eligible for a VA Interest Rate Reduction Refinance Loan (IRRRL). Also known as a VA Streamline Refinance, the IRRRL makes it possible to refinance your home without having to re-qualify for your loan. The process is simpler and faster than a traditional refinance, and it could lower your monthly payments and save you money. To be eligible for an IRRRL, you must:
- have made at least six months of timely payments on your existing VA loan
- lower your rate by .5%
- have a seasoned loan – 210 days from your original Note date
With the VA IRRRL, there’s less documentation (no credit, income, or employment verification) and no appraisal or inspections. Closing costs also tend to be lower, and can be rolled into your loan to eliminate upfront charges.
VA Jumbo Cash-out
VA cash-out refinance allows veterans who qualify to get a loan for up to 100% of the appraised value of their home’s value. A VA Cash-out Refinance loan can be a great way to consolidate your home equity into a single loan with a lower interest rate, or to tap into your home equity to get the cash you need for other purposes.
Also, homeowners aren’t required to take out cash with these refinance loans. That means qualified veterans with non-VA loans can use this benefit just to take advantage of lower rates, or to get out of an adjustable-rate loan, or to eliminate costly mortgage insurance with other loan types.
Here are a few requirements to keep in mind:
- You must occupy or intend to occupy the property as your primary residence
- VA lenders typically require a credit score of 620, but some may go as low as 580
- For first-time users of the VA loan benefit, the VA Funding Fee on a Cash-out refinance is 2.3 percent. For those reusing their benefit, the VA Funding Fee on a Cash-out refinance is 3.6 percent. You can finance the VA funding fee into your loan amount, but your loan-to-value cannot exceed 100%
- The process for getting a VA cash-out refinance is similar to the process when purchasing a home. This would include income qualification, credit underwriting, appraisal and inspections.
- If you go above 90% loan-to-value, the interest rate is typically higher and must pass the net tangible test*
*NTB Test. All cash-out refinancing loans must past pass the NTB test. This requirement is met if the refinancing loan satisfies at least one of the following:
(a) The new loan eliminates monthly mortgage insurance; or
(b) Loan term of the new loan is less than the loan term of the loan being refinanced; or
(c) Interest rate of the new loan is less than the interest rate of the loan being refinanced. (Note: If the loan being refinanced had an adjustable interest rate or was modified, the current interest rate must be used when determining if this requirement has been met.); or
(d) The monthly (principal and interest) payment of the new loan is less than the monthly (principal and interest) payment of the loan being refinanced; or
(e) The Veteran’s monthly residual income is higher as a result of the new loan. (residual income, including refinancing monthly PITI (principal, interest, taxes, and insurance) payment vs. current residual income, including monthly PITI payment of the loan being refinanced.) In cases where TI amounts are changing between the application date and the closing date of the refinance transaction, the new TI amount will be used in determining residual income for both the current and refinanced loan); or
(f) The new loan is used to payoff the Veteran’s interim construction loan; or
(g) The new loan LTV is equal to or less than 90 percent of the reasonable value of the home, i.e. LTV ≤ 90%; or
(h) Refinance of an adjustable-rate mortgage to a fixed-rate mortgage.
