VA Loan Refinance Requirements and Jumbo VA Refinance

VA Loan Refinance Requirements

What factors determine if I am eligible for a VA Refinance?
To decide if you qualify for a VA Refinance Loan, we will look at:

Your income and your monthly expenses. VA uses two methods for income qualification purposes. The primary method of evaluating a veteran's income is the residual income method and a 41% total debt to income ratio.

Your credit history (this is important, but VA's credit standards are flexible). A FICO score of 620 or above is required for an approval.

As previously mentioned, VA uses two methods for income qualification purposes. The primary method of evaluating a veteran's income is the residual income method. Under this method, the underwriter determines that a veteran has sufficient income to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments. VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio (41%) which is the ratio of total debt (both housing and other debt) to income.

What is the maximum amount that I can borrow?
The maximum loan amount for a VA Refinance Loan is determined by:

Maximum VA loan amount: By law, VA Lenders cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. The highest maximum VA mortgage right now is $1,094,625. The lowest VA lender maximum amount available in any county is $417,000. To see what the limit is in the county in which you're interested, visit the following site http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf. This site lists U.S. territories as well as states.

Maximum financing: The maximum loan amount for a VA 100% refinance will be 100% of either the appraised value of the home. If you are refinancing and taking cash out, the loan will be limited to either 90% of the current appraised value.

Can I get a VA Loan Refinance after bankruptcy?

If you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for a VA Loan Refinance. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make a VA Loan Application.

What types of refinance programs does VA offer?

There are three main types of VA Loan Refinance.

VA Rate/Term Refinance
The VA Rate/Term Refinance is for borrowers who currently have a conventional fixed rate or ARM mortgage and wish to refinance into a VA Mortgage. This program helps borrowers who wish to have a stable, VA insured fixed rate mortgage.

Cash-Out Refinance
A Cash Out VA Refinance Loan is perfect for the homeowner who wants to access the equity that they have built up in their home. This program is beneficial to homeowners whose property has increased in value since it was purchased.

Streamline Refinance
The VA Streamline Refinance (IRRRL) is designed to lower the interest rate on a current VA mortgage or convert a current VA adjustable rate mortgage into a fixed rate. A Streamline VA Refinance can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no appraisal, no qualifying debt ratios and no income verification.

Why choose a VA Refinance?

A VA Refinance can access up to 100% of your homes equity.
There are no prepayment penalties for a VA Loan.
VA Refinance Loans have no monthly mortgage insurance.
A VA Home Loan is eligible for non-credit qualifying, Streamline Refinance or "IRRRL".
A VA Refinance Loan is available all areas of the country, provided a market exists for the property and the home meets VA's property standards.
A VA Home Loan may be used to purchase or refinance a new or existing home.
VA Loans are offered at terms of 15 or 30 years.

What types of VA Loans and Jumbo VA Refinance Loans are available?

Fixed Rate Loan
Most VA mortgages are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same for the entire loan period. With a fixed rate VA Loans refinance low rate or Jumbo VA Refinance, you always know exactly how much your monthly payment will be.

Adjustable Rate Loan
With VA's adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. VA uses the 1-Year Constant Maturity Treasury Index (1 Yr CMT), the most widely used index, to calculate the changes in interest rates.

I have already obtained one VA loan. Can I get another one?

Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan or jumbo va refinance and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.