VA Cash-Out Refinance Deep Dive
VA cash-out rules distinguish a VA-to-VA refinance from refinancing a non-VA loan into VA.
Type I vs. Type II
VA Chapter 6 distinguishes cash-out transactions based on whether the loan being refinanced is VA-guaranteed. That classification changes some requirements.
Net Tangible Benefit
VA requires a cash-out refinance to provide at least one qualifying net tangible benefit. Examples in current Chapter 6 include eliminating monthly mortgage insurance, shortening the term, reducing the interest rate, or reaching an LTV of 90% or less, among other qualifying benefits.
Seasoning and rate tests
VA-to-VA cash-out refinances are subject to applicable seasoning and, for certain structures, interest-rate reduction requirements. The exact transaction should be checked against current Chapter 6 before quoting eligibility.
Official VA baseline
Educational summary. Current COE, VA guidance, AUS findings and lender overlays control the actual transaction.