VA Cash Out

VA Cash OutVA 100% LTV Cash-out Refinances!

Whatever the reason for refinancing your home, 1st Colorado Mortgage Solutions can help.
VA Cash-out Refinances in Colorado and the rest of the nation allow Veterans to tap into the equity in their home to consolidate bills, payoff higher rate mortgages or just to obtain cash.

The Department of Veterans Affairs has a broader classification of what constitutes a cash-out refinance than other types of mortgage financing. The VA considers any refinance that pays off a non VA mortgage or pays off a VA mortgage plus any other debt to be a cash-out refinance, regardless of whether the Veteran receives cash at closing or not. Essentially this means that the VA will call any refinance a cash-out refinance unless it is a VA streamline refinance, also known as the VA IRRRL program.

Technically, the VA does allow a Veteran to take 100% of the appraised value with a cash-out refinance to payoff any mortgages, any other non-mortgage related debt and receive cash at closing. While these might be the base VA underwriting guidelines, practically all lenders have their own requirements on top of the base VA guidelines. These additional underwriting guidelines, often called Underwriting Overlays, create additional restrictions that put limits on what the VA will allow.

Guidelines for 100% Cash-out Refinance.
  • 620 Minimum Fico Score
  • An explanation of the use of the cash proceeds required.
  • A cash-out refinancing loan is a VA-guaranteed loan that refinances any type of lien or liens against the secured property. The liens to be paid off may be:
    • current or delinquent, and
    • from any source, such as
      • tax or judgment liens, or
      • VA, FHA, or conventional mortgages.
      • Existing lien of a least $1 required. Property may not be owned free and clear.
  • One Unit Properties
    • For limited-cash-in-hand transactions, the maximum loan amount is limited to 100% LTV. The funding fee may be added to the maximum loan amount. 100% LTV transactions may include the following in the loan amount:
      • Liens (first and second),
      • closing costs,
      • prepaids,
      • debt consolidation*, and
      • cash-in-hand to borrower up to the lessor of 1% or $1,000.
      • NOTE: If property listed prior to the application, must be off the market at least 6 months before the application date.
    • For unlimited-cash-in-hand transactions, the maximum loan amount is limited to 90% LTV. The funding fee may be added to the maximum loan amount. 90% LTV transactions include the following in the loan amount:
      • Liens (first and second),
      • closing costs,
      • prepaids,
      • debt consolidation*, and
      • cash-in-hand to borrower with no limit provided within required maximum VA loan amount.
    • NOTE: If property listed prior to the application, must be off the market at least 6 months before the application date.
      *If revolving debt will be paid at close, the most recent statement is required unless the last reported month on the credit report is within 30 days of the note signing.
    • No limit on the allowed CLTV.
  • 2-4 Unit Properties
    • Cash-out transactions that are not allowed on 2-4 unit properties:
      • Debt consolidation that involves non-mortgage debt
      • Unlimited-cash-in-hand to borrower
    • No limit on the allowed CLTV.
    • NOTE: If property listed prior to the application, must be off the market at least 6 months before the application date.
    • The veteran must have sufficient available entitlement for the loan. If an existing VA loan on the same property will be paid off by the refinancing loan, the entitlement used for that existing loan can be restored for purposes of obtaining the new loan.
    • The veteran must certify that he or she intends to personally occupy the property as his or her home.
Rate/Term (Limited Cash-Out)
  • Rate/term refinance allowed only for the following types of transactions:
    • Payoff a construction loan
    • Payoff of an installment land sales contract, or
    • Payoff of a loan assumed by the veteran at an interest rate higher than that for the proposed refinancing loan
  • Maximum mortgage amount cannot exceed the lesser of
    • the VA appraised value, or
    • the sum of the outstanding balance of the loan plus allowable closing costs and discounts (For construction loans, “balance of the loan” includes the balances of construction financing and lot liens, if any), plus
    • VA funding fee