VA's two cash-out refinance types and the protections each one carries
Type I in practice
Classification
A Type I often happens when an owner with a conventional or FHA loan refinances into a VA loan for the same or a smaller amount, for example to drop mortgage insurance. It can also be a VA-to-VA refinance done through the cash-out program instead of an IRRRL, such as when the owner needs to remove a co-borrower or the lender requires full underwriting.
Last reviewed against the primary sources listed below.
Examples
- FHA to VA with no added balance.
- Conventional to VA to end private mortgage insurance.
- VA to VA through the cash-out program for a reason an IRRRL cannot handle.
Type questions
Why would I use VA cash-out instead of an IRRRL?
When an IRRRL is not available, such as refinancing a non-VA loan, or when you need changes the IRRRL does not allow.