Using equity in a VA to conventional Refi

[Chris McKinley]

Is it possible to do a VA to conventional refi and use the equity in the house you are refinancing as the down payment for the house? For example - Jonny owes 80k on a house valued at 100k Jonny has a VA loan on the house and wants to refi to a conventional Can Jonny take the 20k in equity he has in the house and use that as the down payment for the conventional loan? Thanks in advance for the help. Cheers -Chris

[Miles Juschka]

A couple notes Chris

1. Cash out refinances for conventional can only go up to 80% loan to value, so Johnny would not be able to pull 20k out through the conventional refi.

2. Johnny could do a VA cash out refi and go up to 100% LTV to use the 20% for a downpayment on another property although if "Johnny" is not 10% or more disabled through the VA he would have a 3% funding fee to do so.

3. Another option would be to do a combo loan which essentially puts the 80% into a conventional loan and the other 15% on a HELOC to which could take it all the way up to 95% LTV and there wouldn't be a funding fee associated with it. This also avoids mortgage insurance since your first mortgage is below your 80% mark.

I hope this helps..