Question - Is VA Cash Out Refi on Rental Legal?

[Garrett Kennedy]

Hi! This is hopefully a dumb question with a short answer: I purchased a quadplex with a VA loan (lived it in for quite some time). I no longer live in it and would like to do a cash out refi. A lender told me Texas does not allow a cash out refi on a VA backed loan for a property that I don't live in. Can anyone confirm or deny this? If that's true, are my only options to use the equity a home equity loan or 1031 exchange? Thanks!

[Kenneth McKeown]

@Garrett Kennedy you will need to refinance into a conventional loan and take a cash out refi at that point if you have enough equity. I purchased a duplex in 2017 and a quad in 2019 with my VA loans that still to this day have their VA loans on them because the interest rate is so low... it's not worth refinancing and taking cash out. The VA IRRL is also so easy to continue to refinance if rates are low (one I refinanced twice, the other once) and they're both sitting I believe at 2.25% for the next 28-29 years.