Quick answer: Yes. Eligible borrowers can refinance a conventional mortgage into a VA-backed loan through the VA cash-out refinance program. If you have a conventional mortgage and qualify for VA benefits, refinancing could help you eliminate private mortgage insurance (PMI) or change your loan terms.
But the cost of replacing your mortgage matters just as much as the potential savings.
Despite the program’s name, you don’t have to withdraw home equity to use it. You’ll still need to meet VA occupancy, appraisal, underwriting, and lender requirements.
Before applying, compare your current rate, PMI, remaining loan term, and refinancing expenses to see whether switching would benefit you.
Explore your VA refinance options with GO Mortgage.How do you switch from a conventional loan to a VA loan?
You replace your existing conventional mortgage with a new VA-backed loan that pays off the old balance at closing. This isn’t a change to your current loan agreement; the new mortgage has its own interest rate, term, and costs.
The VA cash-out refinance program covers refinancing a non-VA mortgage, even when you don’t want cash back. A VA Interest Rate Reduction Refinance Loan (IRRRL), by contrast, is only available for an existing VA-backed mortgage.
A conventional-to-VA refinance must provide a qualifying financial benefit, such as eliminating mortgage insurance, lowering your interest rate or payment, or improving your loan terms. Your lender must also provide a comparison of your current and proposed mortgages.
Who qualifies to refinance a conventional mortgage into a VA loan?
Having a conventional mortgage doesn’t prevent you from using VA benefits. Your application generally needs to satisfy four requirements:
- VA eligibility: You need a valid Certificate of Eligibility (COE), based on qualifying military service or another eligible status. Prior VA loan use isn’t required.
- Primary-residence occupancy: You must meet VA occupancy rules for the property you are refinancing. A vacation home or rental-only investment property generally doesn’t qualify.
- Financial qualification: The lender reviews credit history, verifiable income, monthly debts, and residual income. VA doesn’t set one universal minimum credit score, although lenders may have their own standards.
- Property approval: A VA appraisal establishes the home’s fair market value and assesses readily apparent Minimum Property Requirement issues. Significant property defects may need correction.
A COE establishes access to the VA home loan benefit, not guaranteed mortgage approval. Review VA loan eligibility and financing options before applying.
Can refinancing into a VA loan eliminate PMI?
Yes. VA-backed mortgages don’t charge monthly private mortgage insurance. If you’re still paying PMI on your conventional loan, switching to VA financing would remove that expense.
Refinancing isn’t the only way to get rid of PMI
Depending on your conventional loan, you may be able to request cancellation when the principal balance reaches 80% of the home’s original value, provided you meet the applicable requirements. Automatic termination may also apply later.
Before refinancing solely to eliminate PMI, ask your current loan servicer about PMI cancellation requirements. You may be able to remove the expense without replacing your existing mortgage.
If your conventional mortgage already has no PMI, there’s no insurance savings to offset the refinance costs. Compare the rate and loan terms instead.
Do you need 20% equity to refinance into a VA loan?
Not necessarily. VA refinancing doesn’t impose a universal 20% equity requirement. However, the proposed loan must fit within the permitted loan-to-value ratio (LTV) and your lender’s requirements.
VA generally caps the total cash-out refinance loan at 100% of the property’s VA-determined reasonable value, including any financed funding fee. Individual lenders may impose lower limits.
Consider this hypothetical example:
| Mortgage detail | Amount |
| Appraised home value | $350,000 |
| Conventional mortgage payoff | $280,000 |
| Equity before costs | $70,000 |
| Existing loan-to-value ratio | 80% |
| First-use VA funding fee (2.15% of $280,000) | $6,020 |
| New balance if only that fee is financed | $286,020 |
The new balance would represent approximately 81.7% of the appraised value, before any other financed costs. This illustrates why home value and refinancing charges matter even when you don’t request cash proceeds.
Your lender will use the actual appraisal, payoff, entitlement, and loan terms to determine the available financing.
How much does a conventional-to-VA refinance cost?
You’ll generally pay ordinary refinancing expenses, potentially including origination, appraisal, title, and discount-point charges. Most borrowers also pay a one-time VA funding fee, although exemptions apply.
According to the VA funding fee schedule, the standard cash-out refinance rates are:
| Use of VA home loan benefit | Funding fee |
| First use | 2.15% |
| Subsequent use | 3.3% |
| Eligible exempt borrowers | 0% |
These rates apply to conventional-to-VA refinances whether or not you take cash out. Some borrowers receiving qualifying service-connected disability compensation and certain surviving spouses are exempt.
You may be able to finance the funding fee, subject to loan limits. Doing so increases your mortgage balance and the interest you’ll pay over time.
Is switching from conventional to VA financing worth it?
It depends on what you have today and what the lender offers. A refinance that removes PMI but raises your interest rate or extends your repayment term may cost more overall.
Compare the following before deciding:
- Current versus proposed payments. Include principal, interest, and any PMI savings, rather than looking only at the advertised rate.
- Upfront and financed costs. Account for the funding fee, lender charges, discount points, and their effect on your loan balance.
- Time left on your mortgage. A fresh 30-year term can lower the monthly payment while increasing lifetime interest.
- How long you’ll keep the loan. Consider whether the savings are likely to offset costs before you sell or refinance again.
For perspective, if eliminating PMI would save $175 per month but refinancing would cost $7,000, the PMI savings alone would take 40 months to offset those costs.
That’s only a simplified comparison; changes to the mortgage rate, balance, and repayment term can materially alter the result.
If PMI cancellation is available on your current loan without refinancing, compare that lower-cost alternative too.
Use GO Mortgage’s refinance calculator to explore payment scenarios, and compare Loan Estimates before choosing an offer.
Discuss your conventional-to-VA refinance options with GO Mortgage.How soon can you refinance a conventional loan into a VA loan?
VA’s specific cash-out loan-seasoning rules apply to refinancing an existing VA-backed mortgage. They don’t automatically impose the same waiting period on a conventional-to-VA transaction.
However, lender or investor requirements may limit how soon you can refinance, and replacing a recently originated mortgage can mean paying another set of closing costs. Ask your lender to check your current loan and proposed transaction before making plans.
How do you apply for a conventional-to-VA refinance?
The process typically involves five steps:
- Confirm eligibility. Ask your lender to obtain or review your VA Certificate of Eligibility.
- Review your conventional loan. Gather your current rate, payoff balance, remaining term, and PMI details, if applicable.
- Compare proposed terms. Review the estimated rate, funding fee, closing costs, payment, and financial benefit.
- Complete underwriting and the appraisal. Provide the requested income, asset, and credit documentation while the lender evaluates the property.
- Review and close. Check the final terms and required disclosures. Once the refinance closes, the new VA loan pays off the conventional mortgage.
If your existing mortgage already has favorable terms, it may make more sense to keep it. You can also compare a conventional refinance before committing to a new VA loan.
Find out whether refinancing into a VA loan makes sense
You don’t need to have bought your home with VA financing to use your benefits now. Refinancing a conventional mortgage may remove PMI or provide different loan terms, but those advantages must justify the new mortgage’s costs.
GO Mortgage can help you review your current conventional loan, verify eligibility, and compare available VA refinancing options based on your financial goals.
Get started with GO Mortgage to explore your refinance options.For educational purposes only. This content does not constitute a loan offer, credit approval, or individualized financial advice. VA eligibility, property and occupancy standards, underwriting, funding fees, and available refinance terms depend on current program rules and lender requirements. Refinancing may increase total finance charges over the life of the loan.