I have a house that purchased in Maryland using a VA loan. Now that I've moved back to Texas, I am renting out the MD home and we're going to begin searching for a new home early 2018. I would like to refinance the Maryland home to a conventional loan so I can free up my VA loan.

I currently have maybe 10-15% equity in the Maryland home. From what I gather, most lenders want to see 25% equity to refinance a home that isn't your primary residence. Anyone know if its possible to refi with less than 20% equity?

I do not have a loan less then 25% equity. Maybe a niche lender out there.

Also not sure your info is correct on VA. I need to check or someone else may come along but I thought VA is a limited benefit not revolving. 424k is max combined loan money available

SteveBott said:

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I do not have a loan less then 25% equity. Maybe a niche lender out there.

Also not sure your info is correct on VA. I need to check or someone else may come along but I thought VA is a limited benefit not revolving. 424k is max combined loan money available

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VA loans can be used over and over. The funding fee gets higher each time you use it. 424K is max. So, if I convert my current VA loan to a conventional, the VA is once again available for my use provided it is for my primary residence and I pay the funding fee.

VA does not give you back your full eligibility if you refinance out of a VA to a conventional loan. You must sell the house outright to regain your full eligibility. It is a rule they have to keep you from building a real estate portfolio using VA loans. Depending on the amount of eligibility used on the MD home, you may still have enough eligibility for another VA loan. Also, most lenders require a 75LTV to refinance an investment property.

Source on the va statement? I've never heard that. Funding fee goes up but eligibility remains, as far as I know.

Edit: I see what you mean, but there is an option to reapply once for full benefit:

"there is a one-time exception to the "must-sell" mandate, giving the borrower an opportunity to keep the first home and seek a new VA loan for another home. Borrowers who choose to utilize the "one-time restoration" allowance will have to dispose of all property in the future if they again seek restoration of entitlement."

2B found the trip wire. I knew there was something but just couldn't remember what. I misinterpreted the rule originally but no one is perfect.

OP I would work very closely with your lender on getting the exception approved when the time comes. VA is quirky at times and I would not want to half way through contract to find out this was denied.

424k is max with no down payment. Anything over 424 and you have to put down 20% down on the amount over 424. I just went through all this and I did not know that but it is certainly valuable knowledge as I thought I had to put down 100% of funds over $424. Just FYI. But total amount down effects funding fee amount too.

You can refinance or simply pay off your VA mortgage to be able to get another VA loan. As pointed above, if you do that you, you can never do that again. But, you can absolutely do it once. We have done it number of times for borrowers over the years.

Even if you do not restore your eligibility but lets says you have 200k left. You could then buy a 300k house by financing 75% of the 100k over your 200k entitlement. So, you could finance 275k with a VA loan. It is the same as buying a jumbo home over 424,100, you can borrow 100% up to 424,100 but can only borrow 75% of anything over.

and to answer your original question, conventional loans will only go up to 75% on investment properties. But, there are plenty of portfolio products that would go up to 85% LTV. Worst rates/terms but it can be done. We do not lend in MD, but if you were in Texas (or any other state we lend in) we would at least have a product for you so someone in MD does too.