VA Equity Loan: Everything You Need to Know

Are you a veteran in need of financial assistance? If yes, a VA equity loan may be the solution you’re looking for. In this article, we’ll delve into all the vital information you need to know about VA equity loans, including what it is, how it works, eligibility, pros and cons, and much more. Read on to learn more!

What is a VA Equity Loan?

A VA equity loan is a type of home loan that allows veterans to access the equity in their homes. Equity is the difference between the market value of your home and the outstanding mortgage balance. The loan is secured by your home equity, which means your home serves as collateral.

VA equity loans are also known as cash-out refinance loans because they involve refinancing your current mortgage, taking out cash from your home’s equity, and receiving a new mortgage in return.

How Does a VA Equity Loan Work?

VA equity loans work by refinancing your current mortgage and borrowing against the equity of your home. Here’s how it works:

  1. You apply for a VA equity loan with a lender that participates in the VA home loan program.
  2. The lender assesses your eligibility based on your credit score, income, and other factors.
  3. If you’re eligible, the lender appraises your home to determine its current market value.
  4. If your home’s value is higher than your outstanding mortgage balance, you can refinance your mortgage and take out a loan for the difference between the two amounts (i.e., your home equity).
  5. You receive the loan as a lump sum, which you can use for any purpose, such as paying off debt, funding home renovations, or covering emergency expenses.

Eligibility for VA Equity Loans

Who is Eligible?

To be eligible for a VA equity loan, you must meet the following requirements:

  • You must be a veteran who has served in the U.S. military for at least 181 days during peacetime, 90 days during wartime, or six years in the Reserves or National Guard.
  • You must have a current VA home loan or have paid off a VA home loan in the past.
  • You must have sufficient income and credit score to qualify for the loan.
  • Your home must be your primary residence.

What are the Pros and Cons of VA Equity Loans?

Access to cash for various purposes
Higher interest rates than traditional mortgages
No down payment required
Longer repayment terms increase total interest paid
No private mortgage insurance (PMI) required
Reduced home equity
Flexible credit requirements
Not available to surviving spouses

FAQs about VA Equity Loans

1. Can I get a VA equity loan if I’m a surviving spouse?

No, VA equity loans are only available to veterans who meet the eligibility requirements outlined above.

2. Can I use the funds from a VA equity loan for any purpose?

Yes, you can use the funds for any purpose, such as paying off debt, funding home renovations, or covering emergency expenses.

3. Will I need to pay private mortgage insurance (PMI) for a VA equity loan?

No, VA equity loans do not require PMI.

4. How much equity can I borrow against?

The amount you can borrow against depends on your home’s current market value, your outstanding mortgage balance, and your lender’s requirements.

5. Can I use a VA equity loan to refinance a non-VA loan?

No, VA equity loans can only be used to refinance existing VA loans.

6. What are the credit score requirements for a VA equity loan?

While there is no minimum credit score requirement for VA loans, most lenders require a score of 620 or higher.

7. Are there any other fees associated with VA equity loans besides the closing costs?

No, VA equity loans do not require any other fees besides the closing costs.


A VA equity loan can be an excellent way for veterans to access the equity in their homes to achieve various financial goals. However, it’s important to weigh the pros and cons and speak with a VA-approved lender to determine if it’s a suitable option for you. If you’re eligible, take advantage of this opportunity and enjoy the many benefits it offers.

Thank you for reading this article, and we hope you’ve learned something new. If you have any questions or comments, please do not hesitate to reach out to us. We’d love to hear from you!

Closing Disclaimer

The information provided in this article is for informational purposes only and should not be construed as legal, financial, or professional advice. The views expressed in this article are solely those of the author and do not necessarily reflect the views of any organization or government entity. Before making any financial decisions, please consult with a licensed professional in your jurisdiction.