Can You Refinance a VA Loan into a Conventional Mortgage?
Yes. A conventional refinance pays off your existing VA loan and replaces it with a new conventional mortgage under standard agency rules. Expect lender credit, DTI, and documentation checks, plus an appraisal unless waived. Many borrowers pursue this to remove PMI at 80% LTV or to restore VA entitlement for a future purchase. Compare costs against savings carefully.
Quick Facts
- Typical conventional credit score minimums start near 620; stronger credit improves pricing and underwriting outcomes.
- Desktop underwriting can allow total DTIs up to 50% when risk factors support it; lower DTIs price better.
- Private mortgage insurance is generally required above 80% LTV; it can later be removed or canceled.
- Most refinances need a new valuation; some receive appraisal waivers (“value acceptance”) through automated systems.
- Restoring VA entitlement after payoff lets you use a new VA loan later, even if you keep the old home.
Mini FAQ
Why switch from VA to conventional?
Three common reasons are eliminating future VA funding fees, canceling PMI once you reach 80% loan-to-value, and restoring VA entitlement to use on a new purchase. If you have strong equity and credit, a conventional loan can price competitively. Always model closing costs and break-even before you commit.
Does the 210-day rule apply to this refinance?
No. The 210-day/seven-payment seasoning rule is a VA requirement for VA-to-VA Interest Rate Reduction Refinance Loans. When you refinance to conventional, seasoning depends on investor and lender policies, which often require payment history but don’t follow the VA’s statutory timetable. Ask your lender for written overlays.
Do I need 20% down to avoid PMI?
For a conventional refinance, private mortgage insurance is generally required above 80% loan-to-value. You don’t “put money down,” but your current equity acts like a down payment. If your new loan is at or below 80% LTV, you can avoid PMI; otherwise, you can remove it later when you reach the threshold.
- Conventional refis require agency-style credit, DTI, documentation, and usually a property valuation.
- PMI applies above 80% loan-to-value; it can be canceled later under federal rules.
- VA’s 210-day seasoning governs VA-to-VA IRRRLs, not VA-to-conventional refinances.
- Refinancing to conventional can restore VA entitlement for a later VA-backed purchase.
- Compare PMI versus VA funding fees and total closing costs over your expected holding period.
- Loan amounts within FHFA conforming limits get conventional “agency” pricing; jumbo rules differ.
Can you refinance a VA loan into a conventional mortgage—and why would you?
Yes. A VA-to-conventional refinance replaces your VA loan with a new conventional mortgage that pays the old one off. Homeowners choose this when equity is strong, monthly savings justify costs, or they want to restore VA entitlement for a future home. The process mirrors standard refis: underwriting, disclosures, valuation, closing, and payoff of the prior loan. VA eligibility & restoration
- Conventional eligibility is governed by agency guides and lender overlays, not VA rules. You will verify income, assets, and liabilities; your credit report, payment history, and property value determine pricing and whether you can waive PMI through sufficient equity or must carry it temporarily.
- The strongest financial case appears when equity is at or below 80% LTV, eliminating PMI, or when freeing entitlement enables a second VA purchase without selling the current home. In both cases, weigh rate changes, fees, and tax effects against savings across your expected holding period.
What credit, DTI, and documentation do conventional lenders expect?
Most conventional lenders align with Fannie Mae standards. Representative credit scores of at least 620 are typical minimums, with pricing improving at higher tiers. Manually underwritten loans have tighter DTI caps, while desktop-underwritten case files can allow total DTI ratios up to 50% when risk factors support it. Expect full verification of income, assets, and housing history. Fannie: credit scores; Fannie: DTI
- For manual underwriting, expect DTIs capped near 36% unless compensating factors justify up to 45%, per the eligibility matrix. Desktop underwriting can approve up to 50% in some scenarios, but outcomes depend on reserves, housing history, and loan features—stronger profiles lower costs and improve approval odds.
- Documentation includes pay stubs, W-2s or 1099s, tax transcripts as needed, recent bank statements, and mortgage and insurance statements. Align names and dates across documents; small mismatches can trigger conditions, delay clear-to-close, and force lock extensions that erode the refinance’s monthly savings advantage.
How does PMI on conventional loans compare with the VA funding fee?
Conventional loans typically require private mortgage insurance above 80% LTV; VA loans charge a one-time funding fee on most purchases and many refinances unless exempt. PMI can be canceled when you meet statutory thresholds; funding fees are paid upfront (or financed) and don’t recur monthly. Model total cost under realistic timelines before choosing a path. CFPB: PMI; VA funding fee
- Under the Homeowners Protection Act, borrowers can request PMI cancellation around 80% LTV and must receive automatic termination near 78% on eligible principal-residence loans; rules vary by investor and loan type, so confirm your loan’s specifics in writing. CFPB: cancel PMI
- On a new VA loan, funding fee rates depend on use and down payment. If you are exempt due to disability compensation, the fee may not apply—changing the cost comparison. If not exempt, compare that one-time fee against projected PMI duration and premiums.
Will you need a new appraisal—and can it be waived?
Most conventional refinances require a current valuation. However, some desktop-underwritten casefiles qualify for “value acceptance,” an appraisal-waiver pathway that relies on prior data and risk analytics. If eligible, you may skip a traditional appraisal; if not, expect a hybrid, desktop, or full appraisal based on investor criteria and property complexity. Fannie: value acceptance; Fannie: valuation options
- Value acceptance eligibility depends on factors like the presence of a prior acceptable appraisal in the agency’s data and DU findings. Even if eligible, some situations still require new data collection or a full appraisal—complex property types, recent major changes, or risk flags often preclude waivers.
- If an appraisal is required, share any significant improvements and permits with your lender so the appraiser can evaluate market reaction thoughtfully. Higher supported value can drop LTV below 80%, eliminate PMI, and transform the refinance’s economics without changing income, reserves, or the note rate itself.
Do conforming loan limits and occupancy rules affect this refinance?
Yes. Conventional “agency” pricing applies when your new loan fits FHFA conforming loan limits; above those limits, jumbo rules and pricing apply. Occupancy matters for pricing and risk, but entitlement restoration focuses on whether your prior VA loan is fully paid off—not on continued occupancy of that property. Your next VA purchase will require primary-residence occupancy certification. FHFA 2026 limits; VA eligibility & restoration
- Conforming limits differ by county and property units. If your refi amount exceeds your local one-unit limit, the loan becomes jumbo; expect different underwriting, pricing, and reserve rules. Staying within the limit generally delivers more predictable approvals and lower financing costs than jumbo alternatives.
- Restoring entitlement does not require living in the old home indefinitely. After the VA loan is paid in full, you can request restoration (including one-time restoration if you keep the property) and later certify occupancy on the new VA-financed primary residence, consistent with program rules.
Does the 210-day rule apply when switching to conventional?
No. The 210-day/six-payment seasoning requirement was set by statute and VA circulars for VA-to-VA IRRRLs. A refinance into a conventional loan follows investor and lender seasoning, which may include payment history or time-on-title conditions, but not the VA’s 210-day rule. Confirm your lender’s overlays and investor requirements in writing. VA IRRRL seasoning; VA Ch. 6
- Lenders may still want evidence of timely payments (for example, six on-time payments) before approving any refinance. Treat this as a lender or investor overlay; it’s common risk management but distinct from VA’s statutory rule that applies specifically to VA-guaranteed streamline refinances.
- If you’re considering both paths—IRRRL and conventional—remember that seasoning drives IRRRL eligibility and timing, while equity and PMI economics often drive the conventional decision. Build parallel cost comparisons that reflect each path’s unique rules and fees.
How does entitlement restoration work after you refinance?
Once the VA loan is paid in full by your new conventional refinance, you can request restoration of the entitlement used on that property. If you sell the property, restoration is available without limit; if you keep it, you can request a one-time restoration. Restoration is requested with a COE update, often via VA Form 26-1880. VA eligibility & restoration
- Your lender can usually request restoration electronically as part of the process, or you can submit a COE request yourself with the required documentation. Keep your payoff letter, recorded release, and closing documents organized to avoid delays during the entitlement update and future VA pre-approval.
- If you keep the property, the one-time restoration lets you use your VA benefit again while retaining the old home. For any subsequent restorations while keeping properties, you’ll need to dispose of the VA-financed property that used the entitlement to regain full, unrestricted restoration privileges.
What costs and timelines should you expect on a VA→conventional refi?
Expect standard closing costs: lender fees, third-party services, state recording, and any prepaid taxes or insurance adjustments. You can pay at closing or roll costs into the new balance when LTV allows. Timelines resemble typical agency refinances—often four to six weeks—depending on appraisal logistics, underwriting complexity, and title work. CFPB: compare Loan Estimates
- Calculate break-even: divide total costs by monthly savings to see how long you must hold the loan to recoup fees. Include PMI premiums, any lender credits, and rate-lock extension risk if valuation or documentation delays push the schedule beyond the original expiration date.
- Ask for a same-day, apples-to-apples comparison across three lenders with the same term, points, and lock. Review APR, cash-to-close, and any pricing adjustments. Capturing a valuation waiver or higher supported value can swing LTV below 80% and remove PMI, materially improving the economics.
Strategy: When does VA→conventional make the most sense?
The case is strongest when equity brings LTV to 80% or lower (eliminating PMI), when you’re exempt from future VA funding fees but need a jumbo balance conventional can price well, or when restoring entitlement unlocks your next purchase. If equity is thin or PMI will last years, a VA IRRRL may outperform. VA funding fee; HPA cancellation
- If your goal is a second VA purchase soon, refinance the old loan to conventional first, complete entitlement restoration, then shop for the new VA loan. Avoid overlapping contracts and refis; dual underwriting can create conflicts around reserves, DTI, and occupancy certifications for both loans.
- For jumbo balances above FHFA limits, compare jumbo conventional pricing and reserves against selling the property, downsizing, or sequencing a cash-out later. Sometimes a staged approach—refinance now, sell later—optimizes both interest cost and the timing of your next VA purchase.
Step-by-step: How to refinance VA→conventional
Prepare a clean file, standardize quotes, and plan your valuation early. Your goals are to eliminate avoidable conditions, capture any appraisal waiver, and structure pricing with a break-even you actually expect to reach. The sequence below works for most borrowers and keeps underwriting friction low while you transition benefits smoothly.
- Set targets and documents. Define a minimum monthly savings and break-even months. Gather pay stubs, W-2/1099s, award letters, bank statements, mortgage statements, insurance deck page, and your VA payoff information so lenders can issue accurate Loan Estimates quickly.
- Standardize lender quotes. Request same-day Loan Estimates for the same term, points, and lock. Ask whether your case qualifies for value acceptance; if not, book the appraisal immediately and provide a concise list of improvements and permits likely to influence market value.
- Model PMI and fees. Compare monthly PMI duration under HPA rules against a new VA funding fee you’d pay on a future VA purchase. If you’re exempt from the funding fee, re-run the comparison because exemption materially changes the math on your next VA loan.
- Close, pay off, restore. At closing, your new lender pays off the VA loan. Save the payoff letter and recorded release, then request entitlement restoration with your updated COE so you’re ready to use VA benefits on your next primary residence without delay.
Citations Used
- Fannie Mae Selling Guide — Credit scores and DTI limits: Credit scores · DTI ratios
- FHFA — 2026 conforming loan limits: News release
- Fannie Mae — Valuation options and appraisal waivers (“value acceptance”): Selling Guide · Overview
- CFPB — What is PMI and how to remove it (HPA basics): PMI explainer · Cancel PMI
- VA — Funding fee and closing costs: VA funding fee
- VA — IRRRL seasoning rule (210 days/6 payments): Circular 26-19-22 · VA Ch. 6
- VA — Eligibility and restoring entitlement (COE; VA Form 26-1880): Eligibility & restoration
Levi Rodgers is the Founder of VA Loan Network, a leading resource for Veteran homebuyer education. A Retired Green Beret and Broker-Owner of LRG Realty in San Antonio, Levi leverages his military discipline and real-world real estate expertise to provide Veterans with expert loan advice, guidance, and trusted financial leadership.
