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No Credit Check Refinancing

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There are many questions about VA refinancing loans. One that comes up occasionally has to do with the credit check procedures associated with some kinds of VA refinance loans. Is there a refinancing option that features no credit score minimum requirement?

It's true that there are a variety of refinance options available under the VA loan program, but only with one the "no credit check" and "no appraisal" option -the VA Interest Rate Reduction Refinance Loan or IRRRL.

In many cases, VA IRRRLs don't require additional underwriting or an appraisal. But policies and requirements can vary among lenders and depend on your unique financial situation.

The rationale for this is simple. The borrower has already qualified for the original VA home loan, so that original data is used to get the refinance loan approved in cases where the interest and or/mortgage payment goes down as a result of the new loan. However, borrowers need to remember that the lender is free to require a new credit check and appraisal where lender rules require them to.

The IRRRL program does not allow borrowers to take cash out. However, refunds are permitted when money has been paid up front that is later financed into the loan amount or otherwise covered. You should also know that a refund is not the same as "cash back" from loan proceeds and VA rules cover the difference between the two in great detail.

VA IRRRLs are only permitted for existing VA home loans. They cannot be used to refinance conventional mortgages. If you need to refinance from an FHA loan or conventional mortgage to a VA guaranteed mortgage loan, discuss your options with a lender.

These types of refinance loans are possible, but cannot be done under the VA IRRRL or Streamline Refinance program. Borrowers can use cash-out refinancing to refinance conventional, FHA or other non-VA loans to a VA mortgage.