How to Refinance a VA Loan to Conventional (2025 Guide)

Can I Refinance My VA Loan to a Conventional Loan?

Yes. If you currently have a VA home loan, you can refinance it into a conventional loan. This process replaces your existing VA loan with a new loan that is not backed by the U.S. Department of Veterans Affairs. Instead, your new conventional loan will follow guidelines set by Fannie Mae or Freddie Mac.

The most common reason veterans choose to refinance a VA loan to a conventional loan is to restore their VA loan entitlement. This is the amount the VA will guarantee on your behalf. By paying off the VA-backed home loan with a conventional mortgage, you free up that entitlement for a future VA home purchase. Other reasons include removing the VA funding fee from future transactions, taking advantage of competitive interest rates, or changing your loan term.

This article is educational content only and does not constitute financial advice. Consult a licensed mortgage professional before making refinancing decisions.

Eligibility Requirements to Refinance a VA Loan to Conventional

Because you are moving away from a VA loan program and into a conventional loan, you will need to meet the conventional lender’s requirements rather than VA standards. Here is what most lenders look for:

• Credit score: Most conventional lenders require a minimum credit score of 620. However, to qualify for the lowest interest rates, a score of 740 or higher is typically preferred. According to Freddie Mac guidelines, your credit profile plays a major role in pricing.
• Home equity: You will generally need a loan-to-value (LTV) ratio of 80% or less to avoid private mortgage insurance. That means you need at least 20% equity in your home. If you have less than 20% equity, you can still refinance, but you will pay PMI – a cost VA loans do not require.
• Debt-to-income ratio (DTI): Conventional loans typically require a DTI of 45% or lower, though some lenders allow up to 50% with strong compensating factors.
• Stable income and employment: Expect to document at least two years of consistent income history.
• Appraisal: A new home appraisal will be required to determine your property’s current market value and your loan amount eligibility.

Pros and Cons of Refinancing VA to Conventional

Potential Benefits

• Restore VA entitlement: Paying off your current VA loan frees your entitlement so you can use a VA loan on another property in the future.
• Eliminate the VA funding fee: If you were to do a VA refinance (such as the Interest Rate Reduction Refinance Loan, or IRRRL), you would owe another VA funding fee. Moving to a conventional loan avoids this charge entirely.
• Potentially lower interest rate: Depending on market conditions and your credit score, a conventional loan may offer a lower interest rate than your current loan. Check current rates on our refinance calculator.
• Flexible property options: Conventional loans can be used for second homes and investment properties, giving you more flexibility if your situation has changed.
• Remove PMI later: Unlike FHA mortgage insurance, conventional PMI can be canceled once you reach 20% equity.

Potential Drawbacks

• Private mortgage insurance: If you have less than 20% equity, you will pay monthly mortgage insurance – something your VA loan did not require.
• Stricter qualification standards: Conventional loans typically require a higher credit score and lower DTI than VA loans.
• No assumability: VA loans are assumable by qualified buyers, which can be a valuable selling feature. Conventional loans generally are not.
• Closing costs: You will pay standard closing costs, which According to Freddie Mac typically range from 2% to 5% of the loan amount.

Risks and Considerations

Before refinancing, carefully evaluate whether this move truly benefits you. According to the Consumer Financial Protection Bureau, borrowers should always compare the total cost of a new loan against their current loan – not just the monthly payment.

• Break-even timeline: If your closing costs total $6,000 and you save $150 per month, it takes 40 months to break even. If you plan to move before that point, refinancing may cost you more than it saves. Use our break-even calculator to run the numbers.
• Restarting your amortization clock: If you are five years into a 30-year VA loan and refinance into a new 30-year conventional loan, you are resetting the clock. You will pay more total interest over the life of the loan unless you choose a shorter loan term.
• Hidden costs: Watch for appraisal fees, title insurance, origination fees, and potential prepayment penalties on your existing loan. Ask your current servicer about any early payoff fees.
• Credit score impact: Applying for a new loan triggers hard credit inquiries. While credit scoring models typically group multiple mortgage inquiries within a 14-to-45-day window as a single inquiry, shopping over a longer period can result in multiple hits to your score.
• Rate lock risks: When you lock an interest rate, it has an expiration date. If your closing is delayed, you may need to pay for an extension or risk losing your locked rate. Ask your lender about float-down options that let you benefit if rates drop before closing.

According to CFPB complaint data from 2024, the most common mortgage-related complaint across major servicers is trouble during the payment process. When switching servicers during a refinance, monitor both your old and new loan accounts closely to ensure payments are properly credited during the transition.

Steps to Refinance From VA to Conventional

1. Check your current loan details: Review your current VA loan balance, interest rate, remaining loan term, and monthly mortgage payment. This gives you a baseline for comparison.
2. Determine your home equity: Get an estimate of your home’s current value using online tools or a comparative market analysis from a real estate agent. Subtract your loan balance to estimate your equity.
3. Review your credit score and finances: Pull your credit report and verify your score. Address any errors before applying. Gather income documentation including pay stubs, W-2s, and tax returns.
4. Shop multiple lenders: The Consumer Financial Protection Bureau recommends getting quotes from at least three to five lenders. Compare interest rates, closing costs, and loan terms side by side. Our best refinance lenders page can help you start your research.
5. Choose your loan term: Decide between a 15-year, 20-year, or 30-year conventional loan. A shorter loan term typically comes with a lower interest rate but higher monthly payments.
6. Lock your rate and submit your application: Once you find the best offer, lock your interest rate and complete the full application with your chosen lender.
7. Complete the appraisal and underwriting: The lender will order an appraisal and verify all your financial documents. Respond promptly to any requests for additional information.
8. Close on your new loan: At closing, your new conventional loan pays off your existing VA loan. Your VA entitlement will be restored once the VA loan is fully paid off and the lender reports it.

Alternatives to Converting a VA Loan to Conventional

Refinancing to a conventional loan is not your only option. Consider these VA refinance alternatives:

VA Interest Rate Reduction Refinance Loan (IRRRL)

The VA IRRRL – sometimes called a VA streamline refinance – lets you refinance your current VA loan to a new VA loan with a lower interest rate. This type of loan typically requires less documentation, no appraisal, and minimal underwriting. However, it does include a VA funding fee of 0.5% of the loan amount, and it keeps your entitlement tied up.

VA Cash-Out Refinance

A VA cash-out refinance allows you to borrow against your home equity while keeping your VA-backed home loan benefits. This loan may be useful if you need funds for home improvements, debt consolidation, or other major expenses. According to the Department of Veterans Affairs, this option is available to eligible veterans who meet credit and income requirements.

Stay With Your Current Loan

If your current VA loan already has a competitive interest rate and you do not need to free up entitlement, staying put may be the smartest financial move. There is no requirement to refinance, and avoiding closing costs entirely can save you thousands.

Should You Refinance a VA Mortgage to a Conventional?

This decision depends on your specific goals. Refinancing from a VA loan to a conventional loan makes the most sense when you want to restore your VA entitlement for another purchase, you have strong credit and at least 20% equity, and you can secure a competitive interest rate. It may not make sense if you have limited equity, a lower credit score, or plan to sell your home in the near future.

Run the numbers using our refinance calculator to see how your monthly payment and total interest costs would change under different scenarios.

Frequently Asked Questions

Do I need to pay a VA funding fee when refinancing to a conventional loan?

No. The VA funding fee only applies to VA-backed loans. When you refinance to a non-VA loan such as a conventional mortgage, you will not owe this fee. However, you will pay standard conventional closing costs.

Will my VA entitlement be restored after refinancing to conventional?

Yes. Once your VA loan is paid off through the refinance, your entitlement is restored. You can then use it for a future VA home loan purchase. Make sure to verify the restoration through your Certificate of Eligibility on the VA’s eBenefits portal.

Can I refinance a VA loan to a conventional loan with less than 20% equity?

You can, but you will be required to pay private mortgage insurance (PMI) on the conventional loan. PMI is an added monthly cost that protects the lender if you default. This is one of the key tradeoffs since VA loans never require mortgage insurance regardless of equity.

How long should I wait before refinancing my VA loan?

There is no mandatory waiting period to refinance a VA loan to a conventional loan. However, many lenders prefer to see at least six months of payment history on your current loan. Additionally, you want enough time for your home to appreciate so you have sufficient equity.

Is it better to do a VA IRRRL or refinance to conventional?

It depends on your goals. The VA IRRRL is faster, cheaper, and easier to qualify for – making it ideal if you simply want to lower your interest rate. Refinancing to a conventional loan makes more sense if you want to restore your VA entitlement or plan to purchase another home using a VA loan in the future.

Published by the Wirly Editorial Team. This article was drafted using AI writing tools and reviewed for accuracy by our editorial team. All data claims have been verified against the sources listed below.

Sources

• Consumer Financial Protection Bureau (CFPB) – Consumer guidance on mortgage refinancing and shopping for lenders
• CFPB Consumer Complaint Database – 2024 mortgage complaint data referenced for servicer transition warnings
• Freddie Mac Seller/Servicer Guide – Conventional loan eligibility standards and closing cost estimates
• U.S. Department of Veterans Affairs – VA loan types including IRRRL and cash-out refinance eligibility
• FRED (Federal Reserve Economic Data) – Historical and current mortgage interest rate data

Sources

• CFPB (Consumer Financial Protection Bureau) – Official consumer protection guidelines and mortgage resources
• Freddie Mac Primary Mortgage Market Survey – Weekly benchmark mortgage rate survey dating to 1971
• FRED (Federal Reserve Economic Data) – Daily and weekly mortgage rate data sourced from Freddie Mac PMMS

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Written by the Wirly Editorial Team. Last reviewed: March 30, 2026. Fact-checked against CFPB guidelines, CFPB 2024 complaint data, Freddie Mac guidelines, VA.gov loan program details, FRED mortgage rate data. See our methodology for how we evaluate lenders.