VA refinance

Assistance For Vets with Conventional or Sub-Prime Home Loans

February 8, 2011

Assistance For Vets with Conventional or Sub-Prime Home Loans

There is plenty of help and counseling available for VA borrowers should they get into trouble with their VA mortgages. But what about veterans who have borrowed money for conventional or sub-prime loans? Is there any help for them?

Fortunately the VA does not ignore this segment of the veteran and currently-service military population. The Department of Veterans Affairs has several programs for non-VA borrowers who have served in the U.S. Armed Forces. The most basic resource for veteran borrowers who might be in trouble with their loans is the network of eight regional VA loan centers, plus two servicing centers across the United States. These VA loan centers offer advice and assistance for all veterans who need mortgage loan help.

VA borrowers have one distinct advantage over non-VA borrowers. When a VA rep helps a homeowner with a VA mortgage, they are authorized to initiate proceedings with the lender on behalf of the borrower. But conventional and subprime borrowers don’t have the same luxury. According to the VA official site, “…unlike when a veteran has a VA-guaranteed home loan, VA does not have the legal authority to intervene on the borrower’s behalf. It is imperative that a borrower contacts his/her servicer as quickly as possible.”

One option a veteran with a non-VA guaranteed mortgage loan has is to refinance with a VA loan. The VA offers refinancing of conventional and sub prime loans. The Veterans’ Benefits Improvement Act of 2008 allows vets to refinance up to 100% of the home’s value.

Before the 2008 act was passed, borrowers could only refinance 90%. The VA official site adds, “Additionally, Congress raised VA’s maximum loan guaranty for these types of refinancing loans. Loan limits were effectively raised from $144,000 to $417,000.  High cost counties have even higher maximum loan limits.”

Borrowers who want to refinance should take steps to do so before they begin missing payments on their current home loans if possible. A borrower current on their conventional mortgage will have an easier time qualifying for a VA refinancing loan, though there are programs aimed at borrowers who are delinquent and trying to save their home.

Some refinancing programs require a borrower to be current on their home loans while other types of assistance are designed specifically for borrowers who have missed several payments. Borrowers should not assume refinancing is not an option.

  1. Mark Hess

    I have a conventional 1st and 2nd home loan with B of A at 6 and change interest rate. Currently, due to the housing market value crash I'm upside down in my loan. I'm a veteran eligible for a VA loan, I'm looking to re-fi my conventional loan into a VA loan at a lower interest rate. Any help out there for someone in my position? Regards Mark Hess

  2. Joe Wallace

    Hi Mark, thanks for asking. Are you current on your payments? You may be eligible for VA refinancing but may need to work out subordinate lien issues with the lender. You can contact your closest VA Regional Loan Center for additional information:

  3. Donald Good

    A conventional loan may be your only option! The VA has very restrictive requirements for Veterans buying condos. Doesn't matter if the condo is a beautiful waterfront, it must be on the "approved list". Many condo complexes have a 'first right of refusal' clause in their bylaws that prevents that complex from getting on 'the list'. Veterans all over the USA are missing out on great condo deals because of this VA requirement...a requirement that was a law for many years but is just being enforces since January 2010?! In my Florida County, there are over 200 condo complexes BUT only 7 on the list. That restricts my home search to only these 7 vs. the 200+ if I want to obtain a VA Loan. This law needs reviewed!

  4. donald

    A veteran who retired in Jan 09. I used my Va eligibility in late 90's and had a foreclosure. I'm I eligible for certificate?

    • Joe Wallace

      You may reapply for VA loan eligibility but if you owe any money to the government for the previous VA claim you will have to settle that issue before the VA will restore the previously used eligibility.

  5. Steve

    I have been searching for a home for two years. Like the poster above, could not get into a condo because of all the restrictions and lending rules. Now, I'm wondering if I should completely forget about even a conventional SF at 20% down loan in light of the apparently imminent government shutdown because most of my income is from a VA pension. I cannot find any information about how likely - or unlikely - it is that my VA checks would stop in the event of a shutdown. Anyone have any reliable information on that aspect?

  6. Kathy Thoma

    We worked with a mortgage company that closed right in the middle of our transaction - they finalized our construction loan and told us we should not need anything at the second closing- we are using VA and the appraiser has appraised our house at 40K less than we expected. What is our recourse - my husband is a vet - the house is great but in a newly developed area - so not many comps - we can't afford the 40K and the builder won't renegotiate - do we walk away? Any assistance appreciated. Kathy

    • Joe Wallace

      Best advice here would be to contact the VA directly and ask for advice on your options. There might be a local program in your area the VA could refer you to for assistance with down payment or other factors. The choice of whether to walk away or not isn't one that should be taken lightly and in the end it's your decision to make, but getting some advice from the VA Regional Loan Center nearest you could be a huge help. Here's a link to a list of all VA regional loan centers:

  7. Robert

    After divorce in '07, I refinanced my duplex from VA to conventional lender at virtually 100% LTV and 6.75% on 5 year interest only option. I'm now upside down, due to market, and expect actual value is now roughly 10-15% less than what I owe of approx 194K. Interest only portion soon to end and I would very much like to reduce my rate, and return to VA loan. Is this possible? I'm current on my mortgage and have a good steady income >110K$/yr, but debt to income ratio could be better.

    • Joe Wallace

      Best advice--contact the VA directly for mortgage loan advice on your specific circumstances. There's some basic information here: but call VA about your refinance loan needs and debt-to-income ratio concerns. Call the VA at 1-877-827-3702 or visit

  8. Orlando Mielke

    I have a current Fannie Mae Loan with Chase. I am currently upside down on my home. I did a modification loan which helped us during the economic upheaval and became delinquent on our payments which were add to the loan. Our current interest rate is 2% but will continue to go up. In addition this I pay PMI insurance. I can barely afford what i pay now and worry about the increase in payment. How does one refinance into a VA loan which only loans up to the value of the home?

    • Joe Wallace

      Have you spoken with a participating VA loan officer about your specific circumstances yet?

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