How to Refinance a VA ARM into a Fixed-Rate Mortgage

If you have a VA adjustable-rate mortgage (ARM), refinancing into a fixed-rate VA loan can help you secure stable, predictable payments. A fixed rate protects you from future interest rate increases and may offer greater peace of mind for long-term homeownership.

When you VA refinance, you typically choose between simplifying your loan terms or unlocking additional flexibility with your home equity. The best path for you depends on your current loan, your financial goals and how long you plan to stay in your home.

For Veterans with a non-VA ARM (such as conventional, FHA or USDA), the VA Cash-Out refinance is the only path into a VA fixed-rate loan, provided you meet VA loan eligibility requirements.

Refinancing may result in higher finance charges over the life of the loan, so keep that in mind as you consider your options.

Why Refinance a VA ARM into a Fixed-Rate Loan

Refinancing from a VA ARM into a fixed-rate loan provides the stability of consistent monthly payments. While your fixed rate might start slightly higher than your current ARM rate, the long-term benefits often outweigh the short-term cost.

Some key reasons Veterans choose to refinance include:

• Payment predictability: Fixed payments simplify long-term budgeting and remove the uncertainty of annual rate changes.
• Protection against inflation: Locking in a rate helps keep housing costs steady even as other expenses rise.
• Better loan terms: If your credit, income or home value has strengthened, you may now qualify for a better fixed rate.
• Avoiding future hikes: Refinancing before your ARM resets can help you sidestep sharp payment increases.

How to Refinance from an ARM to a VA Fixed-Rate Mortgage

Veterans can refinance an ARM into a fixed-rate VA loan through either a VA IRRRL or a VA Cash-Out refinance. Let’s take a look at the requirements for each option.

VA IRRRL Requirements

Designed for Veterans who already have a VA loan, the IRRRL makes switching from an ARM to a fixed rate quick and affordable.

Keep in mind these key requirements:

• Must be current on your loan with at least six consecutive on-time payments
• At least 210 days must have passed since your first payment
• Only prior occupancy required (you don’t have to live in the home now)
• Pay the required VA Funding Fee, which is 0.5% of the loan amount (can be rolled into the loan or waived for exempt Veterans)

With a VA IRRRL, most Veterans can refinance with little to no out-of-pocket costs. However, switching from an ARM to a fixed rate may increase your monthly payment if the new interest rate is higher.

At Veterans United, ARM-to-fixed IRRRLs do not require a rate reduction, but the refinance must meet a 36-month cost recoupment test.

VA Cash-Out Refinance Requirements

A broader option available for both VA and non-VA loans, cash-out refinancing allows you to secure a fixed rate and, if desired, tap into your home equity.

Requirements typically include:

• Meeting VA loan eligibility and entitlement standards
• At least 210 days must have passed since your first payment and six consecutive on-time payments
• A credit check, income verification and VA appraisal
• The home must be your primary residence
• Cash back allowed at closing (if equity is available)
• Loan amount cannot exceed 100% of your home’s appraised value (including the funding fee)
• Pay the VA Funding Fee, which is 2.15% for first-time VA loan users and 3.3%for subsequent users (can be rolled into the loan or waived if exempt)

This option gives you more control over your finances and the ability to convert any existing ARM into a stable fixed-rate VA loan.