What is the VA IRRRL?
The VA IRRRL, also known as the “VA Interest Rate Reduction Refinance Loan,” offers a straightforward solution for veterans looking to refinance their current VA loan at more favorable terms.
With the VA IRRRL, there’s less documentation (no credit, income, or employment verification) and you might not need an appraisal. Closing costs also tend to be lower and can be rolled into your loan to eliminate upfront charges.
Check your VA IRRRL eligibility. Start hereIn this article (Skip to…)
- VA IRRRL guidelines
- VA IRRRL requirements
- VA IRRRL rates
- How it works
- IRRRL benefits
- VA Streamline lenders
- IRRRL vs. VA cash-out
- Pros and cons
- VA Streamline FAQ
VA IRRRL Streamline Refinance guidelines
When pursuing a VA IRRRL, certain guidelines help ensure a smooth and successful refinancing process. While not mandatory, these VA IRRRL guidelines are commonly followed by lenders:
- Credit Score: A credit score of 620 or higher is often recommended to improve your chances of approval.
- Loan-to-Value (LTV) Ratio: Maintaining a reasonable LTV ratio is suggested, especially if you’re planning to roll closing costs into the loan.
- Payment History: Consistent payment history on your existing VA loan is encouraged, as it demonstrates financial stability, even though income verification isn’t required.
Remember that these VA IRRRL guidelines offer recommended practices that lenders typically follow to streamline the process, whereas requirements (covered in the next section) are the mandatory conditions that must be met to qualify for an IRRRL.
VA IRRRL Streamline Refinance requirements
To meet VA IRRRL requirements and qualify for a VA Streamline Refinance (IRRRL), your current mortgage must be a VA home loan. Homeowners must also meet underwriting requirements set by the Department of Veterans affairs.
Check your VA IRRRL eligibility. Start hereThe current VA IRRRL requirements include:
- Existing VA Loan: The borrower must currently have a VA-backed home loan.
- Occupancy: The property being refinanced must be the borrower’s primary residence.
- Timely Mortgage Payments: The borrower should have a good payment history on the existing VA loan, with no more than one late payment in the past 12 months.
- Net Tangible Benefit: The refinance must result in a tangible benefit to the borrower, such as a lower interest rate, lower monthly payment, or a move from an adjustable-rate mortgage to a fixed-rate mortgage.
- Funding Fee: In most cases, a funding fee is required, but it can be included in the loan amount.
- No Cash-Out: IRRRL is designed for rate and term refinancing only; it does not allow for cash-out refinancing.
- No Appraisal or Credit Underwriting: In many cases, an appraisal or credit underwriting may not be required, making the process more streamlined.
You can easily figure out if you meet the VA IRRRL requirements by checking with your current mortgage lender, or any other lender that’s authorized to do VA loans (most are).
VA IRRRL rates today
VA IRRRL rates are some of the best mortgage rates on the market. Thanks to backing from the Department of Veterans Affairs, lenders can offer exceptionally low interest rates on these loans.
Check your VA IRRRL eligibility. Start hereVA IRRRL rates today, November 20, 2024
| Loan Type | Today’s VA Refinance Rate |
| VA 30-year fixed-rate | % (% APR) |
| VA 15-year fixed-rate | % (% APR) |
| VA 5/1 ARM | % (% APR) |
Today’s starting rate for a 30-year VA IRRRL is % (% APR), according to our lender network*, reflecting some of the best VA IRRRL rates today.
Of course, VA refinance rates vary by customer. Your rate will likely be higher or lower than average depending on your loan size, credit score, loan-to-value ratio, and other factors.
*Interest rates and annual percentage rates for sample purposes only. Average rates assume 0% down and a 740 credit score. See our full loan VA rate assumptions here.
How the VA IRRRL Streamline Refinance works
Like any mortgage refinance, the VA IRRRL program replaces your existing mortgage with a new loan. The new loan starts fresh at 30 or 15 years, depending on which loan term you choose.
Check your VA IRRRL rates. Start hereBut the process for a VA Streamline Refinance is a little different from a traditional refi.
Because there’s no income, employment, or credit verification required, borrowers have less paperwork to handle. And you don’t need a new Certificate of Eligibility (COE), because the IRRRL can only be used on an existing VA loan. So the lender already knows you’re VA-eligible.
Finally, there’s no home appraisal. This can shave a week or more off your loan’s underwriting time — so VA Streamline loans typically close faster than other refinances.
Is the VA IRRRL program worth it?
As with any refinance, using the VA IRRRL results in a brand-new loan. So your mortgage will start over at 30 or 15 years, depending on which loan term you choose.
But using the VA IRRRL is worth it for many homeowners. That’s because today’s ultra-low VA rates can result in a much lower monthly mortgage payment and potentially save you thousands in interest payments in the long run.
Another big benefit of a VA Streamline Refinance? VA loan closing costs can be rolled into the home loan. This allows veterans to refinance with few or no out-of-pocket expenses. Sometimes it is also possible for the lender to absorb your loan costs in exchange for a higher interest rate on your loan.
Benefits of a VA Streamline Refinance
The VA IRRRL lets veterans and service members refinance their current mortgage loan to a lower rate and monthly payment.
Check your VA IRRRL eligibility. Start hereThe biggest benefits of the VA Streamline refinance program compared to other VA loan refinance options are:
- Limited paperwork
- Low interest rates
- No private mortgage insurance (PMI)
- Appraisal typically not required
- May be able to refinance with little or no equity
- You might have low or no closing costs
- A low credit score won’t disqualify you
- Available to most veterans and active-duty members of the armed forces from all branches, including many Reserves and National Guard members
The VA Streamline loan program is extremely popular because it’s easy to use.
If you already have a VA mortgage on your home, the VA IRRRL program makes refinancing to a lower rate relatively quick and painless.
However, mortgage lenders can set their own requirements for credit checks and appraisals in a VA IRRRL. So if you want to skip these steps, be sure to shop around and ask about lenders’ policies before you apply.
VA IRRRL mortgage lenders
It pays to shop around for the best mortgage lender when you do a VA Streamline Refinance. And that’s because not all lenders have the same rules.
Check your VA IRRRL eligibility. Start hereFor instance, when undergoing a VA IRRRL, some mortgage lenders require credit and income approval even though the VA doesn’t. And interest rates can vary a lot from one company to the next. So depending on which lender you choose, you may or may not have access to the full suite of VA IRRRL benefits.
Not sure where to start? For more information on how to choose a VA IRRRL lender, check out our review of the Best VA Loan Lenders.
VA Streamline Refinance vs. VA cash-out refinance
Generally, homeowners are not allowed to get cash back with the VA IRRRL program. There’s just one exception: IRRRL users may get up to $6,000 cash-back if they plan to use it for energy-efficient home improvements.
Verify your VA refinance eligibility. Start hereFor everyone else, there is a VA cash-out refinance loan.
A cash-out refinance allows borrowers to refinance their existing loan into a lower rate while also taking cash from the home’s value. This replaces your existing mortgage, instead of simply withdrawing cash like a home equity loan.
A qualified borrower can refinance up to 100 percent of the home’s value (100% LTV) using a VA loan in some cases. Another benefit is that the VA cash-out refinance can be used regardless of your current loan type — whether VA, USDA, FHA, or conventional.
Just like the VA Streamline Refinance loan, the home must be used as a principal dwelling by the owner. There is no set period of time that you must have owned your home, however, you must have enough equity to qualify for the loan.
VA IRRRL program pros and cons
The VA IRRRL program offers both advantages and disadvantages for eligible veterans looking to refinance their existing VA-backed home loans.
Check your VA IRRRL eligibility. Start hereVA IRRRL pros
- Less documentation requirements — no credit report or COE
- No appraisal required
- Can apply to non-owner occupied properties
- Closing costs can be added to the loan, meaning no out-of-pocket costs
- May borrow up to $6,000 cash for energy-efficiency improvements
VA IRRRL cons
- Must already have a VA loan to be eligible
- A lower interest rate and monthly payment must occur (unless refinancing from an ARM to a fixed-rate loan)
- A 0.50% funding fee is added to new loan amount (though, it’s much less than the VA cash-out)
VA IRRRL Rates FAQ
Closing costs for a VA Streamline Refinance are similar to other VA loans: usually 1 to 3 percent of the loan amount. Lenders may charge a loan origination fee of up to 1 percent of the loan’s value. However, you may be able to skip the home appraisal, which can save around $500 to $1,000. Borrowers are charged a 0.5 percent funding fee as well, which costs $500 for every $100,000 borrowed. This can be rolled into the loan amount to avoid paying upfront.
VA mortgage rates are not controlled by the Department of Veterans Affairs. Rather, they’re set by the private lenders that offer these loans. That means VA refinance rates can vary a lot from one lender to the next. Rates are different for each borrower, so you need to shop around for your best rate. Compare personalized offers from at least 3-5 lenders to find the best deal.
There’s no limit to the number of times you can use the VA IRRRL program, as long as you wait the required 210 days between each refinance and each one has a ‘net tangible benefit’ (lowering your interest rate and monthly payment significantly). Refinancing involves closing costs and starts your loan over, so using the VA IRRRL repeatedly won’t make sense for most homeowners.
The time it takes to refinance using a VA IRRRL varies a lot, depending on the borrower and lender. If all goes smoothly, a VA IRRRL might close in under a month — which is faster than most refinances. However, a complicated loan application or a busy loan officer can bog down the process.
Only under special circumstances. You may receive up to $6,000 cash-in-hand at your VA IRRRL closing. The cash MUST be used for energy-efficiency improvements, and must be a reimbursement for improvements made within 90 days prior to closing. Some VA borrowers will also receive cashback if they prepaid taxes and insurance on their previous loan, and some of those funds went unused.
To qualify for a VA IRRRL, you must have a current VA loan that’s been open for at least 7 months (210 days). You must also be current on your mortgage payments, and the new loan must have a clear financial benefit. Because the VA IRRRL is a streamlined refi program, lenders do not have to check your credit score, although some do anyways.
The VA requires you to wait 7 months (210 days) from your last loan closing before using the VA Streamline Refinance. However, some VA lenders impose their own waiting period of up to 12 months. If your current lender says it’s too soon to refinance your VA loan after 7 months, it might be worth shopping for another lender that will let you refinance earlier.
In general, the borrower(s) obligated on the original VA loan must be the same as borrower(s) obligated on the refinance. However, there are a few exceptions, for example in the case of a divorce. A VA IRRRL is possible in all of the following scenarios: Divorced veteran alone; Veteran and different spouse; and, surviving spouse alone because the veteran died. An IRRRL is not possible for a divorced spouse alone, or a different spouse alone because the veteran died.
The VA does not require a credit check or appraisal when using a Streamline Refinance. However, many lenders require a credit check and employment verification to guarantee you are still financially stable enough to pay your mortgage. Some lenders also require a new appraisal — but since skipping the appraisal is one of the main benefits of a VA IRRRL, we encourage you to shop around if your lender requires one. A COE is not required, because the existing borrower has already been approved for VA financing.
Yes, a VA funding fee is required for the VA IRRRL refinance. It’s 0.5 percent of the loan amount. You have the option to roll the funding fee into your loan when using the VA IRRRL, so you don’t have to pay it upfront in cash. Just remember, rolling the funding fee into your mortgage means you’ll pay interest on that amount over the life of your loan.
Only select VA borrowers are eligible to have the funding fee waived. These include veterans receiving disability compensation; surviving spouses of veterans who died from a service-connected disability; veterans entitled to receive VA compensation for a service-connected disability, but who receive retirement pay or active duty pay; and active-duty service members who provide, on or before the date of loan closing, evidence of having been awarded the Purple Heart.
Yes, the VA allows borrowers to roll the funding fee into their mortgage loan amount rather than paying it upfront. Keep in mind, this means you’ll pay interest on the funding fee over time.
If you are going from a fixed-rate mortgage to another fixed-rate mortgage, the VA requires your IRRRL to have a lower interest rate. But if you are moving from an adjustable-rate mortgage (ARM) to a fixed-rate loan, the VA will allow you to refinance to a higher interest rate.
There is no loan limit for a VA loan. Even jumbo loan sizes are allowed if the homeowner qualifies. However, a VA Streamline Refinance will be limited to the existing loan balance plus any accrued late fees and late charges, plus typical loan costs and the cost of any energy efficiency improvements.
Yes, you can use the VA Streamline Refinance for an investment property. You must certify that you previously lived in the property as your primary residence. However, you no longer need to be living there full-time at the time you refinance.
The VA does allow you to buy discount points to get a lower mortgage rate. Just note, you can only finance two discount points. Additional points will require an upfront cash payment. Discount points typically cost 1 percent of the loan amount and lower interest rates by about 0.25 percent.
Start by getting a preapproval to make sure you’re qualified for a VA refinance. Then, check rates from a few different lenders. You do not have to refinance with your current lender, and most people can find an even lower rate and payment by shopping around. Once you choose a mortgage company, you’ll submit your loan documents and get approved. A VA Streamline Refinance requires less paperwork than other loan types, and may let you skip the home appraisal.
Check VA refinance rates today
The VA Streamline Refinance is one of the simplest and fastest mortgage products available for consumers today. Check rates with top-rated and VA-approved lenders for your refinance.
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