VA IRRRL Charges & Necessities
What is the VA IRRRL ?
The VA IRRRL is a simple way to refinance your current VA
loan into a lower rate and monthly payment.
IRRRL stands for “VA Interest Rate Reduction Refinance Loan.” This loan program is also known as the VA Streamline Refinance or a VA-to-VA refinance.
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
This VA IRRRL information is accurate as of today, June 5, 2021.
Check your VA IRRRL eligibility (Jun 5th, 2021)
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Today’s VA IRRRL rates
VA refinance rates are typically some of the lowest interest rates on the market.
For instance, today’s average rate for 30-year VA refinance is 2.375% (2.547% APR), according to our lender network*. Compare that to 2.875% (2.875% APR) for a conventional loan.
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.
|Loan Type||Today’s Average Rate|
|VA 30-year fixed-rate||2.375% (2.547% APR)|
|VA 15-year fixed-rate||2.25% (2.571% APR)|
*Average rates assume 0% down and a 740 credit score. See our full loan VA rate assumptions here.
When you compare VA refinance options, don’t forget to look at the annual percentage rate (APR) you’re offered as well as the interest rate.
APR is a measure of your interest rate and total loan fees. So it can be a helpful tool to compare offers from different mortgage lenders and find out which one is truly the best deal.
Check your VA IRRRL rates (Jun 5th, 2021)
How the VA IRRRL works
The VA IRRRL lets veterans and service members refinance a current mortgage loan to a lower rate and monthly payment.
The biggest benefits of the VA Streamline program compared to other refinance options are:
- Limited paperwork required
- VA IRRRL rates are exceptionally low
- No private mortgage insurance (PMI) required, ever
- Appraisal typically not required (saves money and time)
- May be able to refinance with little or no equity
- You might have low or no closing costs
- No credit, income, or employment verification required (good if your credit score or income have been reduced)
- 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 IRRRL program makes refinancing to a lower rate relatively quick and painless.
Your lender isn’t required to do time-consuming paperwork, like income and employment verification. And some borrowers can even skip the home appraisal when they use a VA Streamline Refinance.
That said, lenders can set their own requirements for credit checks and appraisals. So if you want to skip these steps, be sure to shop around and ask about lenders’ policies before you apply.
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 payment and potentially save you thousands in interest payments in the long run.
Another big benefit? VA loan closing costs can be rolled into the 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.
Check your VA IRRRL eligibility (Jun 5th, 2021)
How to qualify for the VA IRRRL program
To qualify for a VA Interest Rate Reduction Refinance Loan, your current mortgage must be a VA home loan.
Homeowners must also meet underwriting requirements set by the Department of Veterans affairs.
Current guidelines for the IRRRL include:
- You are current on payments with no more than one 30-day late payment within the past year
- Your new rate and monthly payment for the IRRRL must be lower than the previous loan’s monthly payment. The only time this condition does not apply is if you refinance an ARM to a fixed-rate mortgage
- You must not receive any cash from the IRRRL
- You must certify that you currently or previously occupied the property
- You must have previously used your VA Loan eligibility on the property you intend to refinance. You may see this referred to as a VA-to-VA refinance
You can easily figure out if you meet the VA IRRRL guidelines by checking with your current mortgage lender, or any other lender that’s authorized to do VA loans (most are).
Can you get cash back on the VA IRRRL?
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.
For everyone else, there is a VA cash-out refinance loan.
The cash-out refinance allows borrowers to refinance their conventional or VA loan into a lower rate while also taking cash from the home’s value.
The VA cash-out refinance loan 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 using a VA loan in some cases.
One big 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.
Verify your VA cash-out eligibility (Jun 5th, 2021)
VA IRRRL FAQ
What are current VA IRRRL rates?
VA IRRRL rates are typically the lowest of any loan type. They are more affordable than conventional or FHA loan rates. With today’s low rates on mortgages of all types, homeowners using the VA IRRRL refinance can get especially good deals.
Is there a VA funding fee for the VA IRRRL?
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 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.
Does the VA funding fee cost more for an IRRRL?
The VA funding fee for an IRRRL costs just 0.5 percent of the loan amount. That’s lower than the funding fee for other VA loans, which range from 1.4% to 3.6% of the loan amount depending on your down payment and whether or not you’re a first-time home buyer.
Are there closing costs with a VA Streamline Refinance?
Closing costs for a VA Streamline Refinance are similar to other VA loans: usually 1% to 3% of the loan amount. However, you may be able to skip the home appraisal, which can save around $500 to $1,000.
How long does a VA refinance take?
The time it takes to refinance using an 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.
When can you refinance a VA loan?
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.
How does VA refinancing work?
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.
Do I need my Certificate of Eligibility (COE) for a Streamline Refinance?
Since you used your Certificate of Eligibility to get your first VA loan, you won’t need it to qualify for a Streamline Refinance of your existing VA mortgage. If you’re using the VA Cash-out Refinance to replace a conventional, FHA, or USDA loan, you’ll need a Certificate of Eligibility to access VA borrowing benefits.
Does the VA control mortgage interest rates for VA loan types?
No, it does not. The Department of Veterans Affairs insures VA loans, which allows lenders to offer more favorable terms. However, it’s the lenders — not the VA — that set rates and borrowing requirements for homeowners.
Do I have to use my current lender to refinance my VA loan?
No, you do not. In fact, you should shop around with various lenders, as each will offer different interest rates for your VA loan. All that matters is that the lender is VA-approved. Because so many lenders finance VA loans, it makes sense to shop around.
Do I have to go through the credit check and appraisal process again when refinancing?
The VA does not require another credit check or appraisal using a Streamline Refinance because you have already been approved for a VA loan once. However, many lenders require a credit check and employment verification to guarantee you are still financially stable enough to pay for your mortgage. Some lenders also require a new appraisal for the VA streamline. But since skipping the appraisal is one of the main benefits of an IRRRL, we encourage you to shop around if your lender requires one.
Do I have to be eligible for a better interest rate to qualify for a Streamline Refinance?
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 mortgage, the VA will allow you to refinance to a higher interest rate.
Can I take cash out with a VA Streamline Refinance?
Yes, you may receive up to $6,000 cash-in-hand at your IRRRL closing. The cash, however, 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.
What is the maximum allowable VA IRRRL loan size?
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.
Can I change the borrower-of-record with a VA Streamline Refinance?
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. An 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.
Can I use the VA Streamline Refinance for an investment property?
Yes, you can use the VA Streamline Refinance for an investment property. You must certify that you previously lived in the property as the primary residence. However, you no longer need to be living there full-time at the time you refinance.
Can I use VA loans for a no money down mortgage?
Yes. All VA loan options allows for 100% financing with no down payment. In addition, VA loans do not charge private mortgage insurance. Only a one-time, lump-sum funding fee.
Will I pay a loan origination fee with an IRRRL?
Lenders may charge a loan origination fee up to 1% of the loan’s value.
Can I buy discount points to lower my interest rate?
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% of the loan amount and lower interest rates by about 0.25 percent. Discount points can save you money if you keep the loan long-term.
How much can a lower rate save on my monthly mortgage payment?
Shaving half a point from your interest rate can save a noticeable amount on your monthly mortgage payments. With a $200,000 loan, you’d save about $50 a month by refinancing a 4 percent interest rate loan to a 3.5 percent rate. You could also save about $20,000 over the life of the loan if you pay it off in full. A lower rate can help you buy more expensive real estate or save money on interest. However, make sure your savings justify the cost of refinancing, including closing costs and the VA funding fee.
Check VA mortgage rates
The VA Streamline Refinance is one of the simplest and fastest mortgage products available for consumers today.
Current rates are low, so it’s a great time to take advantage of your veteran benefits.
Check with top-rated and VA-approved lenders for your refinance.
Verify your new rate (Jun 5th, 2021)