VA IRRRL / Streamline Refinance Loan Rates and Comprehensive Guide

The VA Interest Rate Reduction Refinance Loan (IRRRL or “earl”), also known as the VA Streamline refinance, is one of the most straightforward and beneficial refinance options available. It’s designed to give veterans and servicemembers a quick, hassle-free option to refinance their VA loans and get better interest rates. 

Key Points:

• The VA IRRRL (“earl”) is an exclusive, hassle-free refinancing option that allows veterans and service members to lower their mortgage payments quickly, often without an appraisal or credit check. 
• VA IRRRLs are also known as VA Streamline refinances
• VA IRRRLs can only be done with existing VA loans, and there is no cash-out option

What Is a VA Streamline Refinance (IRRRL)? 

A VA IRRRL is a VA loan option that allows you to cut a lot of red tape when refinancing an existing VA mortgage. A VA IRRRL is known for its quick processing times and limited underwriting requirements, which is why it’s also referred to as a VA Streamline refinance. There’s often no home appraisal or credit check requirement, and you can roll your closing costs into the loan term, which can mean no upfront fees in some cases.

VA IRRRL Rates Today

How we source rates and rate trends

Your IRRRL rate can vary depending on your credit score and other factors. To get the most accurate number, get pre-approved with a VA-approved lender. 

VA Streamline Refinance Requirements

When it comes to qualifying for a VA IRRRL, lenders don’t ask for much. Generally, no appraisal is required, you might not need to provide income documentation, and there are no set credit requirements. However, requirements can vary by lender. A big caveat of a VA Streamline is that it can only be used for existing VA mortgages. You can’t refinance a conventional, FHA or USDA mortgage using a VA IRRRL.

Here’s what you need to qualify for a VA IRRRL: 

• You can only refinance from a VA loan to another VA loan.
• The new interest rate must be at least 50 basis points (0.50%) lower than your original loan, unless you’re refinancing from an adjustable-rate mortgage (ARM) to a fixed interest rate.
• The new monthly payment must also be less than your original payment, except when refinancing from an ARM to a fixed rate.
• You must confirm that you previously occupied the property.
• You cannot have more than one 30-day late payment in the past 12 months.
• The loan must meet seasoning requirements, meaning that at least 210 days must have passed since your first mortgage payment and you’ve made at least six consecutive payments.
• The recoupment period for your closing costs cannot exceed 36 months, ensuring the savings from your lower interest rate cover the costs of the refinance within that time.

If you want to refinance another mortgage type to a VA loan, you’ll need to use a VA cash-out refinance loan—and don’t worry, you don’t actually have to take out cash if you don’t want to.

Do you have to pay the funding fee for a VA IRRRL?

As with all VA mortgages, you must pay the VA funding fee when taking out a VA IRRRL. 

The funding fee is a one-time upfront charge to help finance the loan program for future generations. For a VA IRRRL, the fee is only 0.5% of the loan amount unless you’re exempt. 

Those exempt from paying the VA funding fee include: 

• Veterans receiving compensation for a service-connected disability
• Veterans who are eligible to receive service-connected disability compensation but are currently receiving military retirement or active-duty pay instead
• Purple Heart recipients 
• Surviving spouses of veterans who died in service or from a service-related disability

Your Certificate of Eligibility (COE) will state whether you’re exempt. 

Closing Costs

Like other refinance loans, a VA IRRRL comes with closing costs. While an appraisal fee isn’t required, you can expect to pay other typical closing costs like taxes, insurance and recording fees.

The good news is that you can typically roll your closing costs into your loan amount. And, like with all VA loan and refinance variations, closing costs are generally much lower than other loan types due to the VA’s limits on the fees veterans can pay. 

Other Changes You Can Make to Your VA Loan When You Refinance

Along with getting a lower interest rate, a VA Streamline refinance offers you the chance to make other changes to your loan, including:

• Fixed interest vs. adjustable-rate interest: You can switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM) or vice versa, depending on your financial goals and market conditions.
• Loan term (15- vs. 30-year): You can shorten or extend your loan term, which can impact your monthly payments and the total interest paid over the life of the loan.

However, since this refinance option is intended to remain streamlined and efficient, veterans and servicemembers are not able to make the following changes to their loan during a Streamline refinance:

• No cash-out: You cannot take cash out of your home equity as part of the Streamline refinance. 
• Adding or removing borrowers: Adding and/or removing new borrowers is generally not permitted, except in cases like death or divorce.

VA Streamline Refinance (IRRRL) Pros and Cons

Here are some pros and cons of the VA IRRRL loan:

The VA Streamline typically allows you to bypass the underwriting process. Still, there is always a possibility that you will need to provide documentation to your lender. If you’re set on skipping the underwriting process, you can always shop around—another benefit of the IRRRL is that you can apply with any VA-approved lender. 

Potential Savings

Even small reductions in interest rates can save homeowners thousands. Let’s take a look at an example:

Example	Estimated Monthly Payment (principal + interest)	Total Estimated Interest Paid Over 30 Years
$300,000 loan at 7.5% interest rate	$2,098	$455,152
$300,000 loan at 7.0% interest rate	$1,996	$418,527
$300,000 loan at 6.5% interest rate	$1,896	$382,633
$300,000 loan at 6.0% interest rate	$1,799	$347,515
$300,000 loan at 5.5% interest rate	$1,703	$313,212

IRRRL vs. Other Refinancing Options

The VA IRRRL is one of the most beneficial refinancing options available. But, how does it stack up to other refinancing options? Let’s take a look:

• VA Cash-Out Refinance: A VA cash-out refinance allows veterans and servicemembers to turn home equity into cash, while an IRRRL does not.
• Refinancing a VA loan to a conventional loan: VA loans offer some of the best benefits out there. However, there are unique situations where one might want to refinance a VA loan into a conventional loan, such as converting a home into a commercial property, a divorce or separation where the veteran needs to be removed from the mortgage, or situations where a veteran needs to free up their VA entitlement.

Here’s an overview of how each refinancing option works:

Feature	VA IRRRL	VA Cash-Out Refinance	Refinancing to a Conventional Loan
Purpose	Lower interest rate and payment	Access home equity for cash	Lessen restrictions on property types, free up VA entitlement, avoid VA loan limits, remove veteran borrower from loan
Appraisal	Not typically required	Required	Required
Income Verification	Not typically required	Required	Required
Funding Fee	Lower	Higher	None
Cash-Out Option	No	Yes	Yes
Eligibility	Existing VA loan	VA or non-VA loan	Any existing mortgage

How to Choose a VA Streamline Refinance (IRRRL) Lender

Any mortgage lender authorized to provide a VA loan can offer a VA IRRRL.

That said, you should consider using a company that is familiar with processing VA loans. The paperwork, requirements and timelines can differ from conventional loans. So, you want to use a company with enough experience that you won’t have errors or delays in your loan processing.

Here are our top 2024 picks for VA lenders. 

When is a VA IRRRL good for me?

A VA IRRRL is excellent when you can lower your:

• Interest rate
• Monthly payments
• Length of your mortgage
• If you’re looking to go from an ARM to a fixed-rate loan (this might be worth it, even if there’s a modest increase in your interest rate)

Although this will likely happen in a declining interest-rate environment, lowering your monthly payments or shaving a couple of years off your mortgage in a static market is possible.

You should also reasonably expect to use the residence until you can break even. The break-even period is the time it takes for the savings from refinancing to offset the costs associated with taking out the refinance. In other words, it’s the point in time when the cumulative savings from a lower monthly payment or reduced interest rate equal the total closing costs paid for the refinance. 

Here are a few situations where an IRRRL may not be worth the cost: 

1. You’re looking to hold the property for less than the break-even period. If you anticipate selling your home in the near future, the cost savings from refinancing may not outweigh the closing costs associated with the VA IRRRL. It typically takes some time to recoup the closing costs through lower monthly payments, so a refinance may not be worth it if you plan to move before that break-even point.
2. You already have a low interest rate: Refinancing may not result in significant savings if your current VA loan has a relatively low interest rate. The potential reduction in interest rate may not be substantial enough to justify the costs associated with the refinance.

At the end of the day, you should only refinance if the numbers work. 

If you need guidance, seek out a financial advisor. You can also use a free online refinance calculator to find your break-even point.

How to Apply for a VA IRRRL

The VA IRRRL was designed to be a quick, no-hassle option. So, the process is relatively straightforward: 

1. Check Eligibility: Ensure you have an existing VA loan and are current on your mortgage payments.
2. Gather Documents: Prepare necessary documents, including proof of your existing VA loan and recent mortgage statements.
3. Choose a Lender: Select a VA-approved lender who offers IRRRLs.
4. Apply: Submit your application and the required documents to the chosen lender.
5. Appraisal and Income Verification: Typically, no appraisal or income verification is required, simplifying the process.
6. Closing: Review the loan terms and closing costs. Sign the necessary paperwork to finalize the refinance.
7. Payment: Begin making payments on your new, reduced-rate loan.

FAQs

How many times can I use a VA IRRRL?

There is no limit on the number of times you can use a VA IRRRL, but you must meet the VA’s requirements each time you apply.

How does an IRRRL impact VA entitlement?

A VA IRRRL does not impact your entitlement because it reuses the entitlement you already have on your existing VA loan. It simply replaces your current VA loan with a new one, typically at a lower interest rate, without affecting your overall entitlement.

Check out our guide to VA entitlement for more information. 

Can I get cash from a VA IRRRL?

The VA IRRRL program does not allow for cash-out refinancing. If you want cash from your home’s equity, consider applying for a VA cash-out refinance instead. However, as much as $6,000 in additional funds can be borrowed in a VA IRRRL to cover the cost of qualified energy efficiency improvements. Talk to your lender for more details.

How long do I have to wait to do a VA Streamline?

Generally, you can look to close on a VA IRRRL once 210 days have passed since the first monthly payment date of your current VA loan.

What is the VA Refinance Recoupment Period?

The VA requires that the closing costs associated with taking out a VA refinance loan must be recouped within 36 months of closing.

To find your recoupment period, divide your estimated monthly savings from refinancing by your total closing cost amount. 

For example, if your closing costs equal $2,500 and your estimated refinance savings are $250 per month, your recoupment period is 10 months (2,500 ÷ 250 = 10). 

Can I use discount points on a VA IRRRL? 

Depending on your lender’s policies, you might be able to use discount points on a VA IRRRL. 

Discount points are a form of prepaid interest that you can purchase at closing to lower your mortgage interest rate over the life of the loan. Each point typically costs 1% of the loan amount and can reduce your interest rate by about 0.25%.

The primary goal of a VA IRRRL is to reduce your monthly mortgage payments by securing a lower interest rate. Purchasing discount points can help achieve an even lower rate, leading to greater savings over time.

For a VA IRRRL, lenders typically allow a maximum of two discount points to be rolled into the loan amount. The borrower would need to pay any additional points upfront.

Talk to your lender about your options and how they will impact your situation. 

Who can be on a VA Streamline Refinance?

The VA Streamline refinance is designed to be quick and easy. Therefore, the new loan must usually include the same individual(s) as the original VA loan unless death or divorce has occurred. 

More Reading

15-Year vs 30-Year VA Loan – Which is the Better Mortgage?

How to Lower Your Mortgage Payment

Here’s How Your Credit Score Impacts VA Loan Refinancing

Pros and Cons of VA Adjustable Rate Mortgages (ARMs): What You Need to Know

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