VA loans are one of the most valuable benefits available to eligible service members and veterans. Backed by the Department of Veterans Affairs, VA loans make it possible to purchase a home with no down payment, competitive interest rates, and flexible loan qualifications.
Today, we’ll delve into an essential tool within the VA loan arsenal—the VA IRRRL (or “earl”) loan.
What Is a VA Streamline Refinance (IRRRL)?
A VA Streamline, also known as an Interest Rate Reduction Refinance Loan (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. There’s no home appraisal or credit check requirement, and you can roll your closing costs into the loan term, which can mean no upfront costs in some cases.
VA IRRRL Rates Today
| Product | Rate | APR |
|---|---|---|
| 15-year Fixed VA Refinance | 6.33% | 6.55% |
| 30-year Fixed VA Refinance | 6.66% | 6.80% |
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 (IRRRL) 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. But do understand that guidelines and requirements can vary by lender.
However, 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.
While there aren’t strict lender requirements, there are VA requirements. Here’s what you need to qualify for a VA IRRRL:
- You can only refinance VA-to-VA
- The new interest rate and monthly payment must be less than your original loan (except when refinancing an adjustable rate to a fixed interest rate)
- You must confirm that you previously occupied the property
- You must have no more than one 30-day late payment in the past 12 months
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 have to pay the VA funding fee when you take 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
- Purple Heart recipients
- Surviving spouses of veterans who died in service or from a service-related disability
Your Certificate of Eligibility will state whether you’re exempt or not.
VA IRRRL 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.
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VA Streamline Refinance (IRRRL) Pros and Cons
Here are some pros and cons of the VA IRRRL loan:
| VA IRRRL Pros | VA IRRRL Cons |
| Ability to lower your mortgage payment | No cash-out options |
| No appraisal needed | You have to have an existing VA loan |
| You can refinance your ARM to a fixed interest rate | The current rate must be lower than the rate you have now (unless ARM -> fixed rate) |
| No credit check requirement | You must be current on your loan payments |
| You can roll your closing costs into the loan amount | You have to pay the VA funding fee (unless exempt) |
It should be noted that the VA Streamline typically allows you to bypass the underwriting process, but 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.
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 VA 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, or
- 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, it is possible to lower your monthly payments or shave a couple of years off your mortgage in a static market.
You should also have a reasonable expectation that you will 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:
- 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.
- 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.
VA IRRRL FAQs
What does VA IRRRL mean?
IRRRL stands for interest rate reduction refinance loan. A VA IRRRL is a streamlined process available for borrowers who currently have a VA mortgage.
Can I use a VA IRRRL to refinance a 30-year mortgage to a 15-year mortgage?
Yes, it is possible to refinance a 30-year mortgage to a 15-year mortgage with an IRRRL, but the benefits of the refinance must be worthwhile for it to be approved.
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.
Can I get cash from a VA IRRRL?
The VA IRRRL program does not allow for cash-out refinancing. If you are interested in obtaining cash from your home’s equity, consider applying for a VA cash-out refinance.
How long do I have to wait to do a VA Streamline?
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 (2,500 ÷ 250 = 10).
Can I use discount points on a VA IRRRL?
You might be able to use discount points on a VA IRRRL, depending on your lender’s policies.
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%.
For a VA IRRRL, lenders typically allow a maximum of two discount points to be rolled into the loan amount. Any additional points would need to be paid by the borrower upfront.
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Danielle says
Does VA streamline refinance loan require Pest Inspection report for properties in Hawaii?
Ryan Guina says
Hello Danielle,
I do not know what the rules are in this situation. We had to submit proof of pest protection when we purchased our home with a VA Loan. But we didn’t have to do one when we last refinanced with a Streamline Loan.
That said, I cannot speak for specific lender rules, or what is required in HI. I recommend working with your lender and broker for more information. I wish you the best, and thank you for your service.
Dave Davis says
I am a disabled vet and drawing 100% disability from VA. My big dream is to get VA loan and finish paying of home which down to $8k and combine other debts which all in total amount to only $35k and have one payment and one interest. With my health that would really help my wife and I live a more normal life. The VA has been wonderful to me so far. Maybe I have a shot at this, just not sure who to talk to!
Ryan Guina says
Hello Dave, Thank you for your comment. It may be possible to do a cash out refinance. This allows you to refinance your home, and withdraw cash based on your home’s value and your current equity. It is up to you how you use that cash. Though I would recommend being very strict with how you will use it so you don’t make a mistake and end up extending yourself further. It’s also important to be very careful with a cash out refinance loan, as it increases the amount you owe on your home. This only works if you are going to use the money for something very specific, such as a home improvement or paying off other loans. It’s never a good idea to do a cash out refinance and use the money for spending money, a new car, etc.
Most lenders that can do a VA Loan can also do a cash out refinance. Here are some lenders and VA Loan articles that may be helpful. I hope this points you in the right direction. I wish you the best, and thank you for your service!
James says
I have been contacted by my current lender offering a lower interest rate for my VA Loan. They said they can lower my rate by .2%, I have only had this loan for 3 months. They claim that they are offering me this rate in order to show their good faith with a customer; basically keep me happy from shopping around. They also claim that this is at no cost to me. Any advice on this situation? Thank you for your time.
Ryan Guina says
Hello James, Thank you for contacting me. I would get their offer in writing and make sure there truly are no charges to you. If that is the case, then this sounds like a great deal with little work on your end.
That said, it never hurts to shop around to see if another company is offering better rates. Be sure to compare the total closing costs another company may offer to the rate offered by your current lender.
For example, it most likely wouldn’t make sense to refinance with a lender to save 0.3% (instead of 0.2%) if it costs you $10,000. But if you can save a large enough percentage on your loan, then it may be worth refinancing with another lender.
Doing the research will take a little time on your end, but you could potentially save thousands of dollars. So it’s worth it in the long run. I wish you the best with your refinance, and thank you for your service!
Jose Landin says
I have a question about VA refinance which I am currently in the process of doing in the state of Oregon. I am currently using USAA as lender for refinance and unfortunately it has not been a smooth process for me. My question is: when doing a 30 year IRRL for a home appraised at $ 355,00.00 and have a current loan Balance of 282,00.00, how much would be considered reasonable for closing costs and Fees? Through my loan refinance process, USAA has changed the loan refinance fees several times. The most recent amt. They proposed to close was $ 14,000.00 total fees and closing costs which would increase the loan refinance amount to $ 296,00.00. That amount seems rather steep. What is the average cost a person should when refinancing a va loan? Any feedback would be helpful.
Ryan Guina says
Hello Jose, Thank you for contacting me. There are a lot of factors that go into VA Loan closing costs. For example, closing costs may include the VA Loan Funding fees (charged by the VA, not the lender), prepaying your escrow (property taxes and homeowners insurance), loan origination (lender charge), title insurance, VA Appraisal (required by VA), points, if you choose to prepay on your interest rate, HOA prepayments, and other closing costs.
You may be able to substantially reduce these closing costs by paying some of these out of pocket and not rolling them into your loan. I did this when I recently refinanced my VA Loan. I opted to pay my escrow out of pocket. This substantially reduced the amount of money I financed with the VA Loan, saving me thousands of dollars in interest. All you have to do is request this, then wire the money on your closing date. The money that is currently in your escrow account will be returned to you after your refinance closes.
Take a few minutes to speak with your agent at USAA and ask them about each line item. They should be able to help you understand how the refinance works, and possibly give you options to reduce your closing costs and the amount you refinance on your VA Loan. I hope this is helpful!
Millennial Moola says
I feel like you would be hard pressed to find a conventional loan with better terms than the VA, but I suppose it’s possible
Ryan Guina says
It varies. I’ve seen conventional mortgages at lower interest rates, and vice versa. I’m not sure why they vary, but they can and sometimes do. The other consideration is the VA Lending fee, which can add to the cost of the amount borrowed (this is waived for veterans who have a VA disability). Homebuyers should always shop around between conventional loans and VA Loans and find which one best meets their needs.
Michael Swaleh says
Ryan, as you know I run the resource site VAFinances.com, and my partner and I specialize in VA Loans. I have one question and one clarification. Question: are you paying closing costs with your 3.25% IRRRL? Rates below 3.25% are not readily available on 30YF loans, but the amount of credits vary. It is very likely that we could have done this refinance without any cost to you by using lender credits. being a smaller (cost structure) bank (Pulaski) than the ones you mentioned allows us this flexibility. Which leads me to my clarification: you actually CAN create cash up front using an IRRRL if you escrow. It’s a common practice of ours to give more lender credits than we and the title co charge in fees, therefore allowing us to at least partially fill your escrow account for you. This means we are paying a portion of your own property taxes for you, which saves you cash. Then, once your old loan is paid off, the refund check you get back from the previous lender you get to keep, and that represents cash created. If you can somehow work it so that all your fees are covered, your new loan amount equals the old payoff, and your new escrow account was funded entirely by the lender, you’ve scored a deal (no cost refi + created cash). We do this all the time, sometimes even at 3.25% if the loan amount is high enough. Would love the opportunity to see if we can save you some cash up front without rolling in any cost to your new loan.
James says
Hi Michael,
Do you still specialize in VA loans? I am looking into doing an IRRRL and definitely interested in no cost to me. If you are still in the industry, how can I contact you>