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
| Product | Rate | APR |
|---|---|---|
| 15-year Fixed VA Refinance | 5.72% | 5.96% |
| 30-year Fixed VA Refinance | 6.14% | 6.30% |
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.
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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:
Pros
- Ability to lower your mortgage payment
- No appraisal needed
- You can refinance your ARM to a fixed interest rate
- No credit check requirement
- You can roll your closing costs into the loan amount
- Lower VA funding fee than purchase loans
- Fast closing time
Cons
- Will need to wait for rates to drop below your current rate
- No cash-out options
- Will still need to pay closing costs
- You must be current on your loan payments
- You have to pay the VA funding fee (unless exempt)
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:
- 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.
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:
- Check Eligibility: Ensure you have an existing VA loan and are current on your mortgage payments.
- Gather Documents: Prepare necessary documents, including proof of your existing VA loan and recent mortgage statements.
- Choose a Lender: Select a VA-approved lender who offers IRRRLs.
- Apply: Submit your application and the required documents to the chosen lender.
- Appraisal and Income Verification: Typically, no appraisal or income verification is required, simplifying the process.
- Closing: Review the loan terms and closing costs. Sign the necessary paperwork to finalize the refinance.
- 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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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>