A VA IRRRL (interest rate reduction refinance loan) is a refinanced mortgage that replaces your current VA home loan. A VA IRRRL is also commonly referred to as a VA streamline refinance. This mortgage program is backed by the Department of Veterans Affairs (VA), just like an original VA home loan.

What Does It Mean to Refinance Your Mortgage?

Refinancing a mortgage means replacing your current mortgage with a new one. The new home loan will have a different interest rate, repayment period, and amount.

Typically, this new home loan will offer better terms, particularly a lower the interest rate, thereby reducing the monthly payments. This is often possible because the borrower is in a better financial position to qualify for improved loan terms, the current market interest rates are lower than when they took out the original loan, or the borrower is switching from an adjustable-rate mortgage to a fixed-rate mortgage

Borrowers can choose to start over on a brand new 30-year fixed mortgage and maximize their monthly savings or they can choose a new term that matches the amount of years left on their current loan. For example, if a borrower is focused on paying off their home as quickly as possible and is seven years in on a 30-year fixed mortgage and has 23 years left, they can choose to streamline their new VA loan to a lower 23-year fixed rate with Griffin Funding.

How Much Can You Borrow with a VA IRRRL?

Like your first VA home loan, your VA IRRRL limit is based on your home loan entitlement (the maximum amount the VA will back if you default on your loan). In fact, a VA IRRRL reuses the entitlement applied to your first home loan.

In most cases, your new VA loan will be the payoff of your existing VA mortgage plus closing costs, prepaid interest, prepaid taxes and insurance, a new impound account and a 0.5% VA funding fee (if you are not exempt from the VA funding fee due to a service-related injury).

Our free VA streamline loan calculator can help show you how much money you can save every month by getting a VA IRRRL. 

VA IRRRL loans have strict requirements. First and foremost, you must currently have a VA-backed home loan. You must be able to prove that you have previously lived in, or currently live in, the home that the VA loan was originally used for. And, you must use the new VA IRRRL to refinance the original VA loan

The VA has strict guidelines to ensure that you recoup your closing costs within 36 months or less with the monthly savings of your new VA loan (unless you are moving from an adjustable-rate mortgage to a fixed-rate mortgage).

If you are in a fixedrate loan, you must be able to lower the interest rate by at least .5%, unless of course you are in an ARM loan and want to streamline to a fixed rate.

You must also have seasoning of at least 210 days from the date that you made your first payment on your current VA loan. In other words, you have to wait at least 210 days after each refinance before you’re able to refinance again. 

Meeting the VA loan requirements is essential for moving forward with the process.

What if My Original Mortgage Was Not a VA Home Loan?

If your original mortgage was not a VA-backed home loan, you still have other options for refinancing. Fortunately, Griffin Funding has a diverse range of mortgage products, with suitable refinancing options for borrowers in most financial situations.

If you want to explore your mortgage refinancing options, consider downloading the Griffin Gold app. With the Griffin Gold app, you can compare mortgage types, monitor your financials and credit score, privately browse homes, get personalized help from Griffin Funding real estate professionals, and much more. 

VA Streamline Refinance Pros & Cons

A VA IRRRL might not be the right solution for every borrower. To determine whether it’s the right choice for you, it’s important to weigh the benefits and drawbacks of a VA streamline refinance. 

Pros of a VA Streamline Refinance

There are several advantages of a VA streamline refinance that make it an attractive option for many borrowers, such as: 

  • Reduced monthly mortgage payments
  • More stable payments by switching to a fixed-rate mortgage (if you previously had an adjustable-rate mortgage)
  • Streamlined application and qualification process
  • No income verification
  • No required appraisal (in most cases)
  • No pest inspection
  • No need to obtain another Certificate of Eligibility
  • No out-of-pocket costs

If you’re a borrower who needs to reduce the cost of your home loan now and plans on staying in the residence for many years, a VA streamline refinance will likely be a good option for refinancing your home. 

Cons of a VA Streamline Refinance

Some of the advantages of a VA streamline refinance also have their downfalls, including the fact that you don’t have to pay fees up front. While you save yourself from coming up with the cash right away, you will have to pay it back, with interest. This is because these fees are often rolled up into the loan balance and accrue interest over time. This may be a major disadvantage if it’s likely that you’ll relocate in the near future. However, if you are staying in the home for longer than 36 months, you’ll be able to recoup the fees.

Additionally, you cannot receive cash back with a streamline refinance. However, if you need to extract cash from your home’s equity, we also offer VA cash-out refinance loans, which may be better suited to your needs. Keep in mind that to refinance with a VA cash-out loan, your original mortgage does not have to be a VA home loan. 

How Much Does It Cost to Get a VA IRRRL?

With a VA IRRRL, you don’t have to make a down payment and you’ll be able to lower your interest rate, which can save you money on interest payments in the long run. However, keep in mind that there are several fees associated with getting a VA IRRRL, such as the VA funding fee and closing costs. As you consider whether a VA streamline refinance is right for you, it’s important to consider the costs tied to this type of loan and weigh them against how much you’ll save in the long-term. 

VA funding fee 

When you take out a VA IRRRL, you’ll pay a VA funding fee of 0.5% regardless of the loan amount or how many times you’ve used a VA streamline refinance. This is the lowest VA funding fee rate out of all available VA loans.

Keep in mind that some individuals are exempt from paying the VA funding fee. Read our post about the VA funding fee to learn more about what it is, how it works, and who’s exempt. 

VA IRRRL closing costs

The closing costs for a VA streamline refinance loan can often amount to 2-3% of your total loan amount when combined with the VA funding fee. This means that if you’re refinancing a $300,000 mortgage, you can expect to pay around $3,000 – $6,000 to cover both closing costs and the VA funding fee. The closing costs and VA funding fee can be rolled on top of the loan so you don’t have to come out of pocket with any money. 

For a VA IRRRL, closing costs can include things like:

  • Origination fee
  • VA funding fee
  • Discount points
  • Prepaid taxes and insurance
  • Recording fees
  • Title fees

Is a VA IRRRL Worth It?

Whether a VA IRRRL is worth it depends on your personal circumstances. However, in many cases it can make mortgage payments less of a burden, an indisputable advantage for many homeowners. Typically, VA IRRRLs are most beneficial to military personnel or veterans and their families who plan on making this residence their permanent (or at least long-term) home

If you are unsure whether a VA IRRRL is the right option for refinancing your home loan, speaking with one of our knowledgeable VA loan specialists can help you evaluate your circumstances and move forward in the right direction.

How to Apply for a VA IRRRL

For most borrowers, refinancing from a VA home loan to a VA IRRRL is fairly simple. As we mentioned, since you have previously completed the application and qualification process for your original VA loan, many of those steps are not repeated. Usually, this streamlined process is generally completed as follows: 

VA IRRRL Application Process

  • Proof that you currently have a VA loan
  • Verification that you currently live or have previously lived at the residence 
  • Confirmation with the Department of Veterans Affairs regarding the original VA home loan 
  • Review of on-time payment history for the past year through new credit check
  • Proof of assets (only if you are planning to pay cash for closing fees) 

At Griffin Funding, we always strive to complete the loan qualification process within 30 days. With VA IRRRLs, we can often complete the process much faster.

Apply for Your VA Streamline Refinance Today

The mortgage professionals at Griffin Funding have plenty of experience when it comes to navigating the VA loan process. Whether you want to get pre-approved for a new VA loan or refinance your existing VA loan, we can help you every step of the way. 

If you need to improve the terms on your VA home loan, apply for a VA streamline refinance online or call us at (855) 394-8288. Griffin Funding is committed to offering a customer-friendly mortgage process that is straight-forward, cutting-edge, and accessible. Use our free VA loan calculator or speak to one of our loan specialists to get a better understanding of how a VA IRRRL can help you save.

Frequently Asked Questions: VA Streamline Loans (IRRRL)

How long does it take to refinance a VA loan?

The time it takes to get a VA streamline refinance varies depending on your situation and the current backlog of applications. However, Griffin Funding makes it a point to try to complete this process in 30 days or less. In many cases, Griffin Funding can streamline the VA loan timeline and help you close on a VA IRRRL much faster.

What documents do I need for a VA IRRRL?

In order to start the VA IRRRL process, you need to have certain documents that you’ll give to the lender. You will need to meet the criteria of having a VA loan (such as a VA purchase loan) at this current point in time, and this loan must be at least six months old. It’s also a good idea to keep your Certificate of Eligibility (COE) on hand, although it’s not technically required to get approved for a VA IRRRL.

To get a VA IRRRL, it’s crucial that you haven’t been late on any of your payments with your existing VA loan over the last six months. If this loan is longer, we may allow for one late payment within the last 12 months.

One of the upsides of applying for a VA IRRRL is that you won’t need documents such as pay stubs, tax returns, or bank statements to qualify. As you navigate the VA IRRRL application process, make sure to communicate with your lender and provide any requested documentation. 

Can I get cash from a VA streamline refinance?

You typically cannot get cash from a VA streamline refinance. The exception to this is that you can get a reimbursement of no more than $6,000 for the cost of energy efficient home upgrades if they’re completed within 90 days before the loan’s closing.

If you want to take advantage of your home’s appreciation and leverage your home equity for cash, then consider applying for a VA cash-out refinance. With a VA cash-out refinance, you can exchange some of the home equity you’ve built up for cash that you can use to consolidate debts, fund home improvement projects, and cover other large expenses. 

What is the current VA IRRRL rate?

VA refinance rates vary based on factors such as the lender you work with, market conditions, and your current financial profile. Borrowers who have a strong credit score and a history of making timely mortgage payments will be able to access the best VA IRRRL rates. 

At Griffin Funding, we offer highly competitive VA refinance rates for VA IRRRLs and VA cash-out refinance loans. Reach out to us or fill out an application today to lock in your VA IRRRL rate. 

How many times can I use a VA IRRRL?

You can use a VA IRRRL as many times as you want. With that being said, there are a few barriers that restrict how often you can get a VA streamline refinance. For instance, the VA’s seasoning requirement mandates that 210 days must pass after taking out a VA loan before you can get a VA IRRRL. This means that if you refinance your VA loan, you must wait at least 210 days before you’re able to refinance again. 

Additionally, in order to get a VA IRRRL, the VA mandates that there must be a net tangible benefit for the borrower. This essentially means that you must be getting a significantly lower principal and interest payment as a result of refinancing.