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The Basics of VA IRRRL

Sometimes called the VA streamline refinance, IRRRL is a simplified lending approval process that makes it easier for Veterans to refinance their existing VA loan. It’s a way to reduce the amount of interest you’re paying or change from an adjustable-rate to a fixed-rate loan. That's why this entitlement is also known as a VA-to-VA loan.

With an IRRRL, there's no need to go through the same appraisal or approval process that you did when getting your VA loan the first time around. But beyond the time savings, there are a number of great benefits of going through this process, including:‍

Interest rate reduction

If mortgage rates are at least 1% lower than what you’re currently paying, it makes a lot of sense to initiate this process.

You can also look to an IRRRL to refinance your adjustable-rate mortgage to a fixed-rate mortgage. While this may slightly increase your monthly payments at first, fixed-rate loans are a safer bet if you plan to stay in your home for several years.

No appraisal required

The VA will not require a VA-approved appraisal on your house. If your employment or credit history has changed since you were approved for your original VA loan, you should discuss the situation when you apply for refinancing. This can help ensure you can cover the monthly costs without fear of missing payments.

No need for a new COE

When you applied for your VA loan, either you or the mortgage company filed paperwork for you to receive a Certificate of Eligibility. There's no need to go through that process again. Instead, you can use the email confirmation from the VA to move forward with an IRRRL.

Low out-of-pocket expenses

Depending on your situation, you may not have to pay any closing costs upfront.

The only fee that is required by the VA is a funding fee. This is just half of 1% of the loan, which can be paid in cash or included in the loan. For example, a refinanced loan of $100,000 would require $500 in fees.

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The only out-of-pocket fee required by the VA for an IRRRL is a funding fee.

Pay off your loan quicker

Depending on your circumstances, an IRRRL may be a chance to reduce the terms of your loan. Some Veterans are able to refinance into a 15-year loan, rather than a 30-year loan. This can save you thousands in interest costs over the life of your new mortgage.

Keep in mind, however, that if the interest rate isn't reduced by at least 1% or 2%, you may find yourself paying more each month for your home costs. An online mortgage calculator can help you determine if this option is viable within your family budget.

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Who Qualifies for IRRRL?

If you already have a VA loan, you qualify for an IRRRL.

In fact, the qualifications for an IRRRL are less than a regular VA loan. For your original VA loan, you or your spouse had to be living on the property within 60 days of closing. However, the IRRRL only requires that you certify that you once lived in it.

Unlike other refinances, you cannot take out more than the outstanding balance of your existing VA loan with an IRRRL. That means you cannot access your home equity if you wish to consolidate your debt, pay off high-interest credit cards, or fund a big purchase. (If that’s what you’re looking for, we can help with that, too.)

You can, however, add up to $6,000 for energy efficiency improvements. For example, new solar panels or more efficient appliances such as an air conditioner or refrigerator could qualify as part of this refinancing.

If you already have a VA loan, you qualify for an IRRRL.

How to Get an IRRRL: A Step-By-Step Guide

One of the greatest features of an IRRRL is how simple it is to get one.

Step 1: Find your lender

Although the IRRRL process is supported by the VA, you'll need to go directly to a financial institution to begin the process. Like any other home loan, you’ll want to shop around for the best deal. (You can check out our IRRRL rate and benefits here.)  

Although the IRRRL process is supported by the VA, you'll need to go directly to a financial institution to begin the process.

Step 2: Present your eligibility paperwork

You should already have a copy of your COE from when you originally closed on your VA-backed loan. This same document will work for the IRRRL. Don't worry if you've misplaced it—a VA-approved lender (like us here at Lower.com) should be able to get confirmation of your eligibility through the online VA Home Loan program.

Step 3: Pay your funding fee and close

Unlike other refinancing programs, you don't necessarily need a second VA-approved appraisal or other steps required for a more conventional refinance. When you work with us at Lower.com, we’ll walk you through the process. .

You may have to pay the VA funding fee in cash, or you may be able to roll it into your new loan. Either way, once you close, you'll be better positioned financially through your home investment.

Timeline for Refinancing

If you’ve recently purchased your home using a VA loan, you may need to wait to apply for an IRRRL. The Protecting Veterans from Predatory Lending Act requires you  to wait either 210 days from the date of your first payment or for six complete monthly payments, whichever is longer.

If you’ve completed the waiting period of your VA loan, you can begin the IRRRL process.

Beware of any company that offers extremely low rates without clear terms or encourages you to skip payments.

The Difference Between IRRRL and VA Cash-Out Refinancing

An IRRRL and a VA cash-out refinance are similar, but there are quite a few differences. For one, the IRRRL program only allows loans to cover your current mortgage debt, unless you want to use the money for energy efficiency. If you want to tap into your home equity, you will need to go through a different process. That is called a VA cash-out refinance.

The process for a VA cash-out refinance for active-duty military personnel, Veterans, and their spouses is much more like your original VA loan. You'll need a new COE, a new VA-approved appraisal, and a certification that the home you want to refinance is your primary residence.

Also, unlike the IRRRL, the VA cash-out refinance will require a credit check and an analysis of your debt-to-income ratio. The result of this work can be worth it: you may be able to borrow up to 100% of the appraised value of the home.

This can help pay off or consolidate debt, but experts warn against using this cash for non-essential expenses or even home improvement projects that may or may not add to the market value of your home.

Unlike the IRRRL, the VA cash-out refinance will require a credit check and an analysis of your debt-to-income ratio.]

IRRRL Is a Quick Way to Save Big

The IRRRL program is an opportunity to save money and improve your financial health for the long term.

If you’re a Veteran looking to refinance, just give us a shout.