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VA IRRRL rates and requirements for 2020

Dan Green
The Mortgage Reports contributor

What is the VA IRRRL ?

The VA IRRRL is a simple way to refinance your current VA loan into a lower rate and monthly payment. 

IRRRL stands for “Interest Rate Reduction Refinance Loan.” This program is also known as the VA Streamline Refinance or a VA-to-VA refinance.

With the VA IRRRL, there’s less documentation (no credit, income, or employment verification) and you might not need an appraisal. Closing costs also tend to be lower, and can be rolled into your loan to eliminate upfront charges. 

This VA IRRRL information is accurate as of today, August 12, 2020.

Check your VA IRRRL eligibility (Sep 22nd, 2020)

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Today’s VA IRRRL rates

VA refinance rates are typically some of the lowest interest rates on the market.

For instance, today’s average rate for 30-year VA refinance is 2.25% (2.421% APR), according to our lender network*. Compare that to 2.875% (2.875% APR) for a conventional loan. 

Of course, VA refinance rates vary by customer. Your rate will likely be higher or lower than average depending on your loan size, credit score, loan-to-value ratio, and other factors.

Loan Type Today’s Average Rate
VA 30-year fixed-rate 2.25% (2.421% APR)
VA 15-year fixed-rate 2.25% (2.571% APR)

*Average rates assume 0% down and a 740 credit score. See our full loan VA rate assumptions here.

Check your VA IRRRL rates. Start here (Sep 22nd, 2020)

How the VA IRRRL works

The VA IRRRL lets you refinance your current mortgage to a lower rate and monthly payment.

The biggest benefits of using a VA Streamline Refinance over another refinance loan are:

  • Limited paperwork required
  • VA IRRRL rates are exceptionally low
  • Appraisal typically not required (saves money and time)
  • May be able to refinance with little or no equity
  • You might have low or no closing costs
  • No credit, income, or employment verification required (good if your credit score or income have been reduced)

The VA Streamline loan is extremely popular because it’s easy to use. If you already have a VA mortgage on your home, the IRRRL program makes refinancing to a lower rate relatively quick and painless.

That’s because your lender isn’t required to do time-consuming paperwork, like income and employment verification. And some borrowers can even skip the home appraisal when they use a VA streamline refinance. 

That said, many lenders set their own requirements for credit checks and appraisals. So if you want to skip these steps, be sure to shop around and ask about lenders’ policies before you apply.

Using the VA IRRRL is worth it for many homeowners, because today’s ultra-low VA rates can result in much lower payments and helo you save on interest.

As with any refinance, using the VA IRRRL results in a brand new loan. So your mortgage will start over at 30 or 15 years, depending on which loan term you choose.

But starting over using the VA IRRRL is worth it for many homeowners. That’s because today’s ultra-low VA rates can result in a much lower monthly payment, and save you thousands in interest payments in the long run.

Another big benefit? VA loan closing costs can be rolled into the loan. This allows veterans to refinance with little or no out-of-pocket expenses. 

Sometimes it is also possible for the lender to take the brunt of the cost in exchange for a higher interest rate on your loan.

Check your VA IRRRL eligibility (Sep 22nd, 2020)

How to qualify for the VA IRRRL

In order to qualify for a VA IRRRL refinance, your current mortgage must be a VA loan.

Other requirements for the IRRRL include:

  • You are current on payments with no more than one 30-day late payment within the past year
  • Your new rate and monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. The only time this condition does not apply is if you refinance an ARM to a fixed rate mortgage
  • You must not receive any cash from the IRRRL
  • You must certify that you currently or previously occupied the property
  • You must have previously used your VA Loan eligibility on the property you intend to refinance. You may see this referred to as a VA-to-VA refinance

You can easily figure out if you meet the VA IRRRL guidelines by checking with your current mortgage lender, or any other lender that’s authorized to do VA loans (most are). 

Can you get cash back on the VA IRRRL?

Homeowners are not allowed to get cash back with the VA IRRRL program.

There’s just one exception: IRRRL users may get up to $6,000 cash back if they plan to use it for energy-efficient home improvements.

For everyone else, there is a VA Cash-Out refinance loan.

The Cash-Out refinance allows borrowers to refinance their conventional or VA loan into a lower rate while also taking cash from the home’s value.

The VA Cash-Out refinance loan replaces your existing mortgage instead of functioning like a home equity loan, which it is often confused for. A qualified borrower can refinance up to 100 percent of their home’s value in some cases.

The VA Cash-Out refinance lets homeowners refinance up to 100% of their home’s value in some cases.

One big benefit is that the VA Cash-Out refinance can be used regardless of your current loan type – whether USDA, FHA, or conventional.

Veterans generally choose to use the VA Cash-Out over other loan types because the period to pay off the loan is extended, and also, generally comes with a lower interest rate.

Just like the VA Streamline Refinance loan, the home must be used as a principal dwelling by the owner. There is no set period of time that you must have owned your home, however, you must have sufficient equity to qualify for the loan.

VA IRRRL FAQ

What are current VA IRRRL rates?

VA IRRRL rates are typically the lowest of any loan type. They are more affordable than conventional or FHA rates. With today’s mortgage rates near record lows, homeowners using the VA IRRRL refinance can get especially good deals. 

Is there a funding fee for the VA IRRRL?

A funding fee is required for the VA IRRRL refinance. It’s 0.5% of the loan amount. You have the option to roll the funding fee into your loan amount when using the IRRRL, so you don’t have to pay it upfront in cash. Just remember, rolling the funding fee into your loan means you’ll pay interest on that amount over the life of your loan.

Are there closing costs with a VA Streamline Refinance?

Closing costs for a VA Streamline Refinance are similar to other VA loans:  usually 1-3% of the loan amount. However, you may be able to skip the home appraisal, which can save around $500-$1,000.

How long does an IRRRL take?

The time it takes to refinance using an IRRRL varies a lot, depending on the borrower and lender. If all goes smoothly, a VA IRRRL might close in under a month — which is faster than most refinances. However, a complicated loan application or a busy lender can bog down the process.

When can you refinance a VA loan?

The VA requires you to wait 7 months (210 days) from your last loan closing before using the VA Streamline Refinance. However, some VA lenders impose their own waiting period of up to 12 months. If your current lender says it’s too soon to refinance your VA loan after 7 months, it might be worth shopping for another lender that will let you refinance sooner.

How does VA refinancing work?

First, make sure you’re qualified for a VA refinance. (See the VA’s refinancing guidelines here.) Then, check rates from a few different lenders. You do not have to refinance with your current lender, and most people can find an even lower rate and payment by shopping around.

Once you choose a mortgage company, you’ll submit your loan documents and get approved. A VA Streamline Refinance requires less paperwork than other loan types, and may let you skip the home appraisal. With an experienced lender, VA refinancing can take less than a month from end to end.

Do I need my Certificate of Eligibility (COE) for a Streamline Refinance?

Since you used your Certificate of Eligibility to get your first VA loan, it isn’t needed to qualify for a streamline refinance of your existing VA mortgage.

Does the VA control mortgage interest rates for VA loan types?

No, they do not. Although the VA offers an easy, straightforward process for veterans, VA mortgage rates are set by the banks who buy and sell mortgages.

Do I have to use my current lender to refinance my VA loan?

No, you do not. In fact, it is encouraged that you shop around between various lenders, as each will offer various interest rates for your VA loan. All that matters is that the lender is VA-approved. Because so many lenders out there finance VA loans, it makes sense to shop around.

Do I have to go through the credit check and appraisal process again when refinancing?

There is no requirement from the VA for another credit check or appraisal process because you have already been approved for a loan.

However, many lenders require a credit check and appraisal to guarantee that you are still financially stable enough to pay for your mortgage and also, that the house’s market value is still higher than their maximum loan amount.

Do I have to be eligible for a better interest rate to qualify for a Streamline Refinance?

Not if you meet certain conditions. If you are going from a fixed mortgage to another fixed mortgage, the VA requires that your IRRRL be of a lower interest rate, but if you are moving from an adjustable rate mortgage (ARM) to a fixed rate mortgage, the VA will allow you to refinance to a higher interest rate.

Can I take cash out with a VA Streamline Refinance closing?

Yes, you may receive up to $6,000 cash-in-hand at your IRRRL closing. The cash, however, must be used for energy-efficiency improvements, and must be a reimbursement for improvements made within 90 days prior to closing. Some VA borrowers will receive a cash disbursement of “old” escrow funds, too.

What is the maximum allowable VA IRRRL loan size?

There is no maximum loan size limit for a VA loan. However, a VA Streamline Refinance will be limited to the existing loan balance plus any accrued late fees and late charges, plus typical loan costs and the cost of any energy efficiency improvements.

Can I change the borrower-of-record with a VA Streamline Refinance?

In general, the borrower(s) obligated on the original VA loan must be the same as borrower(s) obligated on the refinance. However, this is not always possible. As an example, assume that a veteran and spouse are obligated on an existing VA loan.

An IRRRL is possible in all of the following scenarios: Divorced veteran alone; Veteran and different spouse; and, spouse alone because the veteran died. An IRRRL is not possible for a divorced spouse alone, or a different spouse alone because the veteran died.

Can I use the VA Streamline Refinance for an investment property?

Yes, you can use the VA Streamline Refinance for an investment property. You must only certify that you previously occupied the property as your home. The property does not have to be your primary residence currently.

Can I use the VA IRRRL if my loan is behind or delinquent?

Yes, you can VA Streamline Refinance a loan which is behind in payments or delinquent. Your lender will want to know that the cause of the delinquency has been resolved; and you must be willing and able to make the payments on the new VA loan.

Lastly, you will be asked to provide a letter to explain the delinquency along with additional supporting documentation. The Department of Veterans Affairs will make a final determination whether the IRRRL should be approved.

Can I use VA loans for a no money down mortgage?

Yes. The VA loan allows for 100% financing with no down payment.

Check VA mortgage rates

The VA Streamline Refinance is one of the simplest and fastest mortgage products available for consumers today. Mortgage rates are low, so it’s a great time to take advantage of your veteran benefits.

Check with top-rated and VA-approved lenders for your refinance.

Verify your new rate (Sep 22nd, 2020)

Step by Step Guide

Refinancing a Home