VA Streamline Refinance (VA IRRRL): What It Is & How It Works

Written by Meagan DrewUpdated: 28th Dec 2021
Share this article

Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.

Qualified service personnel with an existing VA Home Loan have access to a VA Streamline Refinance or VA Interest Rate Reduction Refinance Loan (VA IRRRL).

That name might be a mouthful, but it is a simple, effective method for current VA Loan holders to refinance their way to a better rate or more agreeable mortgage terms.

The VA IRRRL or VA Streamline Refinance is a quick, simple way to allow service members to make monthly payments less by reducing interest rates, securing a fixed loan out can an adjustable one, or changing the repayment period of their loan.

What Is VA IRRRL (VA Streamline Refinance)?

This loan program has a few names and nicknames, but the idea is as straightforward as they come.

The VA IRRRL is an efficient way requiring minimal paperwork, low closing costs, low VA Funding Fees, and zero upfront charges to allow VA borrowers to refinance.

How Does a VA Interest Rate Reduction Loan Work?

The VA Interest Rate Reduction Refinance Loan works much like any mortgage refinance.

It allows existing VA Loan holders to replace their current VA Loan with a new VA Loan that offers them better terms and better rates.

Who Qualifies for a VA IRRRL?

Only service members who have a current VA Loan qualify for a VA Interest Rate Reduction Refinance Loan, which means that the burden of proof of the VA Certificate of Eligibility is unnecessary.

The VA does have other refinance options for eligible service members not currently in a VA Loan, but the VA IRRRL is not it.

The VA IRRRL is exclusively for those service members looking to refinance their existing VA Loan into a better one.

VA Streamline Refinance Requirements

The most important qualifying piece of data for those interested in qualifying for a VA Streamline Refinance or VA IRRRL is that they are currently holding a VA Loan on the property they wish to refinance.

The property must also be a residence that they have previously resided in, but it doesn’t need to be their primary residence.

While not a stringent requirement, anyone considering a refinance should run the numbers to ensure that they can recoup the new closing costs and fees associated with the refinance.

Also, service members need to have a clean record of on-time payments for the last 12 months to be considered.

VA IRRRL Refinance Rates

Current VA Interest Rate Reduction Refinance Loan Rates are extremely competitive even if Interest Rate Reduction Refinance Rates is a tongue twister.

As of this month, Loan Rates are 2.625% on a 30-year fixed loan, 2.25% on a 15-year fixed loan, and 2.625% on a 5/1 ARM.

For reference, current conventional loan rates are 3.125% for a 30-year fixed loan for a savings of .5% just for qualifying for a VA Loan.

How to Apply for a VA IRRRL

The first step in securing a VA Interest Rate Reduction Refinance Loan is finding a lender you would like to work with on the refinance.

VA Lenders can be banks, credit unions, or mortgage companies. Each lender determines its own fees, and terms, so careful consideration is imperative.

The VA also cautions eligible service members against misleading offers because some lenders do not do everything above board.

The VA provides a website to inform personnel of signs of misleading refinance offers and encourages service-members to investigate before signing on any dotted lines.

Once service members have picked their lender, they must simply provide the lender with any pertinent documentation.

The VA IRRRL does not require a COE, but it is a great thing to provide to move the refinance process along.

>> More: Compare the Best VA Mortgage Lenders

How Soon Can You Do a VA IRRRL?

VA IRRRL loans can be done 210 days from the first payment date or after the 6th monthly payment, whichever is longer.

This timeframe was established in 2018 by the Protecting Veterans from Predatory Lending Act.

The VA Interest Rate Reduction Loans are very easy to complete, and these guidelines were established by law to protect service members from being taken advantage of by lenders.

Can You Get a Cash-Out VA IRRRL?

The VA does have a VA Cash-Out Refinance, but this is not it. The VA Interest Rate Reduction Loan does not allow for borrowers to take out cash except for one teeny tiny exception.

VA IRRRL allows for homeowners to borrow up to $6,000 to pay for energy improvements that must be completed within 90 days of closing.

How Much Does VA IRRRL Cost?

The VA Interest Rate Reduction Loan is a very quick and easy process, as the name Streamlined Refinance might suggest, but it is not free.

The VA IRRRL does have closing costs and fees that do vary by lender. These fees are typically rolled into the cost of the loan and amortized over the repayment period.

However, they can be paid outright at closing. VA IRRRL also comes with the VA Funding Fee, which is 0.5% for everyone unless they qualify for a waiver. This fee may also be rolled into the loan or paid at the time of closing.

How Many Times Can You Use the VA IRRRL?

There is not currently a cap on the number of times that any person can use a VA IRRRL.

There are restrictions on how often the VA IRRRL can take place to protect service members from unsavory business types trying to take advantage of them, but service-members may use VA IRRRL as many times as they see fit as long as there is a benefit to do so.

There are closing costs and fees every time the service-member refinances, but if there is still a benefit for the service-member after considering those, they may forge right on ahead.

How Long Does a VA IRRRL Take?

There is no hard and fast rule about how long a VA IRRRL takes, but it usually takes a lot less time than a typical refinance on a conventional loan.

The lender and title company guide the ship here, but the paperwork required on the VA end is truly minimal since they’re sliding service members from one of their government-backed home loans into another, which does help to reduce the amount of time that the process takes to complete.

On average, the VA IRRRL process takes anywhere from a few weeks to 30 days. Conventional loan refinancing takes about 45 days.

>> More: VA Loan vs. Conventional Loan

What Is the Maximum VA IRRRL Loan Size?

The VA does not have a cap on the maximum VA Interest Rate Reduction Refinance Loan size because they already established that limit when the initial VA Loan was issued.

The VA will guarantee up to 25% of the new loan amount regardless of the amount, just as the VA did with the originally issued VA Loan.

Typically, the amount eligible for borrowing is determined by the online mortgage lender, but with refinances, that is not a point of discussion.

The original lender has already determined that the borrower is eligible for the amount they have borrowed.

Bottom Line: VA Streamline Refinance (VA IRRRL)

Whether you call it a VA Streamline Refinance, a VA Interest Rate Reduction Refinance Loan, or a VA IRRRL, it is a powerful tool to help qualifying service-members with a current VA Loan get into a new VA loan with lower rates, better terms, or into a fixed rate situation.

The process is quick and simple and gives service members an easy way to improve their situation.

Keep Reading:

Meagan Drew
Meagan Drew

Meagan Drew is a Senior Personal Finance Writer & Product Analyst with 7 years experience in wealth management. As a former Series 7 and 63 certified advisor, Meagan specializes in making financial topics relatable and consumable, no matter the reader’s experience level. She attended the United States Military Academy at West Point where she studied Nuclear Engineering. Meagan is a veteran, military spouse, and mom of 4 currently living in Colorado Springs. Her areas of expertise are military personal finance, credit cards, personal loans, investing, and wealth management.