How a VA IRRRL works
Because the existing loan is already VA-guaranteed, VA lets lenders skip much of the underwriting a full refinance requires. The new VA loan pays off the old one, and your VA entitlement carries over to the new loan.
- You apply with a lender that offers IRRRLs and share your current mortgage statement
- The lender confirms the existing loan is VA-guaranteed and checks your payment history and the seasoning dates
- The lender checks that the new loan meets VA's benefit and recoupment tests
- You certify that you previously occupied the home
- At closing, the new VA loan pays off the old one, with the funding fee paid or added to the loan unless you're exempt
VA streamline refinance requirements
These come from the VA Lenders Handbook (VA Pamphlet 26-7) and 38 U.S.C. 3709. Lenders may set stricter rules.
- An existing VA loan. The mortgage being refinanced must be VA-guaranteed. An IRRRL can't refinance an FHA, conventional or other non-VA loan.
- Seasoning. The later of 210 days after the first payment due date on the current loan, or six consecutive monthly payments made.
- Prior occupancy. You certify that you lived in the home at some point. You don't have to live there now.
- Net tangible benefit. The new loan must lower your interest rate by VA's minimum, or move you from an adjustable to a fixed rate.
- Recoupment. Closing costs, other than the funding fee, taxes and insurance, must be recovered through lower monthly payments within 36 months.
- No cash out. The loan pays off the existing VA loan and allowed costs only.
Appraisal, income and credit
VA generally doesn't require an appraisal, a new Certificate of Eligibility or income re-verification for an IRRRL. That is what makes it a streamline. In practice, many lenders still pull credit, review your recent mortgage payment history and set their own credit score minimum, and some order a value check. If the new payment would rise significantly, for example when moving from an adjustable to a fixed rate or to a shorter term, the lender may need to underwrite income as well. This is why one lender may decline an IRRRL another would approve.
Costs and trade-offs
- Closing costs still apply, though they're often lower without an appraisal; they can be paid at closing, added to the loan within VA limits, or covered by a lender credit
- A VA funding fee applies unless you're exempt; it is lower on an IRRRL than on purchase or cash-out loans
- Adding costs and the funding fee to the loan raises your balance
- A new term can restart the clock on a loan you have been paying for years
- Discount points paid to lower the rate count toward the 36-month recoupment test
Our refinance calculator guide shows how to test the break-even, and no-closing-cost refinance explains how lender credits work.
VA IRRRL vs. FHA streamline
Both programs let you refinance within the same government program with less paperwork, and both need a net tangible benefit. The main differences: an IRRRL only requires that you lived in the home at some point, while FHA's version for homes you no longer occupy has extra limits; VA has no monthly mortgage insurance, while FHA mortgage insurance continues on an FHA streamline; and the VA funding fee replaces FHA's upfront mortgage insurance premium. See the FHA streamline refinance guide for HUD's rules.
When another refinance may fit better
- You want cash. See the VA cash-out refinance guide.
- Your current loan isn't a VA loan. An IRRRL won't work, but an eligible veteran can use a VA cash-out refinance to move from an FHA or conventional loan into a VA loan.
- You're not sure it's worth it. Read should you refinance? and run the break-even before you apply.
Sources
VA Lenders Handbook (VA Pamphlet 26-7), chapter 6 on refinancing loans; 38 U.S.C. 3709 on refinancing seasoning, net tangible benefit and recoupment; and the U.S. Department of Veterans Affairs homeowner guidance on the Interest Rate Reduction Refinance Loan and the VA funding fee. Program rules change; your lender applies the version in force when you apply.
Before you apply
8Twelve is a mortgage broker, not a lender. We check whether your VA loan meets the IRRRL seasoning, benefit and recoupment rules, compare lenders in our network, and tell you if a VA cash-out refinance or no refinance makes more sense.
