Streamline (IRRRL) Refinancing
VA Streamline Refinance (IRRRL)
A Simplified Refinance Option for Homeowners Who Already Have a VA-Backed Mortgage
The VA Interest Rate Reduction Refinance Loan—commonly called an IRRRL or VA Streamline—is designed to replace an existing VA-backed mortgage with a new VA-backed mortgage while using a more streamlined process than many traditional refinances.
An IRRRL is specifically a VA-to-VA refinance.
Because the borrower already has a VA-backed mortgage, VA permits a substantially streamlined refinance process when the transaction satisfies applicable IRRRL requirements.
Individual lenders can still impose additional documentation, credit, income or valuation requirements.
Who Can Use a VA Streamline Refinance?
The mortgage being refinanced must already be an eligible VA-backed mortgage.
An IRRRL cannot be used to refinance a conventional, FHA, USDA or other non-VA first mortgage.
If you have a non-VA mortgage, a qualifying VA Cash-Out Refinance may instead provide a path into VA financing.
Important VA IRRRL Requirements
VA applies Net Tangible Benefit requirements to IRRRLs.
For the common situation where a fixed-rate VA mortgage is refinanced into another fixed-rate mortgage, the new interest rate generally must be at least 0.50 percentage point lower.
Different requirements can apply when moving between adjustable- and fixed-rate mortgage structures.
Meeting the VA threshold does not automatically mean that refinancing is the right financial choice for every borrower.
How Soon Can You Do a VA Streamline?
At least six consecutive monthly payments generally must have been made on the VA mortgage being refinanced before the IRRRL closes.
At least 210 days generally must have passed from the first payment due date of the mortgage being refinanced to the closing date of the new IRRRL.
VA's 36-Month Recoupment Requirement
VA excludes certain amounts from that statutory calculation, including the VA funding fee, escrow amounts, taxes and specified prepaid expenses.
Under VA's recoupment rules, an IRRRL that results in the same or higher monthly principal-and-interest payment generally cannot charge the Veteran fees, closing costs or expenses included in the recoupment rule, other than the specified exclusions permitted by VA.
This can be particularly important when shortening the mortgage term or changing rate structures.
This is one of the major differences between an IRRRL and a VA Cash-Out refinance or VA purchase mortgage.
A lender may still establish an additional valuation requirement in a particular transaction.
Does an IRRRL Require Full Credit and Income Underwriting?
VA does not generally require traditional full credit underwriting for a standard qualifying IRRRL.
However, additional qualification is required in certain circumstances.
- The existing VA mortgage is 30 days or more past due
- The new monthly principal, interest, taxes and insurance payment increases by 20% or more
- Another VA requirement applicable to the transaction requires additional review
- The lender imposes additional underwriting or documentation requirements under its own policies
If the new monthly principal, interest, taxes and insurance payment increases by 20% or more, VA requires the lender to determine that the borrower has sufficient stable and reliable income to support the higher payment.
This can be relevant when deliberately moving from a longer mortgage term to a much shorter term.
If the mortgage being refinanced is 30 days or more past due, the IRRRL does not receive the same standard streamlined treatment. Additional underwriting applies and VA prior approval is required.
VA allows allowable IRRRL fees and charges to be included in the new mortgage.
VA's current handbook also allows up to two discount points to be included in the IRRRL loan amount.
Another structure may use lender pricing that provides a credit toward eligible costs.
Financing costs increases the mortgage balance. Using lender-credit pricing may involve a higher interest rate than another available option.
What Is the VA Funding Fee on an IRRRL?
VA currently lists the funding fee for an IRRRL at 0.50% of the loan amount when the borrower is not exempt.
This percentage does not change based on whether the VA home-loan benefit has been used before.
Certain Veterans, service members and surviving spouses qualify for a VA funding-fee exemption.
Funding-fee status must be verified for the individual borrower.
Choose a Mortgage Term That Fits Your Goal
Longer-Term Fixed IRRRL
A longer fixed-rate structure may be useful when the borrower's primary objective is reducing the required monthly principal-and-interest payment.
However, restarting or extending a mortgage repayment period can affect the total amount of interest paid over time.
Shorter-Term Fixed IRRRL
A shorter mortgage term can accelerate principal reduction and may substantially reduce long-term interest.
The tradeoff is a potentially higher required monthly payment.
An IRRRL may be used to replace an eligible VA adjustable-rate mortgage with a fixed-rate VA mortgage.
VA recognizes the additional payment stability created by moving from an adjustable rate to a fixed rate.
For that reason, an ARM-to-fixed IRRRL does not use the same fixed-to-fixed 0.50 percentage-point rate-reduction test.
The new fixed interest rate may even be higher than the current adjustable rate when applicable VA requirements are met.
Do You Have to Still Live in the Property?
VA's IRRRL occupancy requirement differs from the occupancy requirement for many other VA mortgage transactions.
VA generally requires certification that the borrower previously occupied the property as a home.
Therefore, a former primary residence that has since become a rental may potentially qualify for an IRRRL when the existing mortgage is VA-backed and all other requirements are satisfied.
Read our VA Investment Property Guide →
What If You Have a Second Mortgage or HELOC?
It cannot use IRRRL proceeds to pay off a second mortgage, HELOC or other unrelated loan.
If a junior lien will remain, its holder generally must agree to subordinate so the new VA mortgage obtains first-lien position.
Read our HELOC & Second Mortgage Refinance Guide →
VA states that borrowers may not receive equity cash from IRRRL loan proceeds.
If your objective is to withdraw equity, refinance a non-VA mortgage or pay off a qualifying recorded lien, review the VA Cash-Out program instead.
Refinancing can change the timing between payoff of the existing mortgage and the first scheduled payment on the new mortgage.
That does not mean mortgage payments or accrued interest are simply free or forgiven. VA specifically warns Veterans to be cautious of refinance offers promoting skipped payments or unusually low rates or terms that sound too good to be true.
What Happens to Your Existing Escrow Account?
If your current mortgage servicer holds money in escrow for property taxes and homeowners insurance, the old escrow account is reconciled after the existing mortgage is paid off.
Remaining applicable funds are generally returned by the previous servicer under applicable servicing rules.
An escrow refund is your existing money being returned. It is not equity cash received from the IRRRL.
A new escrow account may also need to be established and funded for the new mortgage.
VA Streamline vs. VA Cash-Out Refinance
| Feature | VA Streamline / IRRRL | VA Cash-Out |
|---|---|---|
| Existing Mortgage | Must refinance an eligible existing VA-backed mortgage. | May potentially refinance qualifying VA or non-VA mortgage debt. |
| VA Appraisal | VA does not require an appraisal for a standard IRRRL. | VA appraisal required. |
| Credit Underwriting | No traditional full underwriting for most standard IRRRLs; exceptions apply. | Full credit underwriting required. |
| Equity Cash | Not permitted from IRRRL proceeds. | May be available when the borrower and transaction qualify. |
| Other Liens | Cannot refinance other liens through IRRRL proceeds. | May refinance qualifying recorded liens. |
| Occupancy | Prior occupancy can satisfy VA's IRRRL requirement. | Different current-occupancy requirements apply. |
Compare More Than Just the Interest Rate
Compare the:
- Interest rate
- APR
- Discount points
- Lender credits
- Closing costs
- New mortgage balance
- Required payment
- Recoupment period
- Remaining current term
- Proposed new term
Review VA Loan Rate Reduction Options →
IRRRL Terms Can Differ From Lender to Lender
VA establishes the underlying IRRRL requirements, but individual lenders determine the mortgage pricing they offer and can impose additional lender requirements.
Available lenders may differ in:
- Interest-rate pricing
- Discount points
- Lender credits
- Additional documentation
- Credit requirements
- Valuation requirements
- Loan-term availability
VA itself encourages Veterans considering an IRRRL to compare lenders because terms and fees can vary.
VA Help Center LLC can evaluate options available through its approved wholesale lender relationships.
How a VA Streamline Refinance Works
Depending on your existing loan and the available options, an IRRRL may be used to pursue:
- A lower qualifying interest rate
- A lower required payment
- Greater payment stability
- A shorter mortgage term
- A faster payoff strategy
- Another qualifying VA refinance benefit
The complete rate, payment, costs, loan balance and term should be compared before deciding.
Related VA Streamline Guides
Review seasoning, recoupment and the financial factors involved in deciding whether an IRRRL makes sense.
Learn how financed costs and lender credits can change cash required at closing.
Compare different ways mortgage pricing, points, credits and terms can affect the loan.
VA Streamline Refinance FAQs
What is a VA IRRRL?
A VA Interest Rate Reduction Refinance Loan is a VA-to-VA refinance that replaces an eligible existing VA-backed mortgage with another VA-backed mortgage under VA's streamlined refinance rules.
Does a VA IRRRL require an appraisal?
VA does not require a new appraisal for a standard IRRRL. Individual lenders can impose additional valuation requirements.
Does a VA Streamline require full income and credit underwriting?
Not for most standard qualifying IRRRLs under VA's baseline rules. Additional underwriting applies in certain circumstances, including when the existing loan is 30 or more days past due or the new PITI payment increases by 20% or more. Individual lenders may also impose additional requirements.
How much lower does my fixed interest rate have to be?
For a fixed-rate VA mortgage refinanced into another fixed-rate IRRRL, current VA rules generally require the new interest rate to be at least 0.50 percentage point lower than the existing rate.
How long do I have to wait before using an IRRRL?
The existing VA loan generally must have six consecutive monthly payments made, and at least 210 days must have passed from the first payment due date before the new IRRRL closes.
What is the 36-month recoupment rule?
When an IRRRL reduces monthly principal and interest, applicable refinance costs included in VA's statutory calculation generally must be recovered through the monthly P&I reduction within 36 months.
What is the VA IRRRL funding fee?
VA currently lists the IRRRL funding fee at 0.50% for borrowers who are not exempt. Qualifying borrowers pay no VA funding fee.
Can IRRRL closing costs be included in the new mortgage?
VA permits allowable fees and charges to be included in the IRRRL. VA's current handbook also permits up to two discount points to be included in the loan amount.
Can I use lender credits instead of paying closing costs?
Potentially. VA permits a structure where the interest rate is set high enough for the lender to pay applicable closing costs. The resulting rate and long-term cost should be compared with other available structures.
Can I refinance a former residence that is now a rental?
Potentially. VA generally permits prior occupancy to satisfy the IRRRL occupancy requirement, subject to the existing mortgage being eligible and all other IRRRL requirements being satisfied.
Can an IRRRL refinance a conventional or FHA mortgage?
No. An IRRRL is specifically a VA-to-VA refinance. An eligible borrower with a non-VA mortgage may instead need to evaluate a VA Cash-Out refinance.
Can an IRRRL pay off my HELOC or second mortgage?
No. IRRRL proceeds cannot pay another loan in addition to the existing VA mortgage. If a junior lien remains, its holder generally must agree to subordinate.
Can I receive equity cash from an IRRRL?
No. An IRRRL is not a cash-out refinance and VA does not permit equity cash to be taken from IRRRL loan proceeds.
Can I move from a VA ARM into a fixed-rate mortgage?
Potentially. VA permits qualifying ARM-to-fixed IRRRLs, and the new fixed rate can be higher than the existing adjustable rate because the added payment stability is treated differently from a fixed-to-fixed refinance.
Can I shorten my mortgage term with an IRRRL?
Potentially. A shorter term can accelerate repayment but may substantially increase the required payment. If the new PITI payment increases by 20% or more, additional VA qualification requirements apply.
Are mortgage payments skipped when I refinance?
Refinancing changes the timing between payoff of the old mortgage and the first scheduled payment on the new mortgage, but mortgage payments and accrued interest are not simply free or forgiven.
Can I receive my old escrow balance after refinancing?
Applicable funds remaining in the old escrow account are generally reconciled by the prior servicer after payoff. Any resulting refund represents the borrower's existing funds and is not equity cash from the IRRRL.
Want to Check Your VA Streamline Options?
Request a VA loan review through VA Loan Today. Your mortgage inquiry can be referred to VA Help Center LLC to compare your existing VA mortgage with available IRRRL rates, terms, costs and lender options.
U.S. Department of Veterans Affairs — Interest Rate Reduction Refinance Loan guidance, VA Lender's Handbook Chapter 6 and current VA funding-fee information.
U.S. Department of Veterans Affairs — IRRRL
VA Home Loans — IRRRL
VA Lender's Handbook — Refinancing Loans
VA Funding Fee & Closing Costs
Mortgage brokerage services are provided by VA Help Center LLC – NMLS #1816438.
VA Loan Today and VA Help Center LLC are not affiliated with or endorsed by the U.S. Department of Veterans Affairs or any government agency.
An Interest Rate Reduction Refinance Loan is available only to refinance an eligible existing VA-backed mortgage.
VA generally does not require a new appraisal or traditional full credit-underwriting package for a standard qualifying IRRRL. Additional underwriting, income, credit, valuation or documentation requirements can apply based on the transaction or individual lender requirements.
For a qualifying fixed-rate-to-fixed-rate IRRRL, current VA requirements generally require the new interest rate to be at least 0.50 percentage point lower than the rate on the mortgage being refinanced.
Current VA loan-seasoning requirements generally require at least six consecutive monthly payments and at least 210 days from the first payment due date before the new IRRRL closes.
When monthly principal and interest decreases, applicable refinance costs included in VA's statutory recoupment calculation generally must be recovered within 36 months.
VA currently lists the IRRRL funding fee at 0.50% when an applicable exemption does not apply.
Allowable IRRRL costs may be financed or potentially offset through available lender pricing. Financing costs increases the mortgage balance, while lender-credit pricing may affect the interest rate.
An IRRRL is not a cash-out refinance. Equity cash may not be received from IRRRL proceeds.
Interest rates, APRs, discount points, lender credits, closing costs, mortgage payments, rate-lock terms and qualification depend on market conditions, borrower circumstances, lender requirements and the individual transaction.
Refinancing may increase the total finance charges paid over the life of the mortgage. Extending or restarting the loan term may reduce the required payment while increasing the period over which interest is paid. Shortening the mortgage term may substantially increase the required monthly payment.
Nothing on this page is a commitment to lend or a guarantee of qualification, approval, savings, interest rate, payment, mortgage terms or closing.
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