The VA IRRRL: Streamlined Refinancing a VA Loan

The VA IRRRL – Streamlined refinancing a VA loan

We’ve already highlighted the power of the VA home loan, great rates, $0 down potential, more forgiving for people with higher debt-to-income ratios, and open to members currently serving or veterans. There’s still ways to continue to improve your foxhole, by using the VA Interest Rate Reduction Refinance Loan (IRRRL, pronounced earl) program.

If you’re a veteran or still serving and current rates are lower than your current mortgage on your primary home, we need to talk to start saving you money every month. The IRRRL dominates this space and makes refinancing a less document intense process.

Another great time to consider using the IRRRL is if you purchased the home using your VA entitlement while on active duty and now you’re separated or retired from the service and you have a VA disability rating. You get to avoid the VA funding fee on the IRRRL when you have a service-connected disability rating. This alone can save several thousands of dollars in the cost of the refinance.

IRRRLs close faster on-average than other refis and have easier verification of income requirements. The assumption is if you have a successful history of paying on-time at a higher rate, you’ll continue at a lower rate.

A few things to keep in mind:

• Payment history – you need to have made at least 6-months of payments before you can use the IRRRL program.

• Net tangible benefit – the IRRRL must actually improve your position: lower monthly payment, shorter loan term, or a move from adjustable to fixed rate. You can’t use it to roll into a worse deal. I’ll confirm the numbers work before we submit anything.

• Eligibility – Open to those still serving or those who have moved back into the civilian sector. Don’t miss out on the benefit of a lower rate if you’re on Active Duty and bought in a high-rate environment like 2023-2025. Save money now.
• Previous occupancy – you only need to certify that you previously occupied the property as your home, not that you currently live there. If you’ve PCS’d and are now renting out your old home, you can still use the IRRRL to drop the rate. This is a meaningful distinction from a regular VA purchase or cash-out refi, both of which require current occupancy , and a major reason more veterans should be aware of this program.

• Funding fee – the IRRRL carries a 0.5% funding fee, far lower than the 2.15–3.3% on a VA purchase loan. Veterans with a service-connected disability rating are exempt entirely. If your rating came through after your original purchase, flag it, you may be entitled to a refund of the fee you paid at closing.
• Access Equity – Some states do not allow you to take equity out of your home when using VA loans. You can still refinance and get a better rate, but not cashout. If you want to access the equity in your home and use the VA IRRRL, let’s discuss a IRRRL refinance and then follow it with a HELOC to get you access to your equity.

Want to refinance a home you own already into using your VA entitlement? This can absolutely work so long as you have enough VA entitlement remaining. However, the refinance will not be an IRRRL. Expect a full documentation review (paystubs, tax returns, etc.) and a little more time to complete the process. This is also another great option if you want to access the equity in your home*.

You served to earn your entitlement. Now let’s make sure your entitlement is serving you the best, each and every month.

Let’s run your numbers to start saving you money every month.

*Not available in all states.