Note: Refinancing frequently or adding
all of these items into your loan, may
result in a situation in which you owe
more than the fair market value of the
house. This can reduce the benefit of
refinancing since your payment will not
be lowered as much as it could be.
Also, you could have difficulty selling
the house for enough to pay off your
loan balance.
*Veterans entitled to VA compensation
may be exempt from the Funding Fee.
What is an IRRRL?
IRRRL stands for Interest Rate
Reduction Refinancing Loan. You
may also see it referred to as a “VA
Streamline”. It is used to refinance an
existing VA guaranteed loan to reduce
the interest rate or to refinance an
adjustable rate mortgage (ARM) to a
fixed rate.
What are the requirements?
The loan you are refinancing must
have been guaranteed using your VA
entitlement. The new loan will re-use
the entitlement you originally used. A
Certificate of Eligibility is not required.
Your lender can verify your previous
loan information by using our
automated system.
No appraisal or credit underwriting is
required by VA. However, you should
be aware that some lenders may
require them anyway.
Also, the occupancy requirement is
different from other VA loans. When
you originally obtained your VA loan,
you certified that you occupied or
intended to occupy the home. For an
IRRRL, you only need to certify that
you previously occupied it.
What if I have a 2nd Mortgage?
No loan other than the existing VA
loan may be paid from the proceeds of
an IRRRL. If you have a 2
nd
mortgage,
the holder must agree to subordinate
that lien so that your new VA loan will
be a first mortgage.
Can I take cash out if I have equity
in the property?
No, you must not receive any cash
from the loan proceeds. The new loan
amount may not exceed the sum of the
outstanding balance on the existing VA
loan, plus allowable fees and closing
costs. You may also add up to $6,000
of energy efficient improvements into
the loan. See your lender for details.
How much will this cost?
An IRRRL may be done with “no
money out of pocket” by including all
costs into the new loan. Some lenders
may say that VA requires certain
closing costs to be charged and
included in the loan. The only cost
required by VA is a funding fee* of ½ %
of the new loan amount. This may be
paid in cash at closing or added to the
new loan.
In addition to the energy efficient
improvements, you may also include
up to 2 discount points into the loan.
I received a letter in the mail about a
“special” refinance program for
veterans. Is this the same
program?
VETERANS ARE STRONGLY
URGED TO CONTACT SEVERAL
LENDERS WHEN CONSIDERING AN
IRRRL. THERE MAY BE BIG
DIFFERENCES IN THE TERMS
OFFERED BY THE VARIOUS
LENDERS YOU CONTACT.
Some lenders may contact you
suggesting that they are the only lender
with the authority to make IRRRLs. This
is not so. Any lender of your choice may
process your application for an IRRRL.
While it may be the best place to start
shopping for an IRRRL, you do not have
to go to the lender you make your
payments to now or to the lender from
whom you originally obtained you loan.