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VA IRRRL: What is a VA Streamline Refinance?

Written By: USAA Bank Mortgage Team
Reading Time: 13 minutes

In this guide, we explain the details of the VA Interest Rate Reduction Refinance Loan (IRRRL) program, including its requirements, benefits, closing costs, and the application process. The VA IRRRL, also known as the VA Streamline Refinance, can be a great option for veterans, service members and surviving spouses looking to lower their mortgage interest rates and reduce monthly payments.

Key Takeaways

  • A VA IRRRL could help you reduce your mortgage rate and monthly payments.
  • When considering a VA IRRRL, you’ll want to assess your refinancing goals and evaluate your current loan terms, interest rate, and monthly payments.
  • Compared to some other refinancing options, a VA IRRRL often offers a simpler process, potential monthly savings, and lower closing costs that could potentially be rolled into your new home loan.
  • Like with any refinance, you will have closing costs. VA loans may include a VA funding fee and for a VA IRRRL, this is a flat 0.5%.
  • The key steps of a VA IRRRL include identifying eligibility, collecting loan information, consulting with a lender like USAA Bank, providing necessary documents, and signing new loan papers.

What is a VA IRRRL?

If you currently hold a VA-guaranteed home loan and are looking for ways to reduce your monthly mortgage payments or replace an adjustable rate (ARM) with a fixed rate, the VA IRRRL might be a good option to consider. Often referred to as a “streamline” refinance, the VA IRRRL allows you to refinance your existing loan with a new one under different terms.

Is a VA IRRRL right for me?

It could be. Every situation is different, so you’ll want to weigh various factors, including what your current loan terms are – your interest rate, monthly payment, and the length left to pay on your VA home loan. Additionally, you’ll want to understand any closing costs you need to pay to decide if, overall, a refinance is right for you.

With an IRRRL, you can choose to refinance the outstanding balance of your VA loan with the goal of reducing both your interest rate and monthly payments. However, if your goals differ and you are interested in shortening your loan term or getting access to cash, you likely will want to consider other home loan refinance options.

You can speak with a USAA Bank loan officer if you have questions or think a VA IRRRL might be right for you.

VA IRRRL requirements and eligibility  

To qualify for a VA IRRRL, you must first meet certain eligibility requirements  set by the U.S. Department of Veterans Affairs (VA) as with any VA home loan.

Generally, if you have a VA home loan, you will be eligible for a VA IRRRL. If you have any questions about your eligibility, you can check with your local VA regional loan center, (by calling 1-877-827-3702), or a USAA Bank loan officer.

To refinance with a VA IRRRL, you must currently have a VA home loan. You must be able to certify that you currently live in or used to live in the home that’s financed by the VA loan.

Additionally, to qualify for a VA IRRRL, the VA requires that the refinance provide clear financial benefits to the borrower. This means the new loan must lower the monthly payment by a required amount, have limits on how much the refinance costs, and allow the borrower to recover all closing costs and fees through the lower monthly payments within three years (36 months) or less.

Lastly, if you have a second mortgage on the home, the holder must agree to make your new VA loan the first mortgage.

Are there loan limits on a VA IRRRL?

While there were loan limits in the past, the VA effectively removed loan limits in 2020, meaning eligible veterans can borrow up to the full cost of their home with no down payment, regardless of conforming loan limits.

VA IRRRL benefits

There are three main benefits that a VA IRRRL could offer you:

  • Compared to some other conventional refinancing options, the VA IRRRL process is much simpler, and fewer documents are typically required.
  • You could save on your monthly mortgage payment by refinancing your VA loan with a VA IRRRL.
  • A VA IRRRL may offer lower closing costs. Additionally, in most cases, you could pay $0 out of pocket with a VA IRRRL, if you choose to roll your costs into the loan.

There may be additional benefits depending on the lender you work with to get your VA IRRRL. You can speak with a lender like USAA Bank to learn more about your current loan refinancing options and costs.

What are VA IRRRL closing costs?

Regardless of the type of refinancing loan you’re considering, there will be closing costs. However, a VA IRRRL could offer lower closing costs and no money out of pocket because the costs may be able to be rolled into your new home loan. According to the VA, generally, no appraisal, credit information or underwriting is required on an IRRRL.

Although the VA doesn’t require an appraisal or credit underwriting on IRRRLs, your lender may require these to qualify you for the refinance, which may increase the costs associated with the new loan.

The VA funding fee for a VA IRRRL

The VA funding fee is a one-time payment made by the veteran, servicemember, or surviving spouse, who is getting a VA IRRRL. You will have a VA funding fee unless you meet specific criteria that exempt you, such as receiving VA compensation for a service-connected disability, being eligible for compensation while receiving retirement or active-duty pay, receiving Dependency and Indemnity Compensation (DIC) as the surviving spouse, having a proposed or memorandum rating indicating eligibility for compensation due to a pre-discharge claim, or being a service member on active duty with evidence of receiving the Purple Heart.

You’ll pay your VA funding fee when closing on your VA IRRRL, and you usually have the option of either including the fee in the loan and paying it off over time (as part of the overall financing) or paying the full amount at closing.

What is the amount of your VA funding fee with a VA IRRRL?

The VA funding fee amount depends on factors like the loan type, loan amount, whether it’s your first or subsequent use of a VA home loan, and your down payment amount. For a VA IRRRL, you’ll pay a flat 0.5% funding fee as part of your refinancing closing costs. The 0.5% is calculated off of the base loan amount.  

How to apply for an VA IRRRL VA Loan  

Refinancing your VA home loan through an IRRRL is a fairly straightforward process, which usually include these steps:

1. Collect information about your current VA loan

You’ll need to collect information on your current VA loan when getting a VA IRRRL. Be prepared with details such as your current VA loan interest rate, insurance payments, taxes and dues for your homeowner’s association (HOA). These details will help your lender to assess your eligibility and determining the potential benefits of refinancing.

You may also need to get your Certificate of Eligibility (COE). If you have the COE you used when getting your initial VA home loan, you can present it to your lender as evidence of the prior use of your entitlement. If you don’t have your original COE, you can request your lender to electronically obtain your COE through the VA Home Loan program portal.

2. Speak with a lender you trust

Be prepared with the information you collected in step one, and you can also ask a lender like USAA Bank, questions about refinancing your home loan.

3. Provide a few documents to your lender

You may need to provide some of the documentation you collected in step one above including your COE to your lender for processing and finalizing your VA IRRRL. In some cases, however, you may only need to show proof of homeowners insurance and any HOA documents. Your loan application will then be submitted for review and final approval.

4. Sign your VA IRRRL documents

Next, if approved, you’ll sign your new loan documents. When using USAA Bank for your refinancing needs, the lending team will work with you to schedule a convenient closing day and time.

Is a VA IRRRL right for you?

If you’re a veteran, servicemember or surviving spouse seeking to reduce your mortgage interest rate and monthly payment, a VA IRRRL could be a beneficial option. Before diving in, look at your refinancing goals, current loan terms, and monthly payments. The VA IRRRL process often provides simplicity, potential savings, and lower closing costs that can be rolled into the new loan. While no cash proceeds are generally allowed, some exceptions exist, such as for reimbursing energy efficiency improvements. If you’re considering this streamlined refinancing journey, consult with a lender like USAA Bank to explore your options and make informed decisions.

Tools and resources provided by USAA Federal Savings Bank should be considered general advice and for informational purposes only. All information is subject to change without notice and may not apply to all members. Products, services or features mentioned may not be offered by USAA Federal Savings Bank. The information contained is not intended to represent any endorsement, expressed or implied, by USAA Federal Savings Bank or any affiliates.

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FAQ

Can I get a VA Loan without two years of employment?

You may still qualify for a VA loan even if you haven’t been employed for two years or have recently become self‑employed. While lenders generally prefer two years of consistent employment or self‑employment—and typically require two years of tax returns for self‑employed borrowers—exceptions do exist. Lenders may consider alternative, verifiable income sources such as VA disability benefits, military retirement or pension income, rental income, investment income, or consistent freelance or contract work. The key requirement is demonstrating that your income is reliable, stable, and likely to continue for at least three years. Because qualification can vary by lender, discussing your specific situation with a VA‑approved lender, such as USAA Bank, can help determine eligibility based on your full financial picture

Can you get a VA loan if you are not on active duty?

Yes, you do not have to be on active duty to qualify for a VA loan. Veterans, reservists, National Guard members, and some surviving spouses may also be eligible. To qualify, you must meet the VA loan eligibility requirements, such as serving at least 90 consecutive days during wartime or 181 days during peacetime. If you’re a National Guard or Reserve member, you generally need at least six years of service unless you were activated for federal service. Eligibility is verified through a Certificate of Eligibility (COE), which you can obtain through the VA, or a knowledgeable VA lender, like USAA Bank, can often help you request yours.

Do you need proof of employment for a VA loan?

Not necessarily. Lenders usually assess your ability to make consistent mortgage payments rather than focusing solely on employment status. Being unemployed does not automatically disqualify you. If you can provide proof of alternative income sources, such as VA disability benefits, retirement pensions, spousal income, or investment earnings, you may still qualify. Additionally, if you’re self-employed, you’ll need to show two years of tax returns to prove income stability.

Can I get a VA loan with someone who is not my spouse?

Yes, but the loan will be considered a joint loan. The VA guaranty will apply only to the eligible Veteran’s portion of the loan.

Can my girlfriend or boyfriend be on my VA loan?

Yes, as a joint borrower or co-borrower. However, VA guaranty rules will apply differently than with a spouse.

Can a child be a co-borrower on a VA loan?

An adult child may be a co-borrower, subject to lender approval and VA joint loan rules.

Can a VA loan have a co-borrower?

Yes. VA loans allow co-borrowers as long as all borrowers occupy the property as their primary residence.

Who can be a co-borrower on a VA loan?

Spouses are the most common co-borrowers. Non-spouse co-borrowers may be allowed, but this may affect guaranty coverage.

Does the co-borrower need to be a Veteran?

No. Only one borrower must be an eligible Veteran or qualified individual. The VA guaranty will apply only to the eligible Veteran’s portion of the loan.

Does adding a co-borrower remove VA occupancy requirements?

No. All borrowers must intend to occupy the home as a primary residence.

When should I consider a mortgage refinance?

That depends on various factors, including your goals, current interest rate, current mortgage terms, and the current interest rate you qualify to get. With a VA Interest Rate Reductio Refinance Loan ( IRRRL), you may be able to refinance the remaining balance of your VA loan to help lower your interest rate and monthly payment. If you want to shorten your loan term, take out cash, or make energy-efficient home improvements, you may want to speak with a USAA Bank Loan Officer about other refinancing options.

How long will the VA IRRRL process take?

While home financing with any loan type encompasses several steps, the VA IRRRL process tends to be more streamlined than that of a home purchase, which typically takes about 45 days or longer. Despite this efficiency, it’s important to note that delays can still occur at various stages of the process.

Can I get cash out with a VA IRRRL?

Usually no. An IRRRL isn’t meant for pulling cash out or settling non-mortgage debts. It’s specifically for paying off your current VA loan and refinancing it. So, you generally won’t get any cash back from the loan. The VA notes that the only exception is if you’ve made energy efficiency improvements (up to $6,000) within the 90 days before closing, then you could get reimbursed for those expenses. Just keep in mind that the loan amount might need to be adjusted down to avoid giving you cash directly. You’ll want to speak with your lender to understand any specifics.

Can you get a VA Loan being self-employed?

Yes, self-employed veterans can qualify for a VA loan. VA loan eligibility is not impacted by employment type. However, you must meet the lender-specific income verification and creditworthiness criteria. Lenders may require more detailed income and business history documentation for self-employed applicants, such as tax returns and bank statements.

What are the requirements for VA self-employed?

The requirements for self-employed veterans are similar to those for any other VA loan applicant. You must meet the VA’s eligibility criteria as well as any criteria defined by your lender, such as having a sufficient credit score and demonstrating stable and reliable income. To verify  income, self-employed applicants may be asked to provide additional documentation, such as tax returns and business financial records.

Can you get a VA Loan without proof of income?

It is highly unlikely to qualify for a VA loan without proof of income. While the VA has no minimum income requirement, lenders must assess your ability to repay the loan. Without income verification, such as tax returns or bank statements, it will be difficult for lenders to determine whether you qualify for the loan.

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