Did you buy your current home with a VA loan? If so, you may be able to refinance your mortgage through a streamlined process with the VA Interest Rate Reduction Refinance Loan (IRRRL, pronounced “Earl”).
Using much of the same documentation on file from your first mortgage, you may be able to lower your interest rate and make your loan more affordable.
Benefits of a VA IRRRL Loan
River City Mortgage can help you decide if refinancing is right for you. The VA IRRRL Streamline program is backed by the U.S. Department of Veterans Affairs, making refinancing fast and simple, with easier approvals and interest rates that are lower than average.
VA IRRRL Approval is Simple
- No appraisal
- No income verification
- No minimum credit score
- Reduced or no funding fee
Start Your Application
or call us at (800) 631-6447
How It Works
Get the most out of your VA benefits. If your VA purchase loan’s interest rate is higher than current market rates, you may benefit from the simplicity of a VA IRRRL refinance. It can lower your interest rate, which also lowers your overall mortgage payments.
With less documentation and no appraisal, you can get approved simply and quickly, allowing you to refinance to a new mortgage where you can choose from the following:
- Fixed interest rate that is lower than your current rate and will remain constant through the life of your loan
- The length, or term, that makes your monthly payments and overall loan amount most affordable for you, such as a 15-, 25-, or 30-year mortgage
Is a VA IRRRL Right for You?
These answers to homeowner’s commonly asked questions may help guide you. To take the next step, our loan officers can help you get the most out of your VA loan.
VA IRRRL eligibility is similar to a VA purchase loan in that it is service-based. Some contributing factors taken into consideration include:
- Your service status, e.g., active duty, separation
- Your years of service, and
- Your service record
The VA provides detailed eligibility guidelines outlining who qualifies for veteran’s benefits. You may meet eligibility requirements if you are:
- A current active duty military service member,
- A military veteran, or
- The spouse (including surviving spouse) of a service member
The VA IRRRL requires less paperwork than your original VA loan, making it a “low-doc” refinance. This time around, you’ll only need a current mortgage statement, employment verification, two months of bank statements, and recent utility bills to qualify.
Eligibility is proven through a Certificate of Eligibility (CoE) as well as the DD-214 obtained by the U.S. Department of Veterans Affairs.
The VA IRRRL has a one-time funding fee of 0.5% of your loan’s value. It ensures the program is financially sustainable for all eligible veterans. There are exceptions to paying the funding fee, including Purple Heart recipients, certain surviving spouses of veterans, and veterans with service-related disabilities.
The VA IRRRL also has closing costs between 1% and 3% of your loan amount. These closing costs are lower than a conventional refinance because the streamline loan is more efficient to process, lowering origination fees.
With both the funding fee and the closing costs, you can pay them upfront or roll them into your loan amount to be paid over time, although this may add to your overall interest costs.
Because the VA IRRRL is meant as a streamlined rate and term refinance, you can’t use it to borrow cash from the value of your home. However, a VA cash-out refinance loan is available. It requires more documentation for approval but also provides the option to borrow against 100% of the equity in your home.
A VA IRRRL offers the best benefits and terms of any refinance mortgage available, including the lowest average interest rates. Similar to an FHA streamline refinance, it requires less documentation than a conventional refinance or switching to a new loan type. VA loans have less strict qualification standards than conventional loans, so it’s easier to qualify for a VA IRRRL.
If you aren’t eligible for a VA IRRRL, you may still refinance to another loan type with a chance at lowering your interest rate, depending on the current market conditions. To refinance to a conventional loan, you would need more than 20% equity in your home and may need a higher credit score. Whereas an FHA refinance has less strict requirements.
After you purchase your home with a VA loan, you can refinance it with a VA IRRRL after 210 days, or about 7 months from the date of your original closing. You need to have made at least six full mortgage payments on your current mortgage to qualify for a VA IRRRL.
This is possible if you can prove that the house served as your primary residence in the past. For example, if you are currently renting out the home but originally purchased it as your main residence, you may qualify for a VA IRRRL.