VA Interest Rate Reduction Refinance Loan (IRRRL) Overview

What is a VA IRRRL loan?

The U.S. Department of Veterans Affairs' Interest rate reduction refinance loan (IRRLL) allows homeowners to refinance existing VA loans into a lower interest loan or a fixed-rate loan (from a variable-rate loan). This program helps homeowners lower their monthly payments and makes payments more predictable by fixing interest rates. Here are the facts about VA IRRRL Refinance Loans.

Information about VA IRRRL Loans

To refinance a property you have already taken out a VA loan for, you can only use a VA IRRRL. The loan will not reuse your entitlement. Except if you're refinancing an ARM loan to a fixed-rate loan, the interest rate for the refinance loan must not exceed your current interest rate.

The VA doesn't require you to have an appraisal or credit check in order to get the loan. However, the lender might need these documents. The VA doesn't require you to bring your Certificate of Eligibility or reapply to it. However, the lender who gives you the loan may want these documents.

The IRRRL does not allow you to cash out a refinance, but you can borrow up to $6,000 for home improvements that improve the energy efficiency of your home. You can also include your upfront costs in the loan amount so that you don't have any extra cash out of pocket for the refinance.

VA IRRRL Loans: What is the cost?

Although the VA only requires that borrowers pay a funding fee equal to one-half percent of the loan amount (this can either be paid up front or included in the loan amount), other lenders may charge additional fees. It is important to compare lenders because these fees can vary. Not all veterans who receive money from the VA to treat a service-related disability are required to pay fees. This includes individuals who would be receiving money for retirement, active duty pay, or surviving spouses of veterans who have died while serving or because they were suffering from a service-related illness.