VA IRRRL Streamline Refinance: What It Is And How It Works

Having somewhere to call home plays an important role when helping veterans integrate back into civilian life. That’s why the VA first created its home loan program, which has been helping veterans, service members and surviving spouses achieve homeownership through VA loans since 1944. 

But what if you already have a mortgage? Not to worry, the VA Interest Rate Reduction Refinance Loan (IRRRL) has got you covered. A VA IRRRL can help qualified borrowers refinance to a lower interest rate, usually faster and simpler than with a conventional refinance. 

If you qualify for VA benefits and are considering refinancing your home, here’s everything you need to know about the VA IRRRL. 

What’s The VA IRRRL Program?

Refinancing is a way to replace your current home loan with a new one – typically with one that has more favorable terms or more manageable monthly payments. A VA IRRRL, also called a VA Streamline loan, is a type of refinance loan offered by the VA. 

Many lenders will use the terms VA IRRRL (pronounced “Earl”) and “VA Streamline” interchangeably. The name VA Streamline is in reference to the simpler, “streamlined” process of refinancing. To use a VA Streamline you must already have an existing VA loan and be able to justify the benefits of a refinance to your lender. 

How Does A VA IRRRL Streamline Refinance Work?

The first step when deciding to refinance is figuring out if one would benefit you. A VA IRRRL may be used to help you achieve any of the following: 

• To help borrowers switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage
• To lower monthly interest
• To lower monthly mortgage payments
• To change loan terms

Once you determine that a refinance could be just what you need, you can move onto the next step. Like any kind of home loan, you’ll still need to apply and get approved by your lender. 

Here are the qualifications to expect when applying for VA Streamline eligibility:  

• You must already have an existing VA home loan. If you don’t have a current VA loan then you will not qualify for a VA IRRRL. Veterans who have a conventional or FHA loan may be eligible for a regular VA refinance, which will require an appraisal, just not a VA Streamline.  
• You have to wait 210 days before you can apply. To qualify for a VA Streamline, your existing VA loan must be open for at least 7 months (210 days). Some lenders, however, may have their own waiting period up to as much as 12 months. 
• Your IRRRL must provide immediate financial benefit. Lenders will require that your new loan presents a clear financial benefit before they approve you. 
• Your home must be a current or previous primary residence. The VA requires that you certify the home covered by your loan as your current primary residence. You may also provide proof that you resided there in the past, but VA Streamlines cannot be used for a new investment property.

Remember, these qualifications are on top of those that you need to meet for your current VA home loan and prove with a Certificate of Eligibility (COE). If you have any more questions or concerns about qualifying, call your VA regional loan center at (877)-827-3702. 

VA IRRRL Pros And Cons

Whether a VA IRRRL is right for you depends on your homeownership and financial goals. Let’s go over some of the pros and cons of a VA IRRRL to see if it could be a good fit. 

Advantages Of A VA Streamline Refinance 

• Lock in a lower interest rate. The VA IRRRL will generally lower your interest rate by refinancing your existing VA home loan. 
• Change loan terms. When refinancing, you’re replacing your current loan with a new one. This means you can usually adjust your loan’s terms to a shorter or longer repayment period to better meet your financial goals. 
• Lower monthly mortgage payment. Through refinancing and obtaining a lower interest rate, your monthly mortgage payment should also decrease. 
• Lower funding fee. The VA funding fee is a required expense rolled into a VA loan’s closing costs, which replaces private mortgage insurance (PMI) or mortgage insurance premiums (MIPs). Unless you meet one of the VA’s exemptions, your funding fee is likely 2.15% or 3.3% of your total loan amount for a standard VA loan. The funding fee for an IRRRL is just 0.5%, which is most beneficial to borrowers financing their funding fee rather than those who made a one-time payment.
• Restructure mortgage. VA Streamlines can help you switch from an ARM to a fixed-rate mortgage, which can help make monthly payments more stable. 
• Refinance a rental property. The occupancy requirements for a VA IRRRL stipulate that you must have previously occupied the home, meaning you may be able to use an IRRRL to finance a second home. 

Disadvantages Of A VA Streamline Refinance

• Can only refinance current or previous primary residence. If you’re looking to buy a new investment home, you’re out of luck when it comes to using a VA IRRRL. Occupancy guidelines state that the home must be your primary residence or have been one in the past. 
• Must already have a VA home loan. As VA Streamlines are a kind of refinance loan, you must have an outstanding VA loan to get one. A VA IRRRL cannot be used to refinance other types of home loans. 
• Can’t convert home equity. If you’re looking to convert equity into cash, you’ll need a full refinance. This means using a VA cash-out refinance or an FHA cash-out refinance. 
• Have to pay closing costs. Since a VA IRRRL is technically a new loan, you’ll have to pay closing costs upfront or roll the balance into your financing. 

How To Apply For A VA IRRRL Streamline Refinance

1. Confirm Your Eligibility 

Avoid a headache down the road and figure out if you qualify for a VA IRRRL upfront. Understanding if you meet the qualifications – and most importantly if a refinance is right for your financial situation – is key to avoiding unnecessary stress. Your lender will help you with this step.

2. Prepare All Your Documentation 

So, you satisfy all the VA Streamline qualifications: What’s next? Gathering all the necessary paperwork may not be the most thrilling part of homeownership, but it’s a necessary step toward achieving your financial goals. 

The information to have ready may include:

• Names, addresses (current and previous), phone numbers
• Date of birth and education
• Number and age of dependents
• Social Security number
• Valid driver’s license or ID 
• Employment and income history
• Assets and property information
• Credit or liability information
• COE

3. Speak With An Expert 

It’s never bad to ask for help, especially where your finances are concerned. Talk to a Home Loan Expert for guidance tailored to your unique financial profile. Financial consultants or other loan experts can also help you identify a new direction to go should you not qualify for an IRRRL. 

VA IRRRL FAQs

What does IRRRL stand for?

“IRRRL” stands for Interest Rate Reduction Refinance Loan, which captures the nature of this kind of refinance. VA IRRRLs, also called VA Streamlines, “streamline” or simplify the refinance process and can help borrowers lower their rate and monthly payments. 

Who’s eligible for a VA IRRRL Streamline Refinance?

Veterans, active service or surviving spouses with a VA loan, and who can prove a tangible net profit from a refinance, may qualify for a VA IRRRL. 

Who would benefit as a candidate for the VA IRRRL Program?

Good candidates for a VA IRRRL usually want to accomplish the following: switching from an ARM to a fixed-rate mortgage, lowering their interest rate or monthly payments, changing the terms of an existing VA loan. 

How long after closing on a VA home loan can I apply for an IRRRL?

You must wait 7 months (210 days) from opening your existing VA loan to apply for an IRRRL. 

Can I use a VA refinance on a conventional or FHA loan?

No. You may be able to qualify for a regular VA refinance loan, but you must have a preexisting VA loan to qualify for the VA Streamline refinance. 

The Bottom Line

If you’re struggling to keep up with monthly payments or looking to make some changes with your mortgage, you aren’t alone. That’s why the VA IRRRL exists - to help military homeowners manage their finances while fulfilling their homeownership dream.

It’s always a good idea to speak with a Home Loan Expert before taking any big steps, but understanding how the VA IRRRL works is a great way to explore your options.

Looking to make a change? Figure out if you qualify for a VA Streamline and apply for a mortgage today.