VA Streamline (IRRRL) Guidelines & Rates 2024

The Bottom Line

When mortgage rates drop, you may be eligible to drop your mortgage rate and payment without income or employment verification, no appraisal, and no bank statements. You replace your existing VA loan with a new one at better terms without the hassle.

Benefits of a VA IRRRL

The VA Streamline Refinance comes with many advantages that aren’t available with other refinance programs.

These benefits make the VA IRRRL a valuable option for eligible veterans and active-duty service members looking to improve their mortgage terms and manage their finances more effectively.

Some of the biggest advantages that make this loan one-of-a-kind include:

• Lower interest rates. One of the primary appeals of the VA IRRRL is the potential to obtain a lower interest rate. A lower rate can mean a reduced monthly mortgage payment and substantial savings over the life of the loan.
• Potentially no out-of-pocket costs. Closing costs associated with this type of refinance are typically lower than other types of loan programs and can usually be rolled into the new loan, as opposed to having to pay these costs upfront.
• Simplified process. As the name implies, the VA Streamline Refinance program is designed to be simple and streamlined, with less paperwork requirements and fewer formalities compared to traditional refinancing options. This makes the refinance process faster and more convenient.
• No appraisal needed. In most cases, VA IRRRL’s do not require a new appraisal. This saves time and money – appraisals typically take weeks and cost over $500.
• No minimum credit score requirement. While some lenders have minimum credit score requirements for a VA Streamline Refinance, many do not, making this type of refinance more accessible to more VA homeowners.
• No income verification. Typically, this refinance program does not require employment or income verification, simplifying the approval process.
• No DD-214: You don’t have to re-verify that you’re eligible for the VA home loan benefit. Your existing VA loan proves you’re eligible.
• Potential for lower monthly payments. With the help of a lower interest rate and potentially extending the loan term, the VA IRRRL can mean lower monthly mortgage payments for veteran homeowners.
• Assumable loan. Like other VA loans, the IRRRL can be assumed by another qualified veteran, or in some cases, even non-veterans. This can be a huge selling point if you decide to sell your home.
• Reduced funding fee. The funding fee for a VA Streamline Refinance is generally lower than the fee for a new VA purchase loan or a standard VA refinance, making this type of refinance a more cost-effective option.
• No prepayment penalty. Borrowers can pay off their VA IRRRL early without facing any penalties.

VA IRRRL Mortgage Rates

The average rate for 30-year fixed VA refinance loan for October 08, 2024 has increased to 5.76% compared to last week's rate of 5.59%. The average rate for 15-year fixed VA refinance loan for October 08, 2024 has increased to 5.33% compared to last week's rate of 4.99%. The average rate for 30-year fixed VA jumbo refinance loan for October 08, 2024 has increased to 5.91% compared to last week's rate of 5.59%.

Product	Rate	APR
30-year Fixed VA Refinance	5.76%	5.91%
15-year Fixed VA Refinance	5.33%	5.57%
30-year Fixed VA Jumbo Refinance	5.91%	6.05%

Rates based on market averages as of Oct 08, 2024.

How we source rates and rate trends

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Rate data in the charts and tables above comes from RateUpdate.com. The displayed rates come from multiple providers and represent market averages. Your mortgage rate will differ based on individual factors like your credit score as well as differing loan types and terms offered by lenders.

As its name implies, the primary appeal of an Interest Rate Reduction Refinance Loan is the potential to reduce your interest rate.

VA IRRRL rates can be even lower than the already low VA loan rates. Obtaining a lower interest rate may not always be the primary reason for a VA IRRRL, though. Many VA homeowners use an IRRRL to switch from an adjustable to a fixed-rate mortgage.

While VA home loans are known for having some of the lowest interest rates on the market, rates vary from lender to lender. Some of the variables that can impact your rate include the loan amount, the property location, the term of your loan and sometimes, your credit score.

What is a VA IRRRL?

A VA IRRRL, also called a VA Streamline Refinance, allows current VA loan holders to refinance into a new VA loan to improve their rate and payment if rates drop.

The program is better than any refinance in the U.S.: It requires no tax returns, pay stubs, or W2s. You don’t even have to be employed (at least according to straight-up VA guidelines, but lenders can require an employment check). The applicant does not need to supply bank statements, and no credit check is required, although most lenders require a credit report.

Additionally, lenders typically don’t require an appraisal, so you may qualify even if your home value has dropped or the home no longer meets VA minimum property standards.

It’s hands-down the easiest way to reduce your monthly mortgage payment if you have a VA loan in good standing currently and meet other guidelines, outlined below.

VA Streamline Refinance Guidelines & Eligibility

The qualifying criteria for a VA Streamline Refinance is easier than most other refinance programs. There are, however, still certain requirements that must be met.

Existing VA loan. To be eligible for a VA IRRRL, you will need to have an existing VA home loan. You won’t have to supply Form DD-214 since your current VA loan proves eligibility.

Waiting period. You must have a current VA loan that’s been open for a minimum of seven months (210 days).

Timely payments: VA mortgage borrowers must have a history of making timely mortgage payments, with no more than one 30-day late payment within the past 12 months.

Must benefit the borrower: The refinance must result in a “net tangible benefit” to the mortgage borrower, such as a lower interest rate, a lower monthly payment, or you’re converting an adjustable-rate mortgage to a fixed-rate.

If the payment rises: Refinancing from an adjustable-rate to a fixed could cause your payment to rise. If the payment rises by more than 20%, income verification is required.

No cash-out. The VA IRRRL is meant to for “rate and term” refinancing only. This type of refinance does not allow for cash-out refinancing.

Funding fee. In most cases, VA IRRRL’s require a funding fee. The funding fee is less than most other types of VA loans and can be included in your new loan.

Occupancy: While veteran homeowners must certify that they previously occupied the property, there are no occupancy requirements for an IRRRL. Unlike the initial VA loan, your home does not need to be your current, primary residence.

VA IRRRL Funding Fee

The VA funding fee is a one-time charge that most VA mortgage borrowers must pay when obtaining a VA loan. The same holds true with a VA Streamline Refinance.

The VA funding fee for an IRRRL is generally 0.5% of the loan amount. For example, if the loan amount is $200,000, the funding fee would be $1,000. The fee can be rolled into the loan amount or paid out-of-pocket. Paying it at closing will reduce your monthly payment.

Exemptions: Some veterans are exempt from paying the funding fee, including veterans receiving compensation for service-connected disabilities and surviving spouses of veterans who died as a result of service.

VA Streamline vs VA Cash-Out Refinance

Generally, you should use a VA Streamline unless you need cash back at closing.

	VA Streamline	VA Cash-Out
Cash back	No cash back allowed unless reimbursing for energy-efficient improvements ($6,000 max)	Cash out up to 100% of the home’s value
Rate	The refinance must reduce the rate	No rate reduction required
Qualification	No income, asset, or employment documentation	Full documentation required.
Appraisal	No appraisal	New appraisal required
Equity required	No equity verification or requirement	Adequate equity required to pay off existing loan and provide cash back
Current loan	Must be a VA loan	Can refinance any loan type
Rates	Lower rates than cash-out	Higher rates than IRRRL

How to Get a VA IRRRL

Like any other type of refinance, a VA IRRRL means you are replacing your existing mortgage with a new loan. Fortunately, the steps are easier and more straightforward than most other refinance loans.

1. Application process. VA mortgage borrowers initiate the process by applying through a VA-approved lender. Unlike conventional refinancing options, the VA Streamline Refinance typically requires less documentation and fewer protocols.
2. Find a lender. The U.S. Department of Veterans Affairs doesn’t offer any loans directly. To find a VA-approved lender, shop around among mortgage companies, private banks and credit unions. Compare rates, terms and fees carefully. “It’s good practice to call three or more VA lenders and request a quote,” says Brad Baker, vice president of Underwriting and Capital Markets for Equity Now, a mortgage lending and servicing company. “Apply at all of them, and compare the loan estimate forms side-by-side to determine the best deal.”
3. Provide necessary information to your lender. Your Certificate of Eligibility (COE), which you used to receive your original VA-backed home loan, will be needed again to demonstrate previous use of your entitlement. If you don’t have your original COE, your lender should be able to access your COE electronically through the VA Home Loan program portal. Other documentation may be required by your lender.
4. Loan Costs: While closing costs are associated with the VA Streamline Refinance, these can often be rolled into the new loan, meaning you won’t necessarily have any out-of-pocket expenses.
5. Occupancy Requirement: The VA mortgage borrower must certify that they previously occupied the property, but it does not need to be your current residence at the time of refinancing.

IRRRL Closing Costs

Closing costs will be somewhere around 2-4% of the loan amount. In addition, you’ll pay a funding fee of 0.5% of the loan balance. Take this into consideration when refinancing. For example, if you only save $25 per month and closing costs are $7,000, it would take 23 years to recoup your costs — likely not worth it.

But if closing costs are $3,000 and you save $250 per month, you recoup costs in just one year.

Negotiate with your lender for lower closing costs and make sure your monthly payment drops enough to justify this cost. Lenders love these loans because they are so fast and easy. You have leverage as a VA streamline customer.

Pros and Cons of the VA IRRRL

Removing a Borrower with an IRRRL

Generally, you can remove a non-veteran from the loan during the IRRRL process if an eligible veteran remains in the home and on the loan.

In cases where the non-veteran is keeping the home after divorce, the non-veteran could assume the loan. The veteran’s entitlement would remain tied to the loan. The departing veteran could not use a VA loan again until it is paid off or refinanced.

The best option is often for the remaining non-veteran spouse to refinance into a conventional loan.

Refinancing an Investment Property

You can refinance an investment/rental property with an IRRRL. You must certify that you previously occupied the home as your primary residence. But the VA allows you to refinance if you have since moved and rented it out. Not all lenders permit this type of transaction (or know the rule exists) so shop around for a knowledgable VA lender.

Final Words On The VA IRRRL

The VA Streamline Refinance program offers a valuable opportunity for veterans and active-duty service members looking to refinance their existing VA home loan for a new loan with better terms, as well as the ability to do so with minimal hassle.

By providing the potential for lower interest rates, reduced monthly payments, and a simplified process, this refinance program can be a smart financial move for eligible veterans.