I’m Scott Swinford, a mortgage loan originator (NMLS# 138422) licensed in Indiana, Illinois, and Michigan. I have been a loan officer for more than 20 years. Here is how the VA IRRRL works and how to tell whether it makes sense for you.
What Is a VA IRRRL?
IRRRL stands for Interest Rate Reduction Refinance Loan. It refinances an existing VA loan into a new VA loan. Veterans use it to lower their interest rate or to move from an adjustable rate to a fixed rate.
An IRRRL does not give you cash. If you want to take cash out or refinance a conventional or FHA loan into a VA loan, see my page on the VA cash-out refinance.
Who Qualifies?
- You have a VA loan now. The IRRRL can only refinance an existing VA loan.
- You lived in the home. You must have used it as your primary residence at some point. You certify that you previously occupied the home, so it can be a rental today.
- Your loan is seasoned. At least 210 days must have passed since the first payment due date on your current loan, and you must have made at least six monthly payments.
- Your payment history is in order. Lenders review your recent mortgage payments and your credit score.
What VA Does and Does Not Require
- No appraisal. VA does not require one for an IRRRL.
- No water test or termite inspection. VA does not require a well water test or a wood-destroying insect inspection for an IRRRL.
- Limited income documentation. VA generally does not require you to requalify on income.
Some lenders add their own requirements, such as an appraisal, a minimum credit score, or income verification. These are lender rules, called overlays, not VA rules. Ask any lender which ones they apply before you apply.
The Refinance Has to Benefit You
VA requires a net tangible benefit. In most cases, the new interest rate must be at least 0.5 percentage point lower than your current rate, and the costs of the refinance must be recovered through your lower payment within 36 months. Different rules apply when you move from an adjustable rate to a fixed rate.
Before closing, you receive a comparison of your current loan and the new one so you can see the difference for yourself.
What Does It Cost?
- VA funding fee. The IRRRL funding fee is lower than the fee on a purchase or cash-out loan. Veterans who receive VA disability compensation are exempt. See current amounts on VA.gov.
- Closing costs. You can usually include them in the new loan or use a lender credit to cover them.
- Interest still accrues. Moving to a new loan can change when your next payment is due, but interest is still charged for that time.
When an IRRRL Makes Sense
- Rates are meaningfully lower than your current VA loan rate.
- You have an adjustable rate and want a fixed payment.
- You plan to keep the home long enough to recover the costs.
It may not make sense if you plan to sell soon or if you need cash from your equity. You do not have to use your current lender. I compare your options and show you the numbers before you decide.
VA IRRRL vs. VA Cash-Out Refinance
| Feature | VA IRRRL | VA Cash-Out Refinance |
|---|---|---|
| Cash to you | No | Yes |
| Current loan type | VA only | Any |
| Must live in the home now | No, prior occupancy is enough | Yes |
| Appraisal | Not required by VA | Required |
| Water test and termite inspection | Not required by VA | Usually |
| Income and credit review | Limited | Full |
Source: VA Interest Rate Reduction Refinance Loan, VA.gov
Frequently Asked Questions
Do I need an appraisal or home inspection for a VA IRRRL?
VA does not require an appraisal, a water test, or a wood-destroying insect inspection for an IRRRL. If a lender requires any of them, that is the lender’s own rule, not a VA requirement.
Do I have to live in the home to get a VA IRRRL?
No. You must have lived in the home as your primary residence at some point, and you certify that prior occupancy. The home can be a rental now.
How soon can I do a VA IRRRL?
Your current VA loan must be at least 210 days past its first payment due date, and you must have made at least six monthly payments.
Can I take cash out with a VA IRRRL?
No. An IRRRL only refinances your existing VA loan. To take cash out or refinance a conventional or FHA loan into a VA loan, look at a VA cash-out refinance.
See Whether an IRRRL Makes Sense for You
Call 219-695-0369 or text me at 219-758-8072. You can also send me a message or schedule a consultation.
This is not a commitment to lend. Approval depends on VA eligibility, credit, property, and program guidelines, which can change. A VA funding fee may apply.
