VA Streamline Refinance FAQs

If you are a military homeowner or homebuyer, you may have heard about the VA IRRRL program (also called a VA streamline refinance). It is a popular choice for veterans and servicemembers refinancing their VA mortgage since the streamlined process makes it faster and easier to refinance to a lower rate, change terms, or switch from an adjustable rate mortgage (ARM) to a fixed rate. 

In this article, we will discuss the VA IRRRL program requirements, closing costs, and more so you can be confident when deciding whether a VA refinance is right for you.

What are the requirements for an IRRRL streamline?

The IRRRL program does not have specific credit score, proof of income, proof of assets, or a new home appraisal requirement, but each lender has their own rules. For example, most lenders typically require a minimum credit score of 620 in order to be approved as a borrower. The good news is that the VA allows lenders to use the information from your purchase loan to qualify for the IRRRL. 

What are the borrower qualifications?

The key to qualifying for a VA streamline is to demonstrate you can afford it and that you will benefit from the new loan. Borrowers must meet all of the following VA loan refinance requirements:

• You are a current VA loan borrower
• You have made on-time mortgage payments for the past 12 months
• You have proof that you live in or have lived at the house as your primary residence
• There is a net tangible benefit to refinancing, either by saving money or getting out of a riskier loan such as an ARM

Do you need another credit check?

Most lenders do not require a credit check for a VA streamline refinance. Instead, they look for proof you are keeping up with repaying your current mortgage. That means the loan must be current and you have made on-time payments for the past 12 months.

What documents do I need?

Good news: A streamline refinance requires much less documentation than a standard refinance! VA IRRRL document requirements include the following:

• Current mortgage statement

• VA loan paperwork

• Certificate of Eligibility (COE)

• A recent pay stub or proof of income

Is a Certificate of Eligibility necessary?

The VA requires a Certificate of Eligibility (COE) for all VA loan types, including a streamline refinance. However, since you already obtained a COE to get approval for your VA purchase loan, your lender should already have it on file. They can reference that same document, saving you more time.

Do you need another appraisal?

You will probably be happy to learn that an appraisal is not usually necessary for a VA streamline. This means you will be saving time, saving money, and avoiding any loss if your home value has dropped since your last appraisal.

There is an exception if you are refinancing from a fixed rate to an adjustable rate mortgage (ARM), but keep in mind, not all lenders offer VA ARMs.

What are the typical costs for a VA IRRRL?

VA IRRRLs do have closing costs to cover lender and third-party fees, but these fees are normally lower than those for other loans. Your loan estimate outlines these costs so you will know the details ahead of time and can make an informed decision. You also may be able to roll the closing costs into the new loan, rather than paying them up front.  These closing costs may include:

• Loan origination fee

• VA funding fee: 0.5% of the loan amount (may be waived for disabled veterans)

• Title search and title insurance fees

• Recording fees

• Other fees, such as credit report, flood certification, and pest inspection fees

How much are VA IRRRL closing costs?

The exact amount you will have to pay on your VA loan’s closing costs may vary, but you can expect them to range from 1%-6% of the total loan amount.

Who pays the closing costs on a VA loan?

As the borrower, you will be responsible for paying the closing costs associated with your VA IRRRL.

Is there a no closing cost refinance option?

A no closing cost refinance means you trade an up-front payment for a higher loan balance or interest rate. It is possible to roll the closing costs into the new loan with an IRRRL. However, it is important to keep in mind that this option will increase your loan balance, interest charges, and monthly payments.

Do you pay a funding fee for a VA refinance?

The largest area of savings for an IRRRL is with the VA loan funding fee. Funding fees for first-time VA purchase loans and cash-out refinances are calculated based on down payment and amount borrowed, and can reach as much as 3.3%, but the VA streamline refinance funding fee is a flat 0.5%. There are even a few exemptions that allow borrowers to pay no funding fees at all.

What are the seasoning requirements for a VA refinance?

Mortgage seasoning requirements refer to the amount of time you have had the home loan. In order to be eligible for a VA IRRRL, you must wait a specified number of days for the loan to be considered seasoned enough to refinance.

What is the 210-day rule?

The 210-day rule is the waiting period, or seasoning requirement, for a VA IRRRL. You must wait until 210 days after the first payment due date. This means, you must make six consecutive payments on the original VA loan before you are able to refinance it.

How many times can you do a VA streamline refinance?

Another great aspect of your VA benefits is that there is no limit on the number of times you can use the IRRRL program to refinance your VA loan. As long as you adhere to the 210-day rule between each new refinance (and each refinance has net-tangible benefits), you do not have to worry.

How long does a VA refinance take?

They do not call it a streamline refinance for nothing. Typically, an IRRRL can be completed within 30-45 days. This is because the application process is shorter, there are less documents that need to be reviewed, and the appraisal is not required.

Is it time to claim your refinancing benefit?

Are you concerned your VA mortgage does not suit your homeowner needs? Then it might be time to refinance. The IRRRL program is a great option if you are looking to lower your interest rate and save money. The simple eligibility requirements, minimal documentation, and lower closing costs make the VA streamline refinance an excellent choice for many eligible servicemembers.

If you are ready to take advantage of your VA benefit, be sure to consult with your lender to discuss all of your options so you can walk through the refinance process with confidence.