Routing # 256078446
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What is an IRRRL?
What you'll learn: What to know about IRRRLs and how they compare to other refinancing options.
EXPECTED READ TIME: 3 MINUTES
November 23, 2020 | Updated March 5, 2025
A major perk of being a homeowner is the ability to refinance your mortgage to better fit your evolving financial needs, especially when interest rates are dropping. And if you are a current Veterans Affairs (VA) loan borrower, then you have the added benefit of streamlining your refinance process with a VA IRRRL.
But what exactly is an IRRRL? And is it right for you? Today, we will be answering those questions and more.
What is a VA IRRRL?
IRRRL stands for Interest Rate Reduction Refinancing Loan and is part of the VA loan program. IRRRLs are typically used to reduce your current mortgage rate to a lower rate, or to convert an adjustable-rate mortgage (ARM) to a fixed rate mortgage.
Sometimes an IRRRL is referred to as a VA Streamlined Refinance because the approval process can be significantly simplified. An IRRRL is for current VA Loan holders, so your lender can leverage the first VA loan’s paperwork and Certificate of Eligibility (COE) to streamline the process.
How does an IRRRL work?
Since you already have a VA loan and met the VA’s eligibility requirements, if refinancing with the same lender, it is likely that your lender will have the necessary documents to start the IRRRL process. One of the benefits of a VA IRRRL is that more often than not they can be completed within 30 to 45 days. This is thanks to the quick application process and no appraisal requirement from the VA.
There is a funding fee when using an IRRRL, and for most borrowers the fee is 0.5% of your loan. Remember that you may qualify for a funding fee exemption if you are:
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Entitled to receive compensation for a service-related disability
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An active-duty service member who has received a Purple Heart
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A spouse of a veteran who died while serving or through a service-related disability
There are a couple of requirements that the borrower or loan must meet in order to be eligible. For instance, the 210-day rule is the waiting period. If you can ensure that you meet all of the loan requirements, there is no limit set on how many times you can use the IRRRL program to refinance your VA loan.
As you are going through the process of obtaining an IRRRL, there are some things to consider:
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You can only refinance to a lower interest rate using an IRRRL, unless you are moving from an adjustable rate mortgage (ARM) to a fixed rate mortgage.
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If you want to reduce your interest rate more, you can pay for discount points. A discount point is a percentage of the mortgage up front in a down payment. You can pay up to two points with an IRRRL.
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If you currently have a second mortgage on your home for any reason, the lender must agree to be the holder under the new refinancing.
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Occupancy is not necessary as mentioned above, so long as you once lived in the home.
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The lender will still perform a credit review of your finances to determine financial eligibility.
Can you get cash out from an IRRRL?
The short answer is no. Because this loan is streamlined, it is not meant for those borrowers looking to refinance to get cash out.
Why consider an IRRRL versus a regular refinance?
There are a few different advantages to choosing an IRRRL over traditional refinancing, including:
1. Lower interest rate: You may get a better interest rate with an IRRRL rather than a traditional refinance. This can end up saving you more money on your monthly payment and over the life of the loan.2. No appraisal: This speeds up the process of your loan and can also benefit you if home values temporarily dip. Accordingly, no appraisal means no appraisal fee, which saves you some money. (Note: While the VA itself does not require an appraisal, many lenders do require an appraisal for a VA loan.)
3. Fewer out-of-pocket costs: Yes, there are costs involved with an IRRRL, but you can roll them into your new loan, which saves you the need for additional cash at closing. If you do decide to pay these costs up front, it is likely they will still be lower compared to other types of refinances.
An additional advantage of a VA IRRRL loan is that you do not need to currently live in the house you are looking to refinance so long as you previously lived there.
Is a VA IRRRL worth it?
In general, you will need to weigh your options, needs, and financial circumstances to determine if it is worth it for you to refinance to an IRRRL. Some general things to consider when you are considering refinancing:
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Reduce your interest rate
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Cash out (if so, you should look at another refinance option)
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Change from an ARM to a fixed rate mortgage
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Use a refinance calculator to determine if refinancing makes sense for you.
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Understand how long you are planning to own the home and calculate the potential savings in refinancing versus the cost to refinance.
Everyone’s financial situation and needs are unique, so it is important to review and understand all of your options before you refinance. It makes sense to first do your homework and then meet with a loan officer who can guide you through the options and steps to an IRRRL refinance.
SIMILAR ARTICLES
When Is the Best Time to Refinance?
It’s tough to know the best time to refinance. PenFed Credit Union explains when the best time to refinance might be based on different financial situations.
Top 10 Benefits of Getting a VA Streamline Refinance
Discover the advantages of a VA Streamline Refinance, from low VA rates to no appraisal, and less stringent credit score requirements.
When is a Cash-Out Refinance a Good Idea?
There are many benefits of cash-out refinances, from debt consolidation to paying off student loans and getting home improvements done. Read on for more.
VA Streamline Refinance - Top FAQs
From benefits to requirements and costs, discover the top frequently asked questions about VA streamline refinances.
Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 96.5%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.125 discount point, which equals 1.125 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.25 discount point, which equals 1.25 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
Routing #256078446
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