VA IRRL

US Deptartment of Veteran Affairs (VA) Interest Rate Reduction Refinance Loan

The VA Interest Rate Reduction Refinance Loan (IRRRL) is a refinance program that for existing VA home owners. The program allows for a decrease to homeowners the interest rate and monthly payment, all without a home appraisal or credit underwriting. The program also allows for the homeowner to refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.

Benefits

  • No appraisal or credit underwriting package necessary to qualify
  • In many cases an IRRRL may be done with no closing costs out of pocket to the borrower.
  • No monthly mortgage insurance
  • Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years.

Eligibility

An IRRRL can only be made to refinance a property on which the veteran has used his or her VA loan eligibility. The transaction must be a VA to VA refinance, and it will reuse the entitlement originally used to obtain the current loan.

Additionally:

  • A Certificate of Eligibility (COE) is not required.
  • No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage the holder must agree to subordinate that lien.
  • The occupancy requirement for an IRRRL is different from other VA loans. For an IRRRL you need only certify that you previously occupied the home.

VA Funding Fee

Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. The borrower has the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:

  • Veteran receiving VA compensation for a service-connected disability, OR
  • Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
  • Surviving spouse of a Veteran who died in service or from a service-connected disability.

For more information about VA Home Loan Guaranty costs visit here: Loan Fees