VA Streamline

IRRRL Facts for Veterans

IRRRL stands for Interest Rate Reduction Refinancing Loan.  You may see it referred to as a "Streamline" or a "VA to VA."  No appraisal or credit underwriting package is required by VA.  A certificate of eligibility is not required.  VA Online Services may use our e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.

An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by raising the interest rate so VA Online Services can pay the costs.  ( Remember : The interest rate on the new loan must be lower than the rate on the old loan unless you refinance an ARM to a fixed rate mortgage).

The interest rate reduction program allows you to choose to refinance with VA Online Services, not the lender you currently make your payments to or to the lender from whom you originally obtained your VA Loan.

You may NOT receive any cash from the loan proceeds.

An IRRRL can be done only if you have already used your eligibility for a VA loan on the property you intend to refinance.  It must be a VA to VA refinance, and it will reuse the entitlement you originally used.  You may have used your entitlement by obtaining a VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan.

The occupancy requirement for an IRRRL is different from other VA loans.  When you originally got your VA loan, you certified that you occupied or intended to occupy the home.  For an IRRRL you need only certify that you previously occupied it.

The loan may not exceed the sum of the outstanding balance on the existing VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points.  You may also add up to $6,000 of energy efficiency improvements into the loan.

Some Veterans use IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years.  While this can save you a lot of money in interest over the life of the loan, if the reduction in the interest rate is not at least one percent (two percent is better) and lots of new loan costs are rolled into the new loan, you may see a very large increase in your monthly payment.

Beware:  It could be a bigger increase than you can afford

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 so that your new VA loan will be a first mortgage.

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