VA IRRRL

What is the VA IRRRL Loan?

The VA Interest Rate Reduction Refinance Loan (IRRRL), also referred to as a Streamline Refinance or a VA to VA loan, provides the opportunity to refinance an existing VA loan into a new VA loan with the purpose of lowering the interest rate, monthly payment, or changing the loan term. Like all of the VA home loans, the IRRRL is designed to make homeownership more affordable for veterans and military personnel and their families by offering an efficient, fast approval refinance program to help lower monthly payments.

VA IRRRL Loan Basics

• No appraisal or credit underwriting package required
• Certificate of Eligibility required
• 100% financing available
• 580 minimum FICO
• 10, 15, 20, 25 or 30 year terms available
• No Cash Out Refinance
• Available for 1-2 unit primary residences
• Available for VA-approved condominiums, PUDs and singlewide and multiwide manufactured housing

What are the benefits?

Reduce Monthly Payment

A VA IRRRL program offers homeowners an opportunity to reduce their monthly mortgage payment by switching to a lower interest rate.

Save on Overall Interest by Reducing Loan Term

Another option for VA borrowers is to adjust the term of their loan (usually from 30 years to 15 years), which can save in overall interest (monthly payment must decrease and loan costs must be recouped within 36 months).

No Minimum Amount of Equity

Many conventional programs require a minimum amount of equity in a home before a homeowner can refinance with lower interest rates. AFR’s VA IRRRL product offers unlimited LTV, so if a borrower owes more than the home is worth, they may still be able to refinance.

It’s Easy

Because this program is a VA to VA loan, many of the steps that took place during the original loan can be eliminated from the underwriting process. A new appraisal may not be required, which may make it quicker and easier to submit an application.

Who is eligible for a VA IRRRL Loan?

An IRRRL is available only to refinance a property that already has a VA loan. As with any VA mortgage loan program, persons who may qualify for a IRRRL refinance loan include eligible veterans, active duty service members, National Guard or Reserve members, or certain surviving spouses. To be eligible, the veteran/service member must have been discharged under conditions other than dishonorable and meet the length of service requirements. The note date of the refinance loan must be on, or after, the later of:

• The date on which the borrower has made at least six monthly payments on the loan being refinanced; and
• The date that is 210 days after the first payment due date of the loan being refinanced

In which scenarios is the VA IRRRL Loan useful?

This loan program can be ideal for borrowers who are:

• Looking for a simple, affordable way to refinance an existing VA Loan
• VA mortgage holders whose interest rate is higher than those currently available

VA IRRRL Loan & Funding Fee/Subsequent Use Fee

VA IRRRL borrowers pay a 1st time and subsequent use fee of 0.50%, per the Department of Veterans Affairs.

Using the VA IRRRL Loan to Refinance from VA ARM to Fixed Rate VA Loans

The VA IRRRL can be used to refinance an existing VA ARM to a Fixed Rate VA Loan. This can help your VA ARM borrowers lock in a low rate that doesn’t increase over time and thereby ensuring their monthly payments are stable and affordable.

Other Programs to Consider:

If the VA IRRRL Refinance Loan is not an ideal fit for a particular scenario here are a few other products to explore:

• For the purchase of HUD homes requiring minimal repairs: FHA Repair Escrow
• VA Purchase Financing: VA Standard
• To finance new home construction projects: VA One-Time Close Construction Loan