Key takeaways
- An IRRRL refinances an existing VA loan into a new VA loan, usually to lower your rate or move from an adjustable rate to a fixed rate.
- It's designed to be simpler than a standard refinance: VA doesn't generally require a new appraisal or Certificate of Eligibility, though lenders may set their own requirements.
- You must have lived in the home at some point, so a home you kept as a rental after a PCS move can still qualify.
- An IRRRL can't put cash in your pocket. If you want cash out or are refinancing a non-VA loan, a VA cash-out refinance is the option to compare.
What Is a VA IRRRL?
IRRRL stands for Interest Rate Reduction Refinance Loan. You'll also hear it called a VA streamline refinance. It replaces your current VA-backed mortgage with a new VA-backed mortgage, and the program is built to make that switch simpler than a standard refinance.
Most homeowners look at an IRRRL for one of two reasons: to lower their interest rate after rates have come down from where they locked, or to move from an adjustable-rate mortgage to a fixed rate for a predictable payment. VA requires that the new loan give you a real benefit, so an IRRRL isn't designed for refinancing just for the sake of it.
In Colorado Springs, with Fort Carson, Peterson and Schriever Space Force Bases, the Air Force Academy and Cheyenne Mountain nearby, many homeowners bought with VA loans. If that's you, the IRRRL is usually the first refinance option worth checking.
Who Can Use an IRRRL
You need an existing VA-backed home loan on the property you're refinancing. VA also asks you to certify that you live in the home now or lived in it in the past. You don't need to be living there today.
Because the IRRRL reuses the entitlement from your current VA loan, VA doesn't generally require a new Certificate of Eligibility. VA also sets rules on how long you must have had your current loan and on your recent payment history before you can refinance. We'll check how those rules apply to your loan before you spend time on paperwork.
If you have a second mortgage or home equity line on the property, that lender usually has to agree to stay in second position behind the new loan. Raise it early so it doesn't hold things up.
IRRRL vs. Other Refinance Options
Current loan
- VA IRRRL (streamline)
- Must be a VA-backed loan
- VA cash-out or conventional refinance
- VA cash-out can refinance a VA or non-VA loan; conventional can refinance any type
Main purpose
- VA IRRRL (streamline)
- Lower your rate or move from adjustable to fixed
- VA cash-out or conventional refinance
- Take cash out, pay off other debt, or change loan type
Cash to you
- VA IRRRL (streamline)
- No cash out
- VA cash-out or conventional refinance
- Cash out is possible, subject to program rules
Occupancy
- VA IRRRL (streamline)
- You live in the home now or lived there before
- VA cash-out or conventional refinance
- Rules depend on the program; VA cash-out requires you to live in the home
Appraisal and Certificate of Eligibility
- VA IRRRL (streamline)
- Generally not required by VA; lenders may require them
- VA cash-out or conventional refinance
- Appraisal usually required; VA cash-out requires a COE
VA funding fee
- VA IRRRL (streamline)
- Applies unless you're exempt
- VA cash-out or conventional refinance
- VA cash-out has its own funding fee unless exempt; conventional has none
Mortgage insurance
- VA IRRRL (streamline)
- None monthly
- VA cash-out or conventional refinance
- None monthly on VA; conventional may require it depending on your equity
Kept Your Home as a Rental After a PCS?
This is where the IRRRL stands out for military families. Because VA only requires that you lived in the home at some point, you can often use an IRRRL on a Colorado Springs house you kept as a rental after orders took you elsewhere, or on a home in another state that you kept when you moved here.
Most other refinance options for a rental are treated as investment property loans, with different requirements. If you're weighing whether to keep or sell a home after a PCS, it's worth knowing the IRRRL may still be available on it.
One thing to plan for: refinancing doesn't free up the VA entitlement tied to that home. If you want to buy again with a VA loan at your next duty station, we'll review how much entitlement you have left.
What It Costs, and How VA Protects You
An IRRRL has closing costs like any refinance, plus a VA funding fee unless you're exempt. Veterans receiving VA disability compensation and some surviving spouses are among those exempt. Closing costs can usually be included in the new loan or covered in other ways, and VA publishes the current fee schedule.
VA requires that the savings from the new loan cover the costs of the refinance within a set period, and that the new loan give you a real benefit. Those rules exist because some refinance offers sent to military homeowners have pushed repeated refinancing that didn't help the borrower.
Your Loan Estimate shows the rate, the costs and the new payment in a standard format. Compare it with your current mortgage statement, and look at the total cost over the time you expect to keep the home, not just the monthly payment.
Is an IRRRL Worth a Look? Quick Self-Check
Check the statements that fit you. The more you check, the more an IRRRL conversation makes sense.
How the IRRRL Process Works With Countryside Lending
Countryside Lending has helped Colorado homeowners since 2006, including many military families in Colorado Springs. Our process is simple: a quick online application that takes about 5–10 minutes, a quick call to go over your refinance options side by side, and a written Loan Estimate so you can decide with the numbers in front of you.
If an IRRRL isn't the right fit, for example because you want cash out or your current loan isn't a VA loan, we'll walk you through the other refinance programs we offer. Your loan officer is Brendon O'Connor (NMLS #249969).