VA Interest Rate Reduction Refinance Loan

An Interest Rate Reduction Refinance Loan (IRRRL) may let service members replace their current VA Home Loan with a new one with different terms.  

Who is eligible for an Interest Rate Reduction Refinance Loan?  

The following are requirements for IRRRL applicants: 

  • Already have a VA Home Loan, 
  • The service member will use the IRRRL on an existing VA Home Loan, 
  • The service member can show that they are living in the home covered by the loan, and 
  • The VA Home Loan must become the primary mortage (for when there is a second mortage on a home already). 

What are the advantages of getting an Interest Rate Reduction Refinance Loan?  

An IRRRL may help service members: 

  • Lower their monthly loan payment by getting a lower interest rate, 
  • Make their monthly loan payment more stable by moving from a loan with an adjustable or variable interest rate (an interest rate that changes over time) to one that is fixed (the interest rate stays the same). 

Do I have to make a down payment for an Interest Rate Reduction Refinance Loan?  

No. There is no requirement for service members to make a down payment on an IRRRL. 

However, the Federal Housing Financing Agency (FHFA), established conforming loan limits for mortgages. Under an IRRRL, service members may borrow up to the limit without making a down payment. If they make a down payment, they may be able to borrow more than this amount. Learn about VA Home Loan limits.  

Do I pay closing costs on an Interest Rate Reduction Refinance Loan?  

While the VA does not determine most of the closing cost fees, here are examples of closing costs service members (buyer) may have to pay 

  • VA funding fee 
  • Loan origination fee 
  • Loan discount points or funds for temporary “buydowns” 
  • Credit report and payment of any credit balances or judgments 
  • VA appraisal fee 
  • Hazard insurance and real estate taxes 
  • State and local taxes 
  • Title insurance 
  • Recording fee 

In cases where an IRRRL is used to get a bigger loan for a different home, the seller pays these closing costs: 

  • Commission for real estate professionals 
  • Brokerage fee 
  • Buyer broker fee 
  • Termite report 

How do I get an Interest Rate Reduction Refinance Loan?  

1. Find a lender. 

Service members will need to find a private bank, mortgage company, or credit union to get an IRRRL. The terms and fees will vary, it is recommended to contact several lenders. 

Learn more on how to spot misleading refinance offers 

2. Gather necessary documents for the lender and the VA. 

Service members should be able to use their original Certificate of Eligibility (COE) from their first VA Home Loan to show their lender. For service members that cannot find their COE, they may request the lender to get their COE electronically through the VA Home Loan program portal.  

3. Follow the lender’s process for closing the IRRRL and pay closing costs.  

Service members may need to pay a VA funding fee to close. Their lender will also charge interest on the loan in addition to closing costs.  

With an IRRRL these costs may be included in the new loan, so, the service member does not have to pay up front. Otherwise, the lender might increase the interest rate, so the lender pays the closing costs instead.  

Where can I learn more about VA Home Loans? 

The VA’s Home Loan page has dedicated information, resources, and guidance for how to get and use a VA Home Loan.  

More in-depth details and information can be found in the VA Home Loan Guaranty Buyer’s Guide. 

This website has been prepared for general information purposes only. The information on this website is not legal advice. Legal advice is dependent upon the specific circumstances of each situation. Also, the law may vary from state-to-state or county-to-county, so that some information in this website may not be correct for your situation. Finally, the information contained on this website is not guaranteed to be up to date. Therefore, the information contained in this website cannot replace the advice of competent legal counsel licensed in your jurisdiction.

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