If you're a Veteran or active-duty service member with an existing VA-backed mortgage, you've probably heard the term "IRRRL" thrown around (pronounced like "Earle") - maybe by another lender, maybe in a Facebook group. It stands for Interest Rate Reduction Refinancing Loan, and it's basically the VA's version of a streamlined refinance designed to help you lower your rate, drop your payment, or move from an adjustable-rate mortgage (ARM) to a more predictable fixed rate.
The whole point of an IRRRL is to make refinancing easier and less paperwork-heavy than a traditional refinance. But like most things in mortgage, there are rules—and the VA has built in some pretty smart consumer protections to make sure you're actually benefiting from the refinance, not just getting churned into a new loan for no real reason.
I work with Veterans across Georgia and Florida, and I've helped plenty of folks navigate whether an IRRRL makes sense for their situation. Here's what you need to know.
What Is a VA IRRRL?
An IRRRL is a VA-backed refinance that replaces your existing VA loan with a new VA loan. The goal is simple: lower your interest rate, reduce your monthly payment, or move from an ARM to a fixed rate for more stability. You'll also hear it called a VA Streamline Refinance because it typically requires less documentation than a standard refinance, often no appraisal, reduced underwriting, and faster processing (though every lender is a little different on this).
The key thing to understand: this is only for refinancing an existing VA loan. If you don't currently have a VA-backed mortgage, you can't use an IRRRL.
IRRRL Requirements You Need to Know
The VA has some rules in place to protect you from lenders refinancing you when it doesn't actually help. Here's what you need to qualify:
You Must Already Have a VA-Backed Loan
IRRRLs are specifically for refinancing an existing VA-guaranteed mortgage. If your current loan is FHA, conventional, or anything else, you'd be looking at a different type of refinance.
210 Days + 6 Payments (the "Seasoning" Requirement)
The VA won't guarantee your IRRRL until the later of: 210 days after your first payment due date on your current VA loan, and after you've made at least 6 monthly payments. This is to prevent lenders from flipping you into a new loan before you've even gotten your feet under you with the existing one.
Net Tangible Benefit (NTB)
This is VA-speak for "you have to actually benefit from this refinance." The benefit usually shows up as either payment stability (like moving from an ARM to a fixed rate) or a meaningful reduction in your interest rate and monthly payment. The VA doesn't want lenders refinancing you just to generate fees.
36-Month Recoupment Rule (the Breakeven Test)
This is the big one. All of the costs that go into your refinance—things like lender fees, title charges, the VA funding fee, and discount points—must be recovered through your monthly principal and interest (P&I) savings within 36 months. Taxes, insurance, and escrow adjustments don't count toward this calculation, just your P&I payment change.
Here's a simple example:
Let's say your total refinance costs are $4,500, and your new monthly P&I payment is $150 lower than your old one. Your recoupment calculation would be:
$4,500 ÷ $150 = 30 months
Since 30 months is less than 36, you pass the test. If it took 40 months to recoup, the IRRRL wouldn't meet VA's requirements.
Occupancy
The IRRRL is generally intended for your primary residence. Most lenders also have their own overlays here, so if you've turned your VA-financed home into a rental, it's worth asking your lender what their policy is.
IRRRL Benefits (Why Veterans Use It)
Lower Monthly Payment or More Stability
If rates have dropped since you got your original VA loan, an IRRRL can save you money every month. And if you're currently in an ARM and worried about future rate adjustments, moving to a fixed rate can give you a lot more peace of mind.
Often Less Documentation
Because the VA already backed your original loan, lenders can often skip the appraisal and streamline the underwriting process. Every lender handles this a little differently, but in general, IRRRLs are faster and require less paperwork than a full refinance.
Roll Costs Into the Loan
It's common to roll many of your closing costs into the new loan amount rather than paying them out of pocket. This depends on how your loan is structured and your lender's policies, but it's a big reason why IRRRLs are so popular - you can refinance without bringing a ton of cash to closing (or any).
What Does a VA IRRRL Cost?
Let's talk numbers. Here are the typical cost buckets you'll see:
VA Funding Fee
For an IRRRL, the VA funding fee is typically 0.5% of your loan amount. So on a $300,000 loan, that's $1,500. If you have a service-connected disability rating, you may be exempt from this fee entirely, we'll check this for you.
Normal Closing Costs
Just like any refinance, you'll have lender fees, title and settlement charges, and recording fees. These vary depending on where you live. Georgia counties have different title and recording costs than Florida counties, for example.
Prepaids and Escrows
This isn't technically a "fee," but you'll likely need to prepay some property taxes and homeowners insurance and refill your escrow account. This can add to your cash to close, but it's money you'd be paying anyway. If you have a current escrow account, it will be refunded shortly after your old loan is paid off.
Discount Points (Optional)
You can choose to pay discount points upfront to buy down your interest rate. Whether this makes sense depends on how long you plan to keep the loan and whether the lower rate helps you pass the 36-month recoupment test.
The key thing to remember: if your total costs take longer than 36 months to recoup through your monthly P&I savings, the IRRRL won't pass the VA's test and you won't be able to move forward.
Quick "Is This Worth It?" Checklist
Good fit if:
- You can lower your rate and payment or move from an ARM to a fixed rate
- You expect to keep the mortgage long enough to recoup your costs in 36 months or less
- Your current VA rate is meaningfully higher than what you can get today
Not a fit if:
- You're planning to sell or move soon
- The rate improvement is tiny and doesn't pass the recoupment test
- You're being pitched on "skipping payments" as a benefit (the VA specifically warns against this kind of marketing—you're not actually skipping payments, you're just shifting when your first payment is due, and it can cost you more in interest)
FAQs
Does an IRRRL require an appraisal?
Often no, but it depends on the lender. One of the benefits of an IRRRL is that appraisals are typically waived because the VA already has a record of your property from your original loan.
Can I take cash out with an IRRRL?
No. If you want to pull cash out of your home, you'd need to look at a VA Cash-Out Refinance, which is a different product with different requirements.
How soon can I do an IRRRL after getting my original VA loan?
You need to wait at least 210 days from your first payment due date and make at least 6 monthly payments before the VA will guarantee an IRRRL.
What's the funding fee for an IRRRL?
Typically 0.5% of the loan amount, unless you're exempt due to a service-connected disability.
Should You Do a VA IRRRL?
The honest answer: it depends on your situation. If you can lower your rate meaningfully, pass the 36-month recoupment test, and you're planning to stay in your home for a while, an IRRRL can be a great move. If you're planning to sell soon or the rate difference is minimal, it's probably not worth it.
I work with Veterans across Georgia—including North Atlanta, Alpharetta, and Milton—and throughout Florida. Costs can vary depending on your county and local title and recording fees, so if you're thinking about a VA IRRRL, I'm happy to run the numbers for you. I'll calculate your recoupment timeline, compare your payment options, and tell you honestly whether it passes the VA's net tangible benefit test.
Let me know if you have questions—happy to help.
