VA IRRRL FAQs

1. What is a VA IRRRL?

A VA IRRRL, or Interest Rate Reduction Refinance Loan, allows an eligible Veteran with an existing VA backed mortgage to refinance that loan, generally to obtain a lower interest rate or move from an adjustable rate to a fixed rate. Merchants Home Lending can help you evaluate whether an IRRRL could improve your current mortgage terms. 

2. Who is eligible for a VA IRRRL?

You generally need to have an existing VA backed home loan and use the IRRRL to refinance that same VA loan. You must also certify that you currently live in or previously lived in the property securing the loan. Merchants Home Lending can review your existing mortgage and determine whether you meet the applicable IRRRL requirements. 

3. Does a VA IRRRL lower your interest rate?

An IRRRL is designed to provide a benefit such as reducing your interest rate or making your payment more stable by moving from an adjustable rate to a fixed rate. The refinance must satisfy VA's applicable net tangible benefit requirements. Merchants Home Lending can compare your current rate with the available IRRRL option to determine whether the refinance provides a meaningful benefit. 

4. What is the current VA IRRRL interest rate?

There is no single VA IRRRL rate available to every borrower. Your rate depends on market conditions, loan term, current loan balance, borrower qualifications, and lender pricing. Merchants Home Lending can provide a personalized IRRRL rate quote based on your existing VA mortgage and refinancing scenario.

5. How much can I save with a VA IRRRL?

Your potential savings depend on your current interest rate, new rate, remaining loan balance, remaining term, and closing costs. Merchants Home Lending can compare your current payment with the estimated IRRRL payment and calculate the potential monthly savings and overall cost of refinancing.

6. Does a VA IRRRL require an appraisal?

Generally, an appraisal is not required for an IRRRL. VA rules allow IRRRLs to be processed without an appraisal in most cases, although specific circumstances can create additional valuation requirements. Merchants Home Lending can determine whether an appraisal is necessary for your particular refinance. 

7. Does a VA IRRRL require a credit check?

A traditional credit underwriting package is generally not required for an IRRRL under VA guidelines. However, lenders may have their own requirements and may obtain credit information as part of their process. Merchants Home Lending can explain the documentation and qualification requirements for your specific IRRRL. 

8. Can I get a VA IRRRL if my credit score has gone down?

Potentially. One advantage of the IRRRL program is that it generally has less extensive credit underwriting than a new purchase or cash out VA refinance. However, lender requirements can still apply, and your payment history and overall loan situation matter. Merchants Home Lending can review your circumstances to determine whether an IRRRL may still be available.

9. How long do I have to wait before getting a VA IRRRL?

VA seasoning requirements generally require that at least 210 days have passed from the first payment due date of the loan being refinanced and that you have made at least six consecutive monthly payments. Merchants Home Lending can review your current loan history and closing date to determine when you may qualify for an IRRRL. 

10. Can I refinance a VA loan with an IRRRL more than once?

Potentially, yes. The VA IRRRL program does not simply prohibit you from using an IRRRL because you have previously refinanced. However, each new refinance must satisfy the applicable VA requirements and provide the required benefit. Merchants Home Lending can review your current mortgage history and determine whether another IRRRL makes financial sense.

11. Can I refinance a VA ARM into a fixed rate with an IRRRL?

Yes. An IRRRL can be used to refinance an existing VA adjustable rate mortgage into a fixed rate mortgage. This can provide greater payment stability by replacing a variable interest rate with a fixed rate. Merchants Home Lending can compare the new fixed payment with your existing ARM and help you evaluate the long term benefit. 

12. Can I refinance a fixed rate VA loan into an ARM with an IRRRL?

It may be possible, but stricter VA requirements apply when moving from a fixed rate to an adjustable rate. VA guidance requires the new ARM rate to provide a substantially lower initial rate than the existing fixed rate. Merchants Home Lending can review the specific rates and terms to determine whether this type of IRRRL meets the applicable requirements. 

13. Can I get cash back with a VA IRRRL?

No. An IRRRL is not a cash out refinance. VA guidance specifically states that you cannot receive cash from the loan proceeds of an IRRRL. If your goal is to access home equity, a VA cash out refinance may be the more appropriate program. Merchants Home Lending can help compare the two options based on your goals. 

14. Can I roll closing costs into a VA IRRRL?

Yes. Eligible closing costs can generally be included in the new loan rather than paid entirely upfront. Another possible structure is a rate high enough for the lender to cover certain costs. Merchants Home Lending can compare the upfront cost versus financing the closing costs so you understand the effect on your new loan balance and payment. 

15. Does a VA IRRRL have a funding fee?

Yes. The current VA funding fee for an IRRRL is generally 0.5% of the loan amount, although eligible Veterans may qualify for an exemption. Merchants Home Lending can determine whether the funding fee applies to you and include it in your refinance cost comparison. 

16. Can I get a VA IRRRL with no money out of pocket?

Potentially, yes. An IRRRL can sometimes be structured so that eligible closing costs are included in the new loan or covered through lender pricing rather than being paid upfront. However, “no money out of pocket” does not mean the refinance has no costs. Merchants Home Lending can show you how the costs are being handled and what they mean for your new loan. 

17. How much does a VA IRRRL cost?

The total cost depends on the lender, loan amount, interest rate, closing costs, discount points, funding fee, and other transaction expenses. VA specifically recommends comparing the closing costs with the expected monthly savings to determine whether refinancing is worthwhile. Merchants Home Lending can calculate your estimated refinance costs and potential savings before you decide. 

18. How long does it take to break even on a VA IRRRL?

Your break even period is the amount of time it takes for your monthly savings to recover the costs of refinancing. For example, if your refinance costs are $6,000 and your monthly savings are $200, your simple break even period would be 30 months. Merchants Home Lending can calculate the actual break even point using your loan balance, closing costs, and proposed new payment. VA also requires lenders to provide specific refinance comparisons in applicable IRRRL transactions. 

19. Is a VA IRRRL worth it if my rate only drops slightly?

It depends on the total cost of the refinance and how long you expect to keep the mortgage. A small rate reduction may not justify the closing costs if you plan to move or refinance again soon. Merchants Home Lending can calculate your break even period and compare the total cost and savings instead of evaluating the rate reduction alone. 

20. How do I apply for a VA IRRRL with Merchants Home Lending?

Start by providing information about your existing VA mortgage, including your current interest rate, approximate loan balance, and payment. Merchants Home Lending can review your current loan, available IRRRL pricing, estimated closing costs, and potential monthly savings to determine whether refinancing makes sense. If the numbers support the refinance, our team can guide you through the application and closing process.

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