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Interest Rate Reduction Refinance Loans (IRRL)

(Lender's Handbook, Chapter 6, Topic 1)

A veteran who obtained a VA loan may refinance it with a VA guaranteed loan at a lesser interest rate without using additional entitlement.

 No appraisal is required.

 The minimum guaranty on an IRRRL is 25%.

 The veteran may not obtain cash proceeds.

 If the existing loan is delinquent, the IRRRL must be submitted to VA for prior approval.

 Although no underwriting is required, approval of new credit may be required by the trustee in a Chapter 13 bankruptcy.

 The new loan must be at a lesser interest rate than the old VA loan except when refinancing an existing adjustable rate mortgage with a new fixed rate mortgage.

 No portion of the loan proceeds may be used to pay off other debts.

 The dollar amount of guaranty applicable to the prior VA loan is transferred to the new loan.

 The new loan is limited to the balance of the old loan, the funding fee, up to $6,000 of energy efficient improvements, and allowable closing costs including not more than 2 discount points.

 The term of an IRRRL may not exceed the original term of the loan being refinanced by more than 10 years.

 The veteran, including active-duty service members stationed elsewhere, is able to satisfy the occupancy requirement by certifying prior occupancy.

 If the veteran whose entitlement was previously used has died, and the surviving spouse was a co-obligor, that spouse is considered a veteran for the purpose of the IRRRL.

Note: Lenders may now use the WebLGY program in the VA Portal site: https://vip.vba.va.gov to verify current VA loans in lieu of a Certificate of Eligibility for IRRRLs.

Did you know?

Interest Rate Reduction Refinancing Loans (IRRRL's) were authorized in 1980.