VA Streamline Refinance: What Is It?


Posted on Sep 27, 2012

What is a VA Streamline Refinance/VA Loan?

VA loans are a special loan program designed specifically for veterans. They are issued by approved lenders and guaranteed by the federal government. The VA Streamline Refinance is the most common loan type within the VA loan umbrella, and is officially known as an Interest Rate Reduction Refinance Loan (IRRRL) .

The VA loan’s definitive characteristic is that veterans with qualifying credit and income can purchase a home with no money down, which makes buying a home extremely attractive for those who have served in the military. In addition, VA loans also offer feature flexible requirements, no private mortgage insurance (PMI), and very competitive interest rates.

In order to qualify for a VA Loan, a veteran must have served 181 days during peacetime, 90 days during war time, or 6 years in the Reserves or National Guard. You may also qualify as the spouse of a service member who was killed in the line of duty. Generally speaking, almost all active duty and/or honorably discharged service members are eligible for a VA purchase or streamline refinance loan.

The VA Streamline Refinance (IRRRL) Loan

The Interest Rate Reduction Loan allows you to refinance your current mortgage interest rate to a lower rate than you are currently paying. The Streamline loan is extremely popular because of its ease of use: once you have already been approved for your initial VA purchase loan, it is relatively simple to lower your interest rate and experience considerable savings. In most cases, a loan officer or lender with expertise in VA loans should be able to complete the loan within a month’s time in most cases.

VA refinance closing costs can be rolled into the cost of the loan, allowing veterans to refinance with no out-of-pocket expenses. Sometimes it is also possible for the lender to take the brunt of the cost in exchange for a higher interest rate on your loan.

In order to qualify for a VA Streamline, you must meet the following requirements:

  • Be current on your mortgage with no more than one 30-day late payment within the past year.
  • Your new monthly payment for the IRRRL must also be lower than the previous loan’s monthly payment. (The only time this condition does not apply is if you refinance an ARM to a fixed rate mortgage.)
  • You must not receive any cash from the IRRRL.
  • You must certify that you previously occupied the property.
  • You must have previously used your VA Loan eligibility on the property you intend to refinance. (You may see this referred to as a VA to VA refinance.)

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