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Best VA Loan Refinance

July 2024

Military borrowers can qualify for a VA loan refinance, which offers competitive rates and a streamlined application process. No appraisal or underwriting required. That means no income or credit score eligibility requirements.
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If you have an existing VA-backed home loan, you can save money and simplify your finances with VA streamline refinance loans, also known as Interest Rate Reduction Refinance Loans (IRRRL). A VA loan refinance can reduce your interest rate and help you pay off your mortgage faster.
Here is our list of the best VA loan refinance lenders.
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What is a VA refinance loan?

A VA refinance loan allows homeowners to refinance into a new mortgage when borrowing from VA-approved lenders. VA refinance loans are part of the U.S Department of Veteran Affairs' VA home loan program, which is the same program that offers the popular $0-down VA mortgages. These are valuable benefits available to those who have served or are serving in the armed forces.
There are two main types of VA loan refinancing: Interest Rate Reduction Refinance Loans (IRRRLs) and cash-out refinance.

VA streamline refinance loans

VA streamline refinance loans, also known as Interest Rate Reduction Refinance Loans (IRRRLs), allow homeowners with a current VA loan to refinance into a more affordable mortgage. They are called “streamlined” because the lending approval process is simplified to lower fees, reduce paperwork, and save time.

VA cash-out refinance loans

VA cash-out refinance loans are available to qualified service members, veterans, or spouses who currently have conventional loans, FHA loans, USDA loans, or VA loans. With a VA cash-out refinance, you can refinance your current mortgage — regardless of whether it's a VA loan or a conventional loan — and get cash by borrowing against the equity you’ve built up in the home.

What is an IRRRL?

VA-eligible homeowners looking to lower the rate on their current VA home loans can save a lot of money with an Interest Rate Reduction Refinance Loan (IRRRL). These loans are designed to make it easy for homeowners to lower their mortgage interest rates to current market rates. An IRRRL can also be used to save money on interest by refinancing a 30-year mortgage to a shorter term, such as a 15-year mortgage. In this case, monthly payments will increase, but you will pay the mortgage off faster and pay less interest.
Borrowers looking to reduce overall interest costs can use an IRRRL to refinance to a 15-year mortgage from a 30-year mortgage. However, the VA warns that you should make sure the new interest rate is at least one percentage point less than the original rate to keep the monthly payment affordable. Your payment will be higher if you’re paying your home off more quickly with a shorter-term loan.

Pros and cons of a VA IRRRL

Here is a list of the benefits and the drawbacks to consider when shopping for an IRRRL.
  • No appraisal is necessary (which means no appraisal fee).
  • Does not require credit underwriting, and has no minimum income or credit score requirements.
  • Option to avoid upfront closing costs if you roll them into the new loan amount.
  • Does not allow you to cash out your home equity (you'll need a VA cash-out refinance for that).
  • Refinancing an adjustable-rate-mortgage into an IRRRL with a fixed rate could increase your interest rate.

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