VA Streamline Finance Program: The Basics

paperwork at bank

The VA’s Streamline Refinance program, also known as a “VA to VA” loan or Interest Rate Reduction Refinancing Loan (IRRRL), allows you to lower the interest rate on your mortgage with few or no out-of-pocket costs. This is only available to you if you have already used your eligibility for a VA loan on the property you intend to refinance, and is probably the best option for you if you just want to refinance your existing loan at a lower interest rate.

Streamline Refinance Advantages:

• Refinance your existing VA loan to a lower interest rate.

• This loan can be done with "no out of pocket money" by including all costs in the new loan, or by making the new loan at an interest rate high enough to enable you to pay the costs.
• The VA does not require an appraisal, income or employment verifications, a credit report or termite report, as long as the current mortgage has been paid as agreed for the last 12 months and is up to date at the time of refinancing.
• You are allowed to include up to $6,000 in your refinancing loan for the purpose of energy efficient home improvements.

Streamline Refinance Basics:

• No assumptions are allowed.
• Except when refinancing an existing VA guaranteed adjustable rate mortgage (ARM) to a fixed rate, the refinance must result in a lower interest rate.
• No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new VA loan will be a first mortgage.
• The VA has a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.
• You cannot receive any cash back.
• You don’t need to use your Certificate of Eligibility (CoE) for the refinance -- your lender can use the VA’s e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.
• Any other liens must be subordinated to the VA loan.

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