The VA Streamline Refinance is a specific loan program available via the VA Loan Guaranty program that nearly all active duty and/or honorably discharged service members are eligible for. It’s officially known as an Interest Rate Reduction Refinance Loan (IRRRL) by the government, and sometimes called a VA-to-VA Loan. It’s one of the quicker and cheaper types of refinance for veterans with a current VA loan. It allows veterans to qualify without income or bank account verification.
Advantages of the VA Streamline Refinance Program
The VA Streamline irons out many of the kinks veterans face when looking for a loan. Paystubs and W2s are not required, and neither are bank statements or home appraisals. Because appraisals are unnecessary, there isn’t any home-to-value limitation either. In addition, underwater homes are eligible, and the required funding fee is even lower than that for VA purchase loans. Closing costs can also be wrapped into the new loan so there are very few expenses that need to be covered out of pocket. All of this dramatically lowers the cost of payments, and so VA loan users are more unlikely to default on payments. The VA streamline refinance rates are also significantly low.
What Do I Need to Qualify for the VA Streamline Refinance Program?
In order to be eligible for the IRRRL, the veteran must have a VA loan, meaning the IRRRL can only refinance a property that the veteran has already used their VA loan eligibility on. There is no requirement for a Certificate of Eligibility, and the veteran only needs to certify that they have previously occupied the home. Applicants are more likely to qualify if they currently reside in the home, but they may still be able to apply otherwise if, for instance, after living in the home they relocated and rented it out. Additionally, the proceeds of the IRRRL cannot fund any loan other than the existing VA loan.
The loan also has to improve the borrower’s financial situation, so VA lenders only approve refinances that do so. In light of this, the veteran’s new payments on the VA streamline must also be lower than their current payments, with a few exceptions (when they’re refinancing into a shorter term, for example). Plus, lenders prove the benefit of the refinance by providing applicants with a form that states the interest rate and payment of the current loan compared to the rate and payment of the new loan, as well as the amount of time it will take for the veteran to make back the cost of the refinance.