FHA Streamline and VA IRRRL: the easiest way to refinance a government loan
The short answer
An FHA Streamline refinance and a VA Interest Rate Reduction Refinance Loan (IRRRL) let borrowers who already have an FHA or VA loan refinance into a lower rate with less paperwork, often without a new appraisal. Both require a history of on-time payments, at least 210 days since the original closing with at least six payments made, and a clear benefit to the borrower, such as a lower payment.
FHA Streamline
- Who: borrowers with an existing FHA-insured loan.
- Paperwork: non-credit-qualifying versions may not require income verification or an appraisal.
- Benefit test: the refinance must provide a net tangible benefit, generally a meaningful drop in combined rate and mortgage insurance or a move from an adjustable to a fixed rate.
- Cash out: not allowed beyond a small amount.
- Mortgage insurance: an upfront premium applies, and if you refinance within three years you may receive a partial refund of your original upfront premium.
VA IRRRL
- Who: borrowers with an existing VA-guaranteed loan.
- Funding fee: 0.5% of the loan, unless you are exempt (for example, if you receive VA disability compensation).
- Appraisal: the VA does not require one, though some lenders do.
- Recoupment: closing costs must generally be recouped through savings within 36 months.
When a streamline makes sense
If you took an FHA or VA loan when rates were higher, for example in late 2023, even a modest rate drop can be worth it because costs are lower than a full refinance. If you now have 20% equity, also compare a conventional refinance, which could eliminate FHA mortgage insurance.
Common questions
Do I need to use my current lender for a streamline?
No. You can use any approved lender that offers FHA Streamline or VA IRRRL.
Can I take cash out with an IRRRL?
No. For cash, VA offers a separate cash-out refinance with full underwriting.