Refinance

VA refinance options: IRRRL and cash-out

Short answer

If you already have a VA loan, the IRRRL (streamline) is the cheapest way to lower your rate or move from an adjustable to a fixed rate. It has a 0.5% funding fee, and costs can be rolled into the loan. A VA cash-out refinance can replace any loan, VA or not, and let you take equity out. It needs a full appraisal and has a 2.15% fee on first use.

Last reviewed · Chicago VA Loans editorial team · How we check facts

IRRRL break-even calculator

Current principal and interest– Funding fee (0.5%)– New loan amount– New principal and interest– Monthly savings– Months to recoup costs–

VA expects fees and costs to be recovered within 36 months. Example figures; principal and interest only.

Side by side

IRRRL (streamline)Cash-out refinance
Current loan must be VAYesNo
Funding fee0.5%2.15% first use, 3.3% after
OccupancyYou live there now or used toYou must live there
AppraisalUsually not required by VARequired
Take cash outNoYes
Closing costsCan be added to the loanPaid at closing or from proceeds
Seasoning210 days after first payment and six payments madeSame seasoning when refinancing a VA loan

IRRRL rules

  • The new loan must give you a net tangible benefit, such as a lower rate or a move to a fixed rate.
  • Fees and costs should be recovered through monthly savings within 36 months.
  • Any second mortgage holder must agree to stay in second position.
  • Your entitlement carries over. Using an IRRRL does not use more of it.

Cash-out uses

Pay off higher-interest debt, pay for school, renovate, or move an FHA or conventional loan into a VA loan to drop monthly mortgage insurance. VA allows lending up to the home’s appraised value; many lenders cap cash-out at 90%.

Watch for refinance offers that sound too good

VA and the Consumer Financial Protection Bureau have warned about mailers that push repeated refinances. Check the break-even month on every offer.

Common questions

What is the VA IRRRL funding fee?

0.5% of the loan amount, waived for veterans exempt from the funding fee. A pending bill, H.R. 6047, would raise it to about 1.4%.

Do I need an appraisal for a VA streamline refinance?

VA does not usually require one for an IRRRL. Some lenders do.

Can I refinance an FHA loan into a VA loan?

Yes, with a VA cash-out refinance, even if you take no cash out. It can remove FHA mortgage insurance.

Sources

  1. Interest rate reduction refinance loan (IRRRL), VA.gov
  2. VA-backed cash-out refinance loan, VA.gov
  3. VA funding fee and loan closing costs, VA.gov (updated Sept. 22, 2026)
  4. VA Lenders Handbook (M26-7), VA Loan Guaranty Service
  5. VA refinance and assumption costs could rise under pending bill, The Close

Related guides

What will your VA funding fee be?

Enter a price and down payment to see the 2026 fee, or check whether you are exempt.

Open the calculator

An independent guide. Not affiliated with or endorsed by the U.S. Department of Veterans Affairs, and not a lender. General information, not legal, tax or financial advice.

Scroll to Top