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VA Refinance Program 2025

Created on: September 16, 2021,

Updated on: November 17, 2024

Reviewed by David Naimey

Approved by Chad Turner

Key Takeaways

  • Includes VA streamline refinance (IRRRL) for lowering interest rates and VA cash-out refinance for accessing home equity.
  • Requires specific service periods for military personnel, veterans, National Guard members, and reservists.
  • Lower interest rates, no PMI, minimal upfront fees, flexible credit requirements, and no prepayment penalties.
  • Generally allowed 210 days after the first mortgage payment with at least six on-time monthly payments needed.
Home decor with background blurry American flag. Veterans applying for a VA refinance loan.
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    Veterans and military homeowners can refinance their VA loan to secure better interest rates and reduce their monthly payments. This can also help manage housing expenses and fund home improvements. This will lighten their budget and leave money aside for other personal finance needs.

    Types of VA Home Loan Refinance Programs

    There are two main types of VA refinance loans: VA streamline refinance (IRRRL) and VA cash-out refinance.

    VA Streamline (IRRRL) Refinance

    Also know as a Streamline refinance, the Interest Rate Reduction Refinance Loan (IRRRL) option is great for existing VA loan holders who are looking to realize significant savings.

    Veteran homeowners might not need to meet a credit score benchmark or debt-and-income requirements.

    VA Cash Out Refinance

    A  VA cash out refinance is an option for those with a VA or conventional loan looking to take advantage of their home’s equity to access cash for home improvements, emergencies, pay off debt, or any other purpose.

    This refinance loan looks a lot like a typical VA purchase loan when it comes to underwriting, including meeting a lender’s credit score minimum, DTI ratio guidelines and more.

    VA Streamline refinance (VA IRRRL) vs VA Cash-Out refinance

    Feature VA Streamline Refinance (VA IRRRL) VA Cash-Out Refinance
    Purpose Refinance an existing VA loan at a lower interest rate. Refinance to a VA loan, access home equity, and get cash.
    Eligible properties Primary residence, investment property, or second home (varies by lender). Primary residence, investment property, or second home.
    Eligibility Must have an existing VA loan
    Current on monthly payments for the last 6-12 months
    Mortgage must be at least 270 days old
    Available for VA and non-VA loans with a valid Certificate of Eligibility (COE)
    Requirements No credit score requirement
    No income verification required
    No appraisal needed
    Typically requires a credit score of 620+
    Debt-to-income ratio under 50%
    Appraisal required
    Benefits Potentially lower monthly payments
    Fixed interest rates
    No appraisal needed
    No cash-out allowed
    Potentially lower interest rates
    Cash-out for debt repayment, home improvements, etc.
    Closing costs Can be rolled into the loan Includes closing costs, appraisal, and a VA funding fee (can be rolled into the loan)
    Cash-out option Not allowed Allows cash-out for various needs

    VA Refinance Eligibility

    To be eligible for the VA refinance, you would require more than 90 consecutive days during wartime or more than 181 days of service during peacetime.

    If you’re from the National guard or the reservists, then you should at lest have served six years, or 90 days on Title 32 orders, 30 of which must have been consecutive.

     

    How soon can you refinance a VA loan?

    Generally, you can’t refinance until 210 days after the first mortgage payment was due, and you need to have made at least 6 monthly on-time payments.

     

    Benefits of VA Refinancing

    There are several benefits of refinancing with a VA loan. Here are some of the key advantages:

     

    Lower interest rates

    VA refinancing often offers lower rates compared to conventional refinancing. 

     

    No private mortgage insurance (PMI)

    VA loans do not require PMI, even if the homeowner refinances more than 80% of their home’s value.

     

    Minimal upfront fees

    VA streamlines, in particular, typically feature minimal cost and fees. Although the VA funding fee is still required for refinancing, it may be rolled into the closing costs, and some veterans may even be exempt from paying it. Plus, the funding fee on a VA Streamline is 0.5%.

     

    Flexible credit requirements

    VA refinancing typically has more lenient requirements compared to other refinancing options. 

    No prepayment penalties

    VA loans do not have prepayment penalties, allowing borrowers to pay off their mortgage early without any extra fees.


    Bottom Line

    VA home loans offer veterans the chance to secure housing with lower rate and favorable terms. By refinancing their existing VA mortgage you an unlock these benefits and reduce their monthly mortgage insurance payments. 

    Additionally, exploring options like a home equity loan or a standard cash-out refinance can offer financial flexibility. Whether you’re looking to refinance your current VA loan, understanding the right type of refinance for your situation is crucial. 

    Borrowers can also explore a VA refinance loans to enjoy the benefits of lower rate  provided by the federal government, as showcased on federal government websites. And veterans in need of assistance, a home equity line, or a line of credit can reach out to the crisis line for support and guidance. 

    It’s essential to review all costs and fees with your mortgage lender to understand the total amount and how it affects or benefits your monthly payments. Let us guide you through the VA refinance loan process. Contact us today to find the best mortgage refinance program for your needs and explore the pros and cons of your refinancing options. We are grateful for your services to the country.

    Frequently Asked Questions

    Eligibility for a VA refinance loan typically requires prior use of your VA loan benefits to purchase a home. For a VA streamline refinance, you must be refinancing an existing VA loan. For a VA Cash-Out Refinance, you need to meet VA refinance and underwriting requirements, including having a valid Certificate of Eligibility (COE) and meeting the VA’s service requirements

    Yes, there are closing costs for VA refinance loans. However, with a VA Streamline Refinance, some costs can be included in the loan amount, minimizing out-of-pocket expenses.

    No, refinancing with a VA loan typically involves closing costs, but some costs can be rolled into the loan amount.

    VA refinance rates fluctuate daily based on market conditions, creditworthiness, loan terms, and lender policies. For the latest rates, consult reputable lenders or financial institutions.

    Whether VA refinancing is worth it depends on factors like current interest rates, your plans for staying in the home, and financial goals. If you can lower your interest rate, reduce monthly payments, or access home equity, it may be beneficial. Consider the costs, benefits, and your long-term objectives before deciding.

    A VA refinance allows veterans to replace their existing mortgage with a new loan under better terms, thanks to their military services. They can can help reduce interest rates, lower monthly payments, and access home equity.

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