Reviewed by: Kenneth Schwartz, Senior Loan Officer NMLS#1001095

Updated on February 15, 2026

VA Loan Refinancing IRRRL vs cash out in 2026

VA Refinance Options, IRRRL vs Cash Out

Primary sources:
VA loan process

VA Lender’s Handbook

IRRRL seasoning rule

Funding fee and exemptions

VA refinancing in 2026 usually comes down to one choice, streamline your existing VA loan with an IRRRL, or do a cash out refinance to access equity or replace a non VA loan. The IRRRL is built for speed and lower friction, while cash out requires full underwriting. Seasoning rules and funding fee status decide what you can do and when.

IRRRL streamline refinance, lowest friction option

What it does: The IRRRL is designed to lower your rate or stabilize payments, such as moving from adjustable to fixed, with a simpler process than a full refinance.
Light documentation: Many IRRRLs require less documentation than cash out, and may not require a new appraisal depending on the file and program structure.
Funding fee is smaller: IRRRL uses a flat 0.5% funding fee for non exempt borrowers, and it can typically be financed into the new balance.
Net tangible benefit required: The new loan must provide a clear benefit, such as lower rate, lower payment, or safer payment structure.

Cash out refinance, equity and PMI removal tool

Access equity: Cash out replaces your current mortgage with a new VA loan and can allow you to take cash from equity, based on the appraised value and underwriting.
Full underwriting applies: Expect an appraisal, credit review, income documentation, and a full DTI and residual income analysis.
Funding fee can be higher: Cash out funding fee tiers depend on use history and exemption status, and they are higher than the IRRRL fee when you are not exempt.
Insurance savings potential: Replacing a non VA loan that has monthly mortgage insurance can reduce the payment, since VA loans do not require PMI.

Seasoning and eligibility rules that trip people up

Seasoning rule: For many IRRRLs, VA requires a seasoning period tied to the first payment due date, plus a minimum number of payments made, before the new note date.
Occupancy certification: IRRRL requires you to certify you previously occupied the home, even if you no longer live there today.
Credit expectations vary by type: IRRRL can be more flexible, while cash out often needs stronger credit and documentation because it is a higher risk transaction.
Exempt remains exempt: Disabled Veterans and other exempt borrowers can avoid funding fees, which changes the break even math immediately.

2026 updates and what to watch right now

Current rate context: As of February 15, 2026, national average 30 year VA refinance APR is about 6.47%, which helps set realistic break even expectations.
VASP is not new intake: VA stopped accepting new VASP submissions on May 1, 2025, so delinquency relief is routed through standard retention and mitigation options.
Partial claim program direction: New legislation created a Partial Claim Program framework to address arrears in certain hardship cases, shifting long term mitigation strategy.
Refinance math still wins: The refinance only makes sense when the payment drop, term change, or cash out purpose beats the total cost, including funding fee and closing costs.

FAQs

What is the difference between IRRRL and cash out?

IRRRL is a streamline refinance for an existing VA loan, built to reduce rate or stabilize payments with less friction. Cash out is a full refinance that can replace any mortgage and pull equity, with appraisal and full underwriting.

When can I refinance a VA loan after closing?

VA requires seasoning for many IRRRLs, tied to the first payment due date and a minimum number of payments made. Cash out timing depends on underwriting and program rules, but seasoning and benefit tests still apply.

Can I roll refinance costs into the new VA loan?

The IRRRL funding fee can typically be financed, and some costs may be covered through credits depending on pricing. For cash out, costs and funding fee treatment vary, and the best plan depends on your break even timeline.

What Is a VA Loan Refinance?

A VA loan refinance allows qualified Veterans, active-duty service members, and surviving spouses to replace an existing mortgage with a new VA-backed loan. Managed by the U.S. Department of Veterans Affairs, these refinances feature flexible guidelines, competitive rates, and the exclusive benefit of no private mortgage insurance (PMI).

There are two main types of VA refinancing options, each designed for different financial goals and circumstances:

VA Streamline Refinance (IRRRL): The Interest Rate Reduction Refinance Loan is ideal for lowering your interest rate and monthly payment. It usually requires no appraisal, income verification, or credit check, making the process faster and easier.
VA Cash-Out Refinance: A VA cash-out refinance lets you convert home equity into cash. Unlike most loan programs, it can refinance up to 100% of your home’s appraised value, providing maximum flexibility.

The Core Benefits of Refinancing with the VA

VA refinance options offer powerful benefits unavailable with most other mortgage products. From eliminating PMI to accessing full home equity, these features make refinancing more affordable and accessible for Veterans and Military families nationwide.

No PMI: Conventional refinances with less than 20% equity require private mortgage insurance, but VA refinances never do. This exemption often saves Veterans hundreds of dollars per month in unnecessary costs.
100% Loan-to-Value: The VA Cash-Out refinance can allow you to borrow up to your home’s full appraised value, providing access to maximum equity when compared with conventional loan options.
Streamlined Process: The IRRRL program is one of the simplest refinance products available, requiring minimal paperwork, no appraisal in many cases, and fast closings that reduce borrower stress.
Flexible Credit Standards: The VA’s forgiving credit guidelines make refinancing possible for Veterans who may have experienced financial hardships or score setbacks compared to conventional qualification standards.
Low Closing Costs: VA rules limit lender fees, and with IRRRL refinances, closing costs can often be rolled into the loan itself, reducing or eliminating out-of-pocket expenses for borrowers.
Keep Your Benefit: Refinancing lets Veterans secure better loan terms while continuing to use the VA home loan benefit they earned, preserving access to future advantages if needed.

Today's VA Loan Rates for

VA Loan Type	Interest Rate	APR	Points
30-Year Fixed VA Purchase	5.375 %	5.794 %	1.563 pts
15-Year Fixed VA Purchase	5.125 %	5.889 %	1.938 pts
20-Year Fixed VA Purchase	5.375 %	5.939 %	1.563 pts
30-Year Fixed VA Jumbo Purchase	5.375 %	5.733 %	0.875 pts
30-Year VA Cash-Out Refinance	5.990 %	6.304 %	0.250 pts
30-Year VA Cash-Out Jumbo Refinance	5.625 %	5.921 %	0.125 pts
30-Year Streamline (IRRRL) Refinance	5.375 %	5.687 %	2.000 pts
30-Year Streamline (IRRRL) Jumbo Refinance	5.750 %	5.944 %	0.625 pts

2026 VA Refinance Eligibility

Eligibility for a VA refinance is largely aligned with the requirements for obtaining a VA home loan. This ensures that the program is accessible to Veterans, active-duty service members, and eligible surviving spouses who meet specific service criteria.

General Eligibility Requirements:

Active-Duty Service Members and Veterans:
- At least 90 consecutive days of active service during wartime.
- At least 181 consecutive days of active service during peacetime.
National Guard and Reservists:
- At least six years of service or 90 days on Title 32 orders, with at least 30 consecutive days served.
Surviving Spouses:
- Spouses of Veterans who died during service or from a service-connected disability may also qualify for a VA refinance loan.

VA Refinance Eligibility Calculator

Benefits of Refinancing Your VA Loan in 2026

Refinancing a VA loan can provide a range of financial advantages tailored to meet the needs of qualified borrowers. Whether you’re seeking to lower payments or access home equity, the benefits are substantial.

Lower-than-Average Interest Rates

VA loans typically offer interest rates that are below the market average, making refinancing a smart choice for many Veterans. Lower rates mean long-term savings and reduced financial strain.

Reduced interest rates compared to other loan types.
Significant savings over the life of the loan.

Potential for Lower Monthly Payments

By securing a lower interest rate, borrowers can decrease their monthly mortgage payments, freeing up cash for other expenses or savings goals.

Decreased monthly payments help improve financial flexibility.
Lower rates lead to long-term savings on interest.

No Mortgage Insurance Requirement

Unlike FHA or conventional loans requiring private mortgage insurance (PMI) without a 20% down payment, VA loans eliminate this additional cost, saving borrowers hundreds monthly.

No PMI required, reducing your monthly payment.
Long-term savings on unnecessary insurance costs.

Relaxed Limits on Cash-Out Refinancing

A VA cash-out refinance allows you to borrow up to 100% of your home’s value, providing financial freedom for home improvements, debt consolidation, or other major expenses.

Access up to 100% of your home’s equity.
Ideal for covering major financial needs like renovations or education.

Refinance Up to 120% of Your Home’s Value

VA loans allow refinancing beyond the value of your home, offering a solution for those with underwater mortgages or fluctuating property values.

Refinance even if you owe more than your home is worth.
Excellent option for borrowers in high-cost or declining markets.

Relaxed Credit Score Requirements

The VA does not set strict credit score requirements, making refinancing accessible for more borrowers, even those with less-than-perfect credit histories.

Lenders may approve scores as low as 580.
Easier approval compared to conventional refinancing options.

Foreclosure Assistance

The VA offers resources and programs to help homeowners in financial distress avoid foreclosure. These include counseling and alternative repayment options.

Access financial counseling and support through the VA.
Explore alternatives to foreclosure, such as repayment plans or loan modifications.

Funding Fee Flexibility

The VA funding fee can be rolled into your loan, reducing upfront costs for refinancing. Certain groups, like disabled Veterans, are exempt from this fee altogether.

Roll the funding fee into your refinance amount to reduce initial costs.
Disabled Veterans, surviving spouses, and Purple Heart recipients are exempt from this fee.

2026 VA Loan Refinancing Options

VA loans offer two versatile refinancing options: the Interest Rate Reduction Refinance Loan (IRRRL) and the Cash-Out Refinance Loan. Each option serves a specific financial purpose, helping Veterans and active-duty service members make the most of their homeownership journey.

VA Streamline (IRRRL) Refinance

The Interest Rate Reduction Refinance Loan (IRRRL), commonly called a “Streamline Refinance,” is designed for homeowners with an existing VA loan. It provides an easy way to lower monthly payments by reducing your interest rate, often without the hassle of income verification or a full appraisal.

Benefits of IRRRL:

Lower Interest Rates: The VA Streamline refinance helps reduce monthly mortgage costs significantly by securing a lower interest rate, producing both immediate savings and substantial lifetime interest reductions for qualified Veterans and Military families.
Minimal Documentation: Unlike conventional refinances, the IRRRL often requires no income verification or new appraisal, streamlining approvals and providing faster closings that eliminate common borrower frustrations and lengthy underwriting delays.
No Out-of-Pocket Costs: Borrowers can roll allowable closing costs directly into their new loan balance, ensuring a true no-cash-required refinance process without sacrificing affordability or creating extra upfront expenses.
Flexible Eligibility: The IRRRL is available exclusively to current VA loan holders, regardless of property equity levels, making it an option even for Veterans with minimal or no existing home equity.

This refinance option is best for Veterans focused on lowering their monthly payments and improving household cash flow without tapping home equity. More details on IRRRL requirements are available through the official VA website.

Cash-Out Refinance

A VA Cash-Out Refinance lets homeowners convert their home equity into usable cash by replacing their current mortgage with a new VA-backed loan. Unlike many refinance products, it is available to both VA and conventional loan holders, offering unmatched flexibility for multiple financial goals.

Benefits of Cash-Out Refinancing:

Tap Into Equity: Borrow up to 100% of your home’s appraised value to fund essential expenses like home renovations, medical bills, tuition costs, or other major financial needs with VA-backed protections.
Debt Consolidation: A VA Cash-Out refinance allows Veterans to pay off high-interest obligations such as credit cards or personal loans, replacing them with one lower-rate mortgage payment that improves monthly cash flow.
Eligibility for Non-VA Loans: Unlike the IRRRL program, the Cash-Out refinance can replace conventional or FHA mortgages, letting more homeowners benefit from competitive VA terms and flexible refinance opportunities.
Flexible Fund Use: Cash received from this refinance can be applied to emergencies, large purchases, educational expenses, or personal financial goals, giving Veterans complete freedom in how they use their equity.

This refinance option is best for homeowners seeking to leverage their property’s equity for cash while enjoying hallmark VA advantages, including competitive interest rates and the elimination of private mortgage insurance (PMI). View official cash-out requirements on the VA site.

How Soon Can You Refinance with a VA Loan?

The timing of when you can refinance with a VA loan depends on the type of refinance you pursue. The VA establishes minimum requirements for payment history and seasoning, while individual lenders may add their own eligibility rules to protect borrowers and ensure financial stability.

VA Streamline (IRRRL): Borrowers must generally make at least six consecutive on-time payments and meet a “seasoning period” of 210 days from the date of their first payment before refinancing eligibility begins.
VA Cash-Out Refinance: While the VA does not mandate a waiting period, many lenders impose internal rules such as requiring at least six months of homeownership or a specific number of payments before approval.
Certificate of Eligibility: All refinance borrowers must meet VA eligibility requirements and provide a valid Certificate of Eligibility (COE), confirming their service history and entitlement before moving forward with the refinance application.
Lender Requirements: Beyond VA guidelines, lenders may enforce minimum credit scores, income ratios, or loan-to-value limits to ensure financial responsibility and reduce risk, especially in higher-balance refinance transactions.
Conventional to VA: Switching from a conventional loan to a VA-backed mortgage requires using the VA Cash-Out refinance option, as the IRRRL program applies only to existing VA loans.

Costs Associated with VA Refinancing

Refinancing a VA loan comes with specific costs, but understanding these fees upfront can help you plan effectively and avoid surprises. Here’s a breakdown of the key expenses:

VA Funding Fee

The VA funding fee is a one-time cost required on most refinances, ensuring the VA loan program remains sustainable without shifting expenses to taxpayers. This fee varies based on loan type, borrower history, and exemptions.

Program Sustainability: The VA funding fee keeps the loan program self-funded, enabling Veterans to access benefits like no PMI and no down payment while reducing reliance on federal taxpayer contributions.
IRRRL (Streamline Refinance): The funding fee for IRRRLs is only 0.5% of the loan amount, making it one of the most affordable refinance options available for eligible VA borrowers.
Cash-Out Refinance: For VA Cash-Out refinances, the funding fee may be as high as 3.6%. Rates vary depending on service history and whether it is the borrower’s first or subsequent use.
Exemptions: Veterans with qualifying service-connected disabilities, Purple Heart recipients, and eligible surviving spouses are fully exempt from the funding fee, eliminating one of the largest refinance costs completely.

Closing Costs

Similar to conventional mortgages, VA refinance loans include closing costs. These are one-time fees paid to complete the refinance process, though many Veterans choose to roll them into the new loan balance to avoid upfront out-of-pocket expenses.

Origination Fees: Lenders may charge origination costs for processing the refinance. VA rules cap these charges, ensuring fairness and protecting Veterans from inflated loan processing expenses at closing.
Title Insurance: Title insurance safeguards borrowers and lenders against disputes or claims on property ownership, providing long-term protection and ensuring that the refinance transaction remains legally valid and secure.
Recording Fees: These charges cover the cost of officially recording the new loan with the county or local government, ensuring updated mortgage records and public documentation of the refinance agreement.
Rolling Costs In: Borrowers can often include closing costs in the new loan balance, making refinancing more affordable by spreading expenses over time instead of paying them at settlement.

Appraisal Fee (If Applicable)

Appraisal requirements depend on the type of VA refinance chosen. While the IRRRL usually avoids appraisals, a Cash-Out refinance almost always requires one to confirm the property’s current market value and ensure accurate loan-to-value calculations.

IRRRL (Streamline Refinance): In most cases, an appraisal is not required, reducing time and expense, and making the IRRRL one of the most convenient refinance options for qualified borrowers.
Cash-Out Refinance: Requires a full appraisal to confirm the property’s worth and safeguard against over-borrowing. This ensures the loan amount reflects true equity and market conditions accurately.
Typical Appraisal Fees: Appraisals usually cost between $300 and $600, though final pricing varies by property type, geographic location, and local market appraisal demand at the time of refinance.

Additional Costs to Consider

Income Verification: Required for VA Cash-Out refinances to confirm repayment ability. Not required for IRRRLs, which rely on prior VA loan performance for streamlined qualification approval.
Credit Report Fees: Lenders may charge modest fees for pulling updated credit reports to evaluate borrower eligibility, ensuring compliance with underwriting standards and protecting against default risks.
Prepaid Expenses: Borrowers may need to cover prepaid items such as property taxes, homeowners insurance, or accrued interest during the transition period to the new VA refinance loan.

Comparison of Costs: IRRRL vs. Cash-Out Refinance

Cost Component	IRRRL	Cash-Out Refinance
Funding Fee	0.5%	Up to 3.6%
Appraisal Required?	No	Yes
Income Verification	No	Yes

VA refinancing remains highly affordable due to capped lender fees, exemptions for qualifying disabled Veterans, and the option to roll costs into the new loan. Understanding these expenses helps borrowers decide if refinancing supports their financial goals.

The Refinancing Process

Refinancing a VA loan includes several steps, from initial preparation to finalizing the new loan. Here’s a step-by-step guide:

Step 1: Assess Your Current Loan Situation

Before moving forward with refinancing, carefully evaluate your existing VA loan and overall financial position. Reviewing your current balance, interest rate, home equity, and personal objectives helps determine whether refinancing aligns with your short-term needs and long-term financial goals.

Current Interest Rate: Compare your current loan rate to prevailing VA refinance offers. If today’s rates are lower, refinancing could generate significant monthly savings and long-term interest reductions.
Remaining Loan Balance: Assess your outstanding loan amount. Understanding how much you owe helps project new monthly payments and whether refinancing will truly improve your financial position.
Home Equity: Identify how much equity you’ve built. While not required for IRRRL, equity plays a critical role in qualifying for VA Cash-Out refinancing options.
Financial Goals: Clarify whether your objective is to reduce monthly payments, access cash, or switch loan terms. Clear goals ensure you choose the refinance option best suited to your needs.

Step 2: Shop for Lenders

Not all lenders are equally experienced in handling VA loans. Comparing multiple VA-approved lenders ensures you secure the most competitive interest rate, lowest fees, and highest quality service tailored specifically to your refinance needs.

VA-Approved Lenders: Only lenders authorized by the Department of Veterans Affairs can issue VA refinances. Confirm approval before applying to ensure compliance and avoid processing delays.
Reputation and Reviews: Research customer reviews, Better Business Bureau ratings, and community reputation. Reliable lenders with strong service records provide smoother closings and superior borrower experiences.

Step 3: Gather Required Documentation

While the VA IRRRL requires minimal paperwork, borrowers pursuing a Cash-Out refinance or switching from a conventional loan will need to provide additional documentation. Preparing these records early helps expedite the application and approval process.

Proof of Income: Recent pay stubs, W-2 forms, or full tax returns may be requested to verify steady income and repayment ability, particularly for cash-out refinances.
Bank Statements: Lenders typically review recent bank account statements to confirm assets, verify reserves, and ensure borrowers maintain sufficient liquidity during the refinance process.
Mortgage Statement: A current mortgage statement shows your existing loan balance, payment history, and interest rate, providing lenders the baseline details needed for refinance approval.
Certificate of Eligibility (COE): A valid COE confirms service history and benefit entitlement, ensuring the borrower qualifies for VA refinance options without disruption or additional delays.
Debt and Asset Information: A summary of outstanding debts and current assets is often required for underwriter review, providing a full picture of borrower financial health.

Step 4: Apply for the Refinance

After selecting a lender and gathering the required documentation, the next step is formally applying for your VA refinance. Your lender will review your financial situation, employment status, and loan objectives before submitting your file into processing for official consideration and eligibility review.

Employment Verification: Lenders require your current employment history and income details to confirm stable earnings, which helps determine your ability to handle the refinanced mortgage comfortably.
Debt and Obligations: A full list of your active debts, including credit cards, car loans, or other obligations, is reviewed during application to evaluate your debt-to-income ratio accurately.
Loan Purpose: For VA Cash-Out refinances, lenders will ask you to specify your desired loan amount and the purpose of funds, such as home improvements, debt repayment, or education expenses.

Step 5: Underwriting Process

Once your refinance application is submitted, the lender’s underwriting department will carefully evaluate your eligibility. This step includes verifying all documentation, reviewing credit history, and ensuring your refinance meets VA program standards and any additional lender-specific requirements before final loan approval.

Financial Verification: Underwriters confirm income, assets, and debts, ensuring all financial details are accurate and compliant with both VA guidelines and the lender’s risk assessment standards.
Property Appraisal: For cash-out refinances, a full appraisal is usually required to establish current market value and verify the requested loan amount aligns with the home’s worth.
LTV Ratio Review: Loan-to-value ratios are evaluated for cash-out refinances. This step confirms that sufficient equity exists and ensures the loan remains within VA-mandated eligibility limits.

Step 6: Closing the Loan

After underwriting approval, you’ll move to closing, the final stage of your VA refinance. During this step, you’ll review loan documents, sign final paperwork, and either pay closing costs or roll them into the new loan balance depending on lender policies.

Loan Documents: Borrowers review and sign closing disclosures, promissory notes, and any addendums, finalizing the legal terms of the refinance agreement with the lender.
Closing Costs: Refinances include fees for origination, title insurance, and other services. These costs can often be financed into the loan balance, reducing or eliminating upfront out-of-pocket requirements.
Loan Transition: The refinance pays off your existing VA or non-VA loan, and new monthly payments begin under the updated terms of the refinanced VA-backed mortgage.

Check Refinance Rates

Resources Used

Frequently Asked Questions about VA Refinancing

What is a VA IRRRL and who qualifies?

A VA IRRRL is a streamline refinance for existing VA loans that can lower your interest rate or move you from adjustable to fixed. You must already have a VA mortgage and typically must show a net tangible benefit under VA rules.

What is a VA cash-out refinance and when does it make sense?

A VA cash-out refinance replaces your current mortgage and lets you access home equity as cash, even from a non-VA loan in many cases. It makes sense when the new total payment stays comfortable and the purpose justifies costs.

How much can I cash out with a VA refinance?

Maximum cash-out depends on lender policy, credit, income, and the appraised value, plus VA and investor guidelines. Some lenders allow high loan-to-value levels, but you should underwrite the new payment with taxes and insurance included.

Do I need an appraisal for a VA IRRRL?

Often no. Many IRRRL refinances do not require a new appraisal, which can speed the process and reduce friction. However, lender overlays vary, and some scenarios still require valuation, especially if the loan terms change materially.

What is the VA net tangible benefit requirement?

Net tangible benefit means the refinance must clearly improve your situation, usually through a lower interest rate, lower payment, or safer payment structure. VA rules also require reasonable recoupment timing for costs in many cases, which lenders verify.

Can I roll closing costs into a VA refinance?

Yes, many VA refinances allow certain closing costs to be rolled into the new loan balance, which reduces cash due at signing. Rolling costs increases the loan amount, so compare breakeven time and total interest cost before committing.

Is there a waiting period to refinance a VA loan?

Yes for IRRRL refinances. VA rules require a seasoning period, including a minimum number of payments and a minimum time since the first payment date. Cash-out refinances follow lender guidelines, but timing still depends on occupancy and underwriting.

Does refinancing reset my loan term and increase total interest?

It can. If you refinance into a new 30-year term, you may lower the payment but pay more interest over time. Ask for side-by-side options, such as a shorter term or paying extra monthly, to control long-term cost.

Will refinancing affect my VA entitlement?

Refinancing a VA loan into another VA loan typically keeps the same entitlement tied to the property until it is paid off or sold. Cash-out refinancing from a non-VA loan into VA can use entitlement, so confirm available entitlement early.

How long does a VA refinance usually take to close?

Many VA refinances close in about 20 to 45 days, depending on appraisal needs, lender capacity, and document speed. IRRRLs can be faster when no appraisal is required. Submitting documents early and choosing a VA-experienced lender reduces delays.