IRRRL vs Cash-Out
VA has two main refinance options. The right one depends on whether you want a lower payment or access to equity.
| IRRRL (streamline) | Cash-Out Refinance | |
|---|---|---|
| Current loan | Must already be a VA loan | Any loan type (VA, conventional, FHA, etc.) |
| Purpose | Lower rate, or move from ARM to fixed | Take cash out, pay off debt, or convert a non-VA loan to VA |
| Occupancy | Must certify you previously lived in the home | Must live in the home |
| Appraisal / credit | VA doesn't require them; lenders may | Appraisal and full underwriting required |
| Max loan | Payoff plus allowable costs | Up to 100% of appraised value per VA; lender limits may be lower |
| Funding fee | 0.5% | 2.15% first use / 3.3% after |
Rules worth knowing
- Seasoning: generally the later of 210 days from the first payment due date and six monthly payments made.
- Net tangible benefit: the refinance must clearly benefit you, such as a lower rate or a move to a fixed rate.
- Recoupment: for IRRRLs, fees and closing costs must generally be recouped through lower payments within 36 months.
- Cash-out refinances require lender disclosures and a comparison of the new loan to your current one.
Ask Aaron which fits your situation
Sources: IRRRL · Cash-out refinance · Funding fee
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