VA IRRRL vs. Conventional Refinance
If you have an existing VA loan and want to refinance, two main paths are available: the VA IRRRL or a conventional refinance. For most veterans, the IRRRL wins — here’s exactly how to think through it.
Direct Comparison
| Feature | VA IRRRL | Conventional Refinance |
|---|---|---|
| Appraisal required | Often not required | Almost always required |
| Income documentation | Minimal (non-credit qualifying option available) | Full documentation required |
| Monthly mortgage insurance | None | Required if LTV above 80% |
| Upfront cost | 0.50% VA funding fee (waived for disabled veterans) | No upfront fee, but PMI if LTV > 80% |
| Max cash-out LTV | Up to 100% for eligible borrowers (VA cash-out, subject to lender overlays) | 80% (conventional cash-out) |
| Eligibility | Must have existing VA-guaranteed loan | Any loan type eligible |
| Investment property | Not eligible | Eligible |
| Speed | Faster — streamlined documentation | Standard timeline |
When the VA IRRRL Wins
When the goal is simply a lower monthly payment on an existing VA loan, the IRRRL almost always wins — less paperwork, lower upfront cost, no appraisal risk, no monthly MI. For disabled veterans who pay zero funding fee, the IRRRL is essentially a no-cost refinance in most cases.
When Conventional Makes More Sense
- You’re refinancing an investment property (VA requires primary residence)
- You need to remove a co-borrower who cannot remain on the loan
- Your VA entitlement is tied up and you’re not eligible for a VA refinance
- You have 20%+ equity and want to avoid any upfront fee
Not Sure Which Path Makes More Sense?
At Lendia, we’ll run both scenarios side by side — monthly savings, closing cost recoupment, and total interest over your expected holding period. Get a free comparison today.
An LTV example that shows the gap (illustrative example, not a quote)
Say your home is worth $700,000 and your VA balance is $595,000. That is an LTV of $595,000 / $700,000 = 85%. A conventional refinance at that LTV requires mortgage insurance, because it is above 80%, and typically an appraisal. The IRRRL usually requires neither mortgage insurance nor an appraisal. The IRRRL funding fee at 0.50% would be $2,975 on a $595,000 loan, and it can be financed. Whether the conventional route makes sense then depends on what you gain elsewhere, such as removing a co-borrower or switching occupancy.
Questions to ask before you choose
- Do I want cash out? An IRRRL allows no meaningful cash back. For cash, compare the VA cash-out program with conventional cash-out.
- Is the home still my primary residence? The IRRRL does not require current occupancy, but a VA cash-out does.
- Have I met seasoning? Both VA refinances require 6 payments and 210 days.
- Will I recover the cost? For an IRRRL, closing costs need to be recouped in 36 months through the lower payment.
- How long will I keep the loan? A short holding period favors the option with the lowest upfront cost.
One thing people overlook
Moving off a VA loan into a conventional loan changes how your entitlement is used. If you may want to buy again with your benefit, ask us how the refinance affects what is available.
Ask for both options in writing on the same day, with the same lock period, so any difference comes from the program rather than from timing. Then compare the monthly payment, the cash needed at closing and the number of months it takes to recover the costs.
Frequently asked questions
Can I use an IRRRL if I have already moved out of the home?
Yes. The IRRRL requires that you previously occupied the property, not that you live in it now.
Will I get any cash back with an IRRRL?
Only incidental amounts, up to $500, are permitted. Anything more would shift you to a cash-out refinance.
Is a longer term allowed on an IRRRL?
The new term can run up to 10 years beyond the original term, with an absolute maximum of 30 years and 32 days.