VA Streamline Funding Fee
The VA funding fee on a Streamline refinance (IRRRL) is 0.50% of the loan amount. Most borrowers finance it into the new loan, so it is not paid in cash at closing. Veterans who receive VA disability compensation, and certain other groups, are exempt and pay nothing.
Key Takeaways
- The IRRRL funding fee is 0.50%, much lower than the 2.15% or 3.30% on a cash-out refinance.
- It can be financed into the new loan.
- Veterans who are exempt from the fee are exempt on an IRRRL too.
- Exempt groups include veterans receiving VA disability compensation and surviving spouses of those who died in service or from a service-connected disability.
- The fee counts toward the 36-month recoupment test.
How much is the VA funding fee on an IRRRL?
It is a flat 0.50% of the loan amount. It does not change with your credit score, your first or subsequent use, or your down payment, because there is none. It is a one-time charge paid to the VA.
| Loan balance being refinanced | Fee at 0.50% | Balance if fee is financed |
|---|---|---|
| $450,000 | $2,250 | $452,250 |
| $600,000 | $3,000 | $603,000 |
| $800,000 | $4,000 | $804,000 |
| $1,000,000 | $5,000 | $1,005,000 |
These examples ignore other closing costs and show only the fee on the balance. The actual loan amount also reflects payoff figures and any allowed costs.
Who is exempt from the funding fee?
You do not pay the fee if you:
- Receive VA compensation for a service-connected disability.
- Would receive that compensation if you did not receive military retirement pay.
- Are the surviving spouse of a veteran who died in service or from a service-connected disability, whether or not you are a veteran yourself and whether or not you are using your own entitlement on the loan.
- Are on active duty awaiting discharge and have been rated eligible for compensation after a pre-discharge disability exam. You are treated as receiving compensation from the date of that rating.
- Are entitled to VA compensation but are not currently receiving it because you are on active duty.
Your Certificate of Eligibility shows whether you are exempt. If you recently received a disability rating, tell your loan officer, because the rating date can matter.
Should I pay the fee in cash or finance it?
Financing keeps cash in your pocket, so you can often complete an IRRRL with little or nothing due at closing. The tradeoff is a slightly higher balance and interest on the fee. Paying in cash keeps the balance lower. Because the fee is part of the costs, it counts in the recoupment rule, which requires your fees to be earned back through lower payments within 36 months.
How does the IRRRL fee compare with other VA loans?
| VA loan type | Funding fee |
|---|---|
| IRRRL (streamline) | 0.50% |
| Assumption | 0.50% |
| Cash-out refinance | 2.15% first use; 3.30% subsequent use |
| Purchase | 1.25% to 3.30%, depending on down payment and use |
See the full tables in the VA funding fee guide and the program page What is the VA funding fee?
How do I prove I am exempt?
The Certificate of Eligibility is the usual proof. It notes whether you are exempt, and we confirm it electronically when we request it. If you receive VA disability compensation, your VA award letter also helps. Surviving spouses may need documents showing receipt of Dependency and Indemnity Compensation. If your status changed recently, the COE may not yet reflect it, so bring the letter.
What is the fee used for?
It is worth asking for the number in writing early, so there are no surprises at closing.
The funding fee supports the VA home loan program. It is not paid to Lendia or to a lender, and it is separate from title, escrow, appraisal and lender fees. On your Loan Estimate and Closing Disclosure it appears as a line item, so you can always see the number before you sign.
Do I get a refund if my disability rating is approved later?
Possibly. If the VA later grants disability compensation with an effective date on or before your closing, you may be entitled to a refund of the fee. Keep your closing papers and award letter, and ask your loan officer how to request it. Refunds are not guaranteed.
How does this fit the rest of the IRRRL process?
The fee is only one piece. To qualify you also need an existing VA loan, no 30-day lates in 12 months, seasoning and a net tangible benefit. Start with the VA Streamline program overview, then how to qualify and IRRRL guidelines and credit requirements.
At Lendia, we calculate the break-even for you
At Lendia, we show the fee, your new payment and your payback time side by side, so you can decide with real numbers. Contact us or get a rate quote now.
Frequently Asked Questions
Can I roll the fee into the loan?
Yes. Most borrowers do.
Who is exempt?
See the exempt groups above. Your Certificate of Eligibility shows whether you are exempt.
Is the fee based on my balance or my home value?
On the loan amount, not the home value.
Why is the IRRRL fee lower than other VA loans?
The VA sets the streamline fee at 0.50%, well below the fee on a cash-out refinance, because the new loan replaces one the VA already guarantees and no cash comes out.
Does the fee change if I use my benefit again?
Not for an IRRRL. It stays at 0.50%.
Rates and terms depend on your situation; approval requires qualification.
Talk to a Licensed Lendia California Loan Officer
At Lendia, we review your situation and show you the programs you qualify for.