VA Refinance Calculator
ℹ RefinanceUSA is not a lender. Results are estimates — disability exemption eligibility must be confirmed with VA. How we calculate
VA Refinance Advantages vs. Conventional
VA refinancing offers structural advantages that don't exist on conventional loans — and they apply every time you refinance, not just on purchase.
| Feature | VA IRRRL | Conventional Refi |
|---|---|---|
| Appraisal required | No | Yes ($400–$700) |
| Full income verification | No (minimal) | Yes |
| PMI / MIP | Never | Required if LTV > 80% |
| Funding fee (IRRRL) | 0.5% (waived if disabled) | N/A — but full closing costs 2–3% |
| Rate requirement | Must be lower than current (fixed-to-fixed) | No rule |
| Net tangible benefit | Required | Not required |
| Underwater OK? | Yes (no appraisal) | No — LTV limits apply |
VA Funding Fee Rates (2026)
| Loan Type | First Use | Subsequent Use | Disability Exempt |
|---|---|---|---|
| IRRRL (any use) | 0.50% | 0.50% | 0% |
| Cash-Out Refinance | 2.15% | 3.30% | 0% |
| Purchase (5% down) | 1.40% | 1.40% | 0% |
The IRRRL's 0.5% funding fee is significantly lower than conventional refinancing's 2–3% total closing costs at comparable loan sizes. On a $350,000 IRRRL, the funding fee is $1,750 vs. $7,000–$10,500 in typical conventional closing costs.
3 VA Refinance Scenarios
Scenario 1 — IRRRL: Classic rate-drop refinance
$350K balance, 7.25% → 6.25%, no appraisal needed
| Loan balance | $350,000 at 7.25% |
| New rate | 6.25% / 30-year |
| Monthly P&I savings | $233/mo |
| VA funding fee (0.5%, financed) | $1,750 (added to loan) |
| Other closing costs | $2,200 |
| Total upfront cost | $2,200 (fee financed) |
| Break-even | 10 months |
| 5-year net savings | +$11,780 |
The IRRRL's low total closing cost — funding fee financed, minimal other fees — produces a 10-month break-even. A conventional refinance of the same loan at 2% closing costs would cost $7,000 and take 30 months to break even. The VA IRRRL is categorically better when eligible.
Scenario 2 — Disability-exempt IRRRL: Virtually free refinance
Zero funding fee + minimal closing costs
| Loan balance | $420,000 at 7.50% |
| New rate | 6.50% / 30-year |
| Monthly savings | $280/mo |
| VA funding fee | $0 (disability exempt) |
| Other closing costs | $1,800 (title, recording) |
| Break-even | 6 months |
| 5-year net savings | +$14,997 |
| 10-year net savings | +$31,800 |
Veterans receiving VA disability compensation are exempt from the funding fee. Combined with the IRRRL's already-minimal closing costs, a disability-exempt veteran can refinance for as little as $1,500–$2,500 total — achieving break-even in 5–7 months. This is one of the best deals in the mortgage market.
Scenario 3 — Cash-out refinance: Accessing equity at VA rates
$300K balance, $420K home value, $60K cash-out
| Current balance + rate | $300,000 at 7.0% |
| New loan | $360,000 at 6.75% / 30-yr |
| VA funding fee (3.3% subsequent) | $11,880 (financed) |
| New monthly P&I | $2,335/mo |
| Old monthly P&I | $1,996/mo |
| Monthly payment increase | +$339/mo |
| Cash received | $60,000 |
The VA cash-out allows veterans to access up to 100% LTV — something no conventional loan permits. However, the 3.3% subsequent-use funding fee is significant ($11,880 on $360K), and taking cash out while the rate increases adds monthly payment burden. This path is most attractive when the cash replaces high-rate debt or funds investments that return more than 6.75%.
IRRRL Eligibility Requirements
- Existing VA loan required: You must already have a VA-backed loan. You cannot use the IRRRL to refinance a conventional or FHA loan.
- Rate must decrease (fixed-to-fixed): If refinancing from one fixed-rate to another, the new rate must be lower than the current rate.
- Fixed-to-ARM rule: If moving from a fixed rate to an ARM, the new rate must be at least 2% lower than the current fixed rate.
- Net tangible benefit: The loan must reduce your interest rate and/or provide another clear financial benefit (e.g., moving from ARM to fixed for payment stability).
- No cash out: IRRRL is rate-and-term only. Maximum $500 cash back at closing.
- Primary residence or prior occupancy: The property must be or previously was your primary residence.
- 6-payment seasoning: You must have made at least 6 monthly payments on your current VA loan.
Frequently Asked Questions
What is a VA IRRRL?
The VA Interest Rate Reduction Refinance Loan (IRRRL) is a streamlined refinance for veterans with an existing VA loan. No appraisal needed, minimal income documentation. The new rate must be lower than the current rate (for fixed-to-fixed), and the refinance must provide a net tangible benefit.
What is the VA funding fee for an IRRRL?
The IRRRL funding fee is 0.5% of the loan amount — the same rate regardless of how many times you've used your VA benefit. Veterans receiving VA disability compensation pay 0%. This is dramatically lower than conventional refinancing closing costs of 2–3%.
Do I need an appraisal for a VA IRRRL?
No appraisal required. This protects veterans in declining markets or with negative equity — you can refinance even if your home is worth less than you owe. The lender uses an automated valuation or the original appraisal.
How much can I save with a VA IRRRL?
Savings depend on your rate reduction and balance. A 1.0% reduction on $320,000 saves approximately $213/month. With only $2,500–$3,500 in typical closing costs on an IRRRL, break-even is often 12–16 months — far faster than conventional refinancing.
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Compare VA and Conventional Offers Side by Side
Use the full RefinanceUSA calculator to enter your VA lender quote alongside any conventional offer — and see which one actually saves you more after all fees and funding costs.
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