VA refinancing programs, like VA home loans, are valuable perks of military service. Veterans and service members can refinance into a new mortgage with a lower interest rate, lower monthly payments or both.
There are two options for refinancing: a VA Streamline Refinance (also known as an Interest Rate Reduction Refinance Loan or IRRRL) or a VA Cash-Out Refinance, which allows the homeowner to pull cash from their home equity for paying off debt, making improvements to the home or other needs.
The low interest rate environment may make VA refinance programs even more beneficial for military homeowners.
VA refinances had an average interest rate of 3.34 percent and APR of 3.40 percent for a 30-year refinance, as of mid-December 2019, according to Bankrate’s comprehensive national survey of mortgage lenders. That represents a considerable savings over a conventional 30-year refinance, which carries an average interest rate of 3.72 percent and APR of 3.84 percent.
The table below brings together a comprehensive national survey of mortgage lenders to help you know what are the most competitive VA refinance loan rates. This interest rate table is updated daily to give you the most current rates when choosing an VA refinance loan.
|30-Year Fixed Rate||3.790%||3.930%|
|20-Year Fixed Rate||3.830%||3.950%|
|15-Year Fixed Rate||3.200%||3.360%|
|10/1 ARM Rate||3.850%||3.960%|
|7/1 ARM Rate||3.640%||3.900%|
|5/1 ARM Rate||3.510%||3.950%|
|30-Year VA Rate||3.460%||3.570%|
|30-Year FHA Rate||3.340%||3.740%|
|30-Year Fixed Jumbo Rate||3.950%||3.970%|
|15-Year Fixed Jumbo Rate||3.350%||3.370%|
|7/1 ARM Jumbo Rate||3.570%||3.870%|
|5/1 ARM Jumbo Rate||3.440%||3.810%|
Rates as of April 6th, 2020 at 6:30 AM
To be eligible for an IRRRL refinance loan, you need to have an existing VA loan for the property and meet the following requirements:
For a VA Cashout Refinance, the requirements are different:
The current low rate environment makes it a good time to consider refinancing through a VA program, especially if your current rate is high.
You might use an IRRRL if you want to:
A VA-backed cashout refinancing may be right if you want to:
Warning: When considering whether to refinance, be wary of any unsolicited VA loan refinancing offers that sound too good to be true. The VA and the Consumer Financial Protection Bureau have warned about advertisements for VA refinancing that promise extremely low interest rates or the ability to skip payments, that are actually scams targeting veterans and service members.
You may be able to get a VA refinance without paying anything out of pocket at closing time. That doesn’t mean the refi is fee-free, but you can typically roll associated costs into the new loan, either through increasing the loan amount or receiving a slightly higher APR.
With what’s called an Interest Rate Reduction Refinance Loan or IRRRL, you don’t have any appraisal or underwriting fees, as these are not required. You’ll also save money since a VA refinance doesn't require mortgage insurance. By contrast, VA cash-out refis do require underwriting and appraisals.
However, you will pay a VA funding fee for both IRRRLs and VA cashout refis. This is a fee that reduces the taxpayer burden of providing low-cost loans to veterans and service members.
For IRRRLs, the funding fee is 0.5 percent of the loan amount. For VA cashout refis, the fee is typically 2.15 percent for a first-time VA loan, and 3.3 percent for subsequent ones. However, for veterans of the National Guard or Reserves, the fee is 2.4 percent for a first VA cash-out refinance.
Veterans with service-related disabilities and their spouses may be exempt from the funding fee.
When refinancing from a fixed-rate VA loan, your new interest rate must be at least 50 basis points less than the original rate, to comply with the Protecting Veterans from Predatory Lending Act of 2018. If you refinance from a fixed-rate to an adjustable-rate loan, the new loan must be at least 200 basis points less.
Before deciding to refinance, do the math to make sure your savings over the life of the loan (or how long you plan to keep the house) outweigh the costs of refinancing. To estimate your new monthly payment, you can plug your new interest rate into Bankrate’s mortgage calculator. To see whether it’s worthwhile, divide your estimated closing costs by the amount you expect to save each month. That will give you the number of months before you break even and start to rack up savings.
The VA doesn’t lend money directly, so whether you choose to refinance with an IRRRL and a VA Cash-Out Refinance, you’ll need to work with a VA-approved lender. Find a bank, mortgage company or credit union that does VA loan refinancing.
For an IRRRL, you can show your original COE to the lender to prove your entitlement, but you don’t need it. The lender can obtain your COE through the VA loan program portal.
For a VA cash-out refi, in addition to a COE, you’ll typically need these items for the underwriting process:
The lender will also order a home appraisal for a cash-out refi.
Each bank, credit union or mortgage lender sets its own requirements, interest rates, terms and fees for VA loans. To find the best deal, be sure to shop around with different lenders and compare terms to get the lowest interest rate and fees. You can enter your zip code, loan amount and other details in Bankrate’s refinancing tool to quickly compare offerings from a wide range of lenders and narrow down a list of the most favorable lenders for your VA refinancing.
|Loan Type||Purchase Rates||Refinance Rates|
|The table above links out to loan-specific content to help you learn more about rates by loan type.|
|30-Year Loan||30-Year Mortgage Rates||30-Year Refinance Rates|
|20-Year Loan||20-Year Mortgage Rates||20-Year Refinance Rates|
|15-Year Loan||15-Year Mortgage Rates||15-Year Refinance Rates|
|10-Year Loan||10-Year Mortgage Rates||10-Year Refinance Rates|
|FHA Loan||FHA Mortgage Rates||FHA Refinance Rates|
|VA Loan||VA Mortgage Rates||VA Refinance Rates|
|ARM Loan||ARM Mortgage Rates||ARM Refinance Rates|
|Jumbo Loan||Jumbo Mortgage Rates||Jumbo Refinance Rates|