VA Refinance Rates

What is a VA refinance loan?

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.

• VA Streamline Refinance - allows homeowners with a current VA loan to refinance to a more affordable mortgage. True to its name, this program has little paperwork and typically has no out-of-pocket costs at the time of closing.
• VA Cash-Out Refinance - is open to homeowners with conventional loans, FHA loans, USDA loans or VA loans who are eligible service members, veterans or spouses.

What are current VA refinance rates?

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.

Today’s VA Refinance Rates

Who qualifies for a VA refinance loan?

To be eligible for an IRRRL refinance loan, you need to have an existing VA loan for the property and meet the following requirements:

• You must have had the VA loan for at least 210 days.
• You must refinance the same property for which you have the VA loan.
• You don’t need a Certificate of Eligibility (COE) since you had one for the original VA loan.
• You must not use the IRRRL proceeds to pay any loan other than the existing VA loan (no second mortgage).
• You must certify that you occupied the home at one time — you don’t need to live in the home currently.
• There are no underwriting requirements for IRRRLs from the VA, though the lenders might set minimum credit scores.

For a VA Cashout Refinance, the requirements are different:

• You must live in the home you are refinancing.
• You can refinance any type of existing mortgage — VA loan, conventional or other mortgage — into a VA loan.
• You must qualify for a COE.
• You must meet the VA’s and your lender’s credit and income requirements.
• Your lender will order a professional home appraisal.

When is it the right time to refinance my VA loan?

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:

• Get a lower interest rate and lower your monthly payment.
• Switch from an adjustable-rate loan to a fixed-rate loan with a low interest rate.

A VA-backed cashout refinancing may be right if you want to:

• Take cash out of your home equity for any purpose
• Refinance a non-VA loan into a VA-backed loan

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.

How much does a VA refinance cost?

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.

How do I refinance a VA loan?

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:

• Recent paystubs
• W-2 forms
• Federal income tax returns

The lender will also order a home appraisal for a cash-out refi.

How do I find the best refinance VA loan rates?

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.