Compare current VA refinance rates

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Bankrate has been the authority in personal finance since it was founded in 1976 as the “Bank Rate Monitor,” a print publication for the banking industry. Bankrate has been surveying and collecting information on mortgage and refinance rates from the nation’s largest lenders for more than 30 years. Top publications such as The New York Times, Wall Street Journal, CNBC and others depend on Bankrate as a trusted source of financial information, so you know you’re getting information you can trust.

How Bankrate mortgage and refinance rates are calculated

Lenders nationwide provide weekday mortgage rates to our comprehensive national survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of refinance loans. The interest rate table below is updated daily to give you the most current refinance rates when choosing a home loan. APRs and rates are based on no existing relationship or automatic payments. For these averages, the customer profile includes a 740 FICO score and a single-family residence. To learn more, see understanding Bankrate rate averages.

What are current VA refinance rates and where are they headed?

The low interest rate environment may make VA refinance programs even more beneficial for military homeowners.

VA refinances had an average interest rate of 3.61 percent and APR of 3.79 percent for a 30-year refinance as of mid-June 2020, according to Bankrate’s comprehensive national survey of mortgage lenders. Check out our latest mortgage rate trends survey to see where rates are headed.

What is a VA refinance loan?

Like VA home loans, which are backed by the U.S. Department of Veterans Affairs, VA refinance programs are valuable benefits that reward military service. These programs enable veterans and current service members to refinance into a new mortgage with a lower interest rate, lower monthly payments or both when borrowing from VA-approved lenders.

There are two options:

1. VA streamline refinance loans

These mortgage loans allow homeowners with a current VA loan to refinance into 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 streamline refinance rates are the mortgage rates for what are known as Interest Rate Reduction Refinance Loans (IRRRLs). They are called “streamline” because the lending approval process is simplified to reduce paperwork and fees, and to save time for borrowers who already have a VA mortgage.

2. VA cash-out refinance loans

These mortgage loans are available to qualified service members, veterans or spouses who currently have conventional loans, FHA loans, USDA loans or VA loans. With a VA cash-out refinance, you can refinance your current mortgage — regardless of whether it's a VA loan or a conventional loan— and get cash by borrowing against the equity you’ve built up in the home. Thus, qualified borrowers can get cash to pay off debts, fund education expenses or make home improvements. How much cash you can get depends on how much equity you have in your home, among other factors. All VA refinance loans that aren’t IRRRLs are known as cash-out loans, regardless of whether borrowers actually get cash.

VA refinance pros and cons

If you’re considering a VA loan refinance, the benefits generally include:

• No down payment or private mortgage insurance (PMI) requirement
• More flexible credit underwriting
• Refinance options such as an IRRRL

The drawbacks, however, include:

• A VA funding fee that can be between 0.5 percent and 3.3 percent or more, depending on the kind of refinance
• Specific service requirements

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 cash-out 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 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 cash-out refinance 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 (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 cash-out 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 cash-out 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 the Bankrate 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 or a VA cash-out refinance, you’ll need to work with a VA-approved lender.

1. Find a VA-approved lender in your state

Learn about the lender’s business practices. Look them up online and be wary of excessive complaints or other red flags. You can search the CFPB complaint database and the database from the Nationwide Mortgage Licensing System (NMLS) to verify.

2. Gather important documents

You don’t need to provide your COE for an IRRRL, but you do need to provide one for a VA cash-out refinance. You can find your COE through the VA eBenefits portal.

For a VA cash-out refinance, in addition to a COE, you’ll typically need these items for the underwriting process:

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

3. Obtain appraisal, if required

For a VA cash-out refinance, the lender is likely to order a home appraisal. In this process, an appraiser will assess your home to determine its market value.

4. Pay closing costs

In addition to standard closing costs for a cash-out refinance, both a cash-out refi and an IRRRL require the borrower to pay a VA funding fee, which is 0.5 percent for an IRRRL and 2.3 percent for a first-time cash-out refi and 3.6 percent for subsequent uses.

How do I find the best refinance VA loan rates?

Each VA-approved bank, credit union or mortgage lender sets its own requirements, interest rates, terms and fees for VA-backed loans. To find the best deal, be sure to shop around (the VA encourages this) among different lenders and compare terms to get the best deal. You can enter your ZIP code, loan amount and other details in our 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.

Interest rates of VA mortgage loans are typically lower than those of conventional or FHA loans. The best rate you can get will depend primarily on the lender involved, your personal financial situation and your credit score. Your best VA refinance rate will be the one with the lowest rate and fees. VA refinance rates fluctuate, so when you price shop — and whether you’re willing to wait to pounce on a low rate — is a big factor in how good a deal you’ll be able to get. As always, compare rate quotes from multiple lenders.