VA Loan · Streamline Refinance (IRRRL)
VA IRRRL Break-Even Calculator
Quick answer: VA requires an IRRRL's closing costs to be recouped within 36 months through the reduction in your monthly principal and interest, and a fixed-to-fixed refinance must drop the rate by at least 0.50 points. Enter your current loan and the offer on your Loan Estimate to see your break-even month and whether the refinance passes VA's tests.
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Enter your current interest rate and the rate on your Loan Estimate to see your results. The balance, years and closing costs start with example amounts; replace them with yours.
Your current VA loan
The IRRRL offer (from your Loan Estimate)
Closing costs: lender, title and recording charges, minus any lender credit. Leave out the funding fee, taxes, insurance and escrow deposits.
Enter both interest rates
Estimates only — not a commitment to lend or a Loan Estimate. Jim Blackburn, NMLS #1072866.
How VA Calculates IRRRL Recoupment
VA's recoupment period is the closing costs divided by the drop in your monthly principal and interest payment. Three things stay out of the costs: the VA funding fee, taxes, and amounts that go into escrow such as homeowners insurance. If the result is more than 36 months, the loan doesn't qualify for a VA guaranty as an IRRRL.
Example: $4,500 in closing costs ÷ a $300 monthly principal and interest reduction = 15 months. That passes, because 15 is within 36.
The Three Tests Every VA IRRRL Has to Pass
- Recoupment within 36 months. Costs (not counting the funding fee, taxes or escrow) are earned back through the monthly principal and interest reduction within 36 months.
- Net tangible benefit. Fixed to fixed: the new rate is at least 0.50 points lower. Fixed to adjustable: at least 2.00 points lower. Points added to the loan amount can't be the only reason the rate drops.
- Seasoning. The later of six monthly payments made on the current loan, or 210 days after its first payment due date.
Break-Even Isn't the Whole Story
If you are 6 years into a 30-year loan and refinance into a new 30-year loan, you add 6 years of payments. The monthly number can drop while the total you pay over the life of the loan goes up. The last row in the calculator compares the principal and interest left on your current loan with the total on the new one, so you can see both. Choosing a 20- or 25-year term is one way to keep the end date close to where it is today.
How to Compare VA IRRRL Offers
We don't publish rates on this page. IRRRL pricing changes daily and depends on your loan amount, credit, term and whether you pay points, so a posted number rarely matches what you'd actually be offered. The reliable way to compare is to request a Loan Estimate from two or three lenders on the same day, then enter each offer here. The one with the shortest break-even and the smallest lifetime cost is usually the one to look at closely.
Frequently Asked Questions
What is a VA IRRRL?
A VA IRRRL (Interest Rate Reduction Refinance Loan), often called a VA streamline refinance, replaces an existing VA-guaranteed loan with a new VA loan to reduce the interest rate or move from an adjustable rate to a fixed rate. VA itself does not require an appraisal or income verification for an IRRRL, though lenders may add their own requirements.
What is the VA IRRRL 36-month recoupment rule?
Federal law (38 U.S.C. § 3709) requires that the fees and closing costs of an IRRRL be recouped through the reduction in the regular monthly payment within 36 months of the loan date. Taxes, escrow amounts and the VA funding fee are left out of the calculation.
How do you calculate VA IRRRL break-even?
Divide the closing costs (not counting the funding fee, taxes, insurance or escrow deposits) by the monthly reduction in principal and interest. Example: $4,500 in costs divided by a $300 monthly principal and interest reduction is 15 months, which is within VA's 36-month limit.
How much must the rate drop for a VA IRRRL?
For a fixed-rate loan refinanced into a new fixed-rate loan, the new rate must be at least 0.50 percentage points lower. For a fixed-rate loan refinanced into an adjustable-rate loan, it must be at least 2.00 percentage points lower.
How soon can I do a VA IRRRL?
The new loan can close no sooner than the later of two dates: after you have made six monthly payments on the current loan, or 210 days after the first payment due date of the current loan.
What is the VA funding fee on an IRRRL?
The funding fee for an IRRRL is 0.5% of the loan amount and can be added to the loan. Veterans receiving VA disability compensation are exempt, as are certain other borrowers. Your Certificate of Eligibility shows your status.
How do I compare VA IRRRL offers?
This page does not publish rates, because IRRRL pricing changes daily and depends on your loan amount, credit, term and any points. Ask two or three lenders for a Loan Estimate on the same day, then enter each offered rate and its closing costs here to compare break-even and lifetime cost side by side.
Does a lower break-even always mean I should refinance?
Not by itself. Starting a new 30-year term can reduce the monthly payment while increasing the total interest you pay over the life of the loan. This calculator shows the total principal and interest left on your current loan next to the new loan so you can see both sides.
Want Us to Run Your Actual Numbers?
Send us your current loan details and we'll check recoupment, the rate-drop test and seasoning on a real Loan Estimate.
- Only 2 minutes to complete
- No credit score impact
Related VA Tools and Guides
Important Disclaimer
This calculator illustrates the recoupment, net tangible benefit and seasoning requirements in 38 U.S.C. § 3709 using the numbers you enter. It is not a Loan Estimate, a rate quote, a loan approval or a commitment to lend. Stairway Mortgage does not set VA eligibility or funding fee exemption; your Certificate of Eligibility does. All borrowers must qualify based on VA, lender and property guidelines. Jim Blackburn, NMLS #1072866. Equal Housing Opportunity.