If you have an existing VA-backed home loan and want to lower your monthly mortgage payments or make them more stable, a Reduced Rate Refinance Loan (IRRRL) may be right for you. Refinancing allows you to replace   with a new one with different terms. Find out if you qualify and how to apply.

Why might I want to get a VA-backed cash-out refinance loan?

A cash-out refinance loan under the VA can help you:

borrow money from the equity of your home to pay down debt, pay tuition, renovate your home or other needs, or refinance a loan with no down payment into a VA-backed loan.

With a no down payment loan, you can borrow up to the Fannie Mae/Freddie Mac limit in most areas, and even more in some high-cost counties. You can borrow more than this amount if you want to make a down payment.

When refinancing your loan, be aware of closing costs, which can run into the thousands of dollars. Make sure you understand how the new loan amount relates to the value of your home. While your lender can advise you on the costs and benefits of the deal, you should make sure you understand what you’re getting into.

How can I get a VA-backed cash-out refinance loan?

Find a lender

To get a cash-out refinance loan, you’ll need to contact a private bank, mortgage company or credit union – not directly through us. Terms and fees may vary, so contact several lenders to check your options.

Note: Be careful when considering offers to refinance your home loan. Claims that you can skip payments or get a very low interest rate, or other terms that sound too good to be true, may be signs of a misleading offer.

Apply for a certificate of eligibility for benefits (COE).


You will need to show the COE to your lender as proof that you are eligible for home loan benefits.

Provide the lender with all necessary information.


In addition to the COE document, provide the lender with

  • Copies of payroll for the most recent 30-day period
  • Forms W-2 for the previous 2 years
  • A copy of your federal income tax return for the previous 2 years (required by many, but not all lenders)
  • Any other information required by the lender
    Note: The lender will order a home appraisal, which is an expert appraisal of the value of the home.

Follow the loan closing procedure set forth by your lender and pay closing costs.


At loan closing, you may be required to pay a VA funding fee.

This one-time fee helps lower the cost of borrowing for U.S. taxpayers because the VA home loan program does not require a down payment or monthly mortgage insurance. Your lender will charge interest on the loan in addition to the closing fee.

On Friday, September 10, 2021, the national average 30-year VA refinance APR is 2.930%. The average 30-year VA mortgage APR is 2.880%, according to Bankrate’s latest survey of the nation’s largest refinance lenders.

Lower Your Interest Rate on a VA Loan You Already Have

If your current mortgage was financed with a VA loan, you have another refinance option: an Interest Rate Reduction Refinance Loan, or IRRRL. This is used to refinance your current VA loan into a loan with a lower interest rate. You can’t get cash back with an IRRRL, but it has these advantages:

  • Lower monthly payment
  • A quick and easy process
  • No new certificate of eligibility is required
  • No need to take money out of your pocket if refinancing costs are included in the loan
  • Lower VA financing fees compared to cash-out refinancing.

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