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Yes. If you have a VA-backed mortgage, you may be able to refinance with an Interest Rate Reduction Refinance Loan (IRRRL) or a cash-out refinance. An IRRRL replaces an existing VA loan but cannot give you cash; a cash-out refinance can let an eligible borrower access home equity or move a non-VA mortgage into a VA-backed loan. The better fit depends on your goal, eligibility, new loan terms and total costs—not simply the advertised interest rate.
VA loans are refinanced through private lenders, and approval and pricing depend on the loan and borrower. Compare written offers from several lenders before deciding. VA says refinance closing costs can add up to thousands of dollars, so calculate whether the new loan’s benefits justify its fees and any change to your balance or repayment period.
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What are the two ways to refinance a VA loan?
An IRRRL is designed to refinance an existing VA-backed mortgage, often to reduce monthly payments or make them more stable. A cash-out refinance can refinance a VA or non-VA mortgage and may provide cash from home equity. The essential difference is that an IRRRL cannot return cash to you, while a cash-out loan may do so under its terms.
| Decision point | IRRRL | Cash-out refinance |
|---|---|---|
| Main purpose | Refinance an existing VA-backed loan, often to lower the payment or make it more stable. | Access home equity or refinance a non-VA mortgage into a VA-backed loan. |
| Existing mortgage | Must already be VA-backed. | May be VA-backed or non-VA, subject to program and lender requirements. |
| Cash paid to borrower | Not allowed. | May be available from equity, subject to loan terms and applicable limits. |
| Key eligibility points | Existing VA-backed loan and certification of current or former residence in the home. | Certificate of Eligibility (COE), VA and lender credit and income requirements, and occupancy of the home being refinanced. |
| Costs and process | Funding fee and closing costs may apply; some costs may be financed or paid through the lender’s rate arrangement. | Costs and underwriting differ; VA says the lender orders an appraisal. |
Sources: VA IRRRL guidance, VA cash-out guidance and the VA lender handbook.
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When does an IRRRL make sense?
Consider an IRRRL when your goal is to change the terms of an existing VA-backed mortgage—not to take equity out. The VA describes it as an option for borrowers who want to reduce monthly mortgage payments or make payments more stable. Whether it actually helps depends on the new rate, payment, term and costs in your specific offer.
To qualify for the type of loan, you must already have a VA-backed home loan and certify that you currently live in, or previously lived in, the home. If there is a second mortgage on the property, its holder must agree to let the new VA loan become the first mortgage. That requirement can affect whether the refinance can proceed, so raise any second lien with the lender early.
An IRRRL is not a cash-access tool. The VA lender handbook says IRRRL proceeds cannot provide cash to the borrower. If a lender presents an offer as a way to take cash out, ask which loan type it is and request written details rather than assuming it is an IRRRL.
VA lists the IRRRL funding fee as 0.5%. The fee page was retrieved November 12, 2026; confirm current rules, whether you are exempt and the amount that applies to your transaction with VA or the lender. Closing costs may also apply. VA says they may be included in the new loan, or a lender may set a rate high enough to pay them. Either approach has a cost: financing fees increases the amount you owe, while a rate arrangement affects the loan’s interest terms. Ask for the figures in writing and compare the full loan, not just the cash due at closing.
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When might a cash-out refinance be the better fit?
A cash-out refinance may fit if you want to access home equity or replace a non-VA mortgage with a VA-backed loan. Unlike an IRRRL, it can potentially provide cash to the borrower, but that possibility is not a guarantee of approval or a particular amount. The cash available depends on the home’s value, the new loan terms, applicable limits and the lender’s underwriting.
VA’s borrower guidance identifies several requirements: a COE, meeting VA and lender credit and income standards, and living in the home being refinanced. The lender requests supporting documents; VA gives recent pay stubs and W-2s as examples, and says the lender orders an appraisal. The exact documentation and underwriting process depend on the lender and the loan.
VA handbook guidance says the cash-out loan amount, including the funding fee, may not exceed 100% of the reasonable value determined by VA. This is a ceiling described in the handbook—not a promise that a lender will approve that amount, that every borrower can borrow to the ceiling, or that a particular amount of equity will be available as cash. Have the lender explain the value and loan-amount calculation for your property, and verify the current rules for your transaction.
Cash-out refinancing changes the mortgage itself, not just the amount of money you receive at closing. Compare the proposed principal balance and payment with your current loan, and consider whether using equity for your intended purpose is worth taking on the new loan and its costs. A larger balance can mean you owe more even if the new rate or monthly payment looks attractive.
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How should you compare refinance offers?
Compare the projected total cost and loan balance as well as the rate and monthly payment. A lower payment alone does not show whether the refinance saves money: the new loan may include closing costs or a funding fee, and the proposed term can change how long you pay and how much you owe. VA specifically advises borrowers to understand how the new loan amount relates to the home’s value.
Gather these figures for your current mortgage and every proposed loan:
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- Proposed loan: interest rate, principal amount, term and projected monthly payment.
- Upfront and financed costs: itemized closing costs, applicable funding fee, how each cost will be paid, and the new balance if fees are rolled in.
- Cash-out details, if relevant: cash you would receive after paying off the existing mortgage and transaction costs, and the resulting principal balance.
- Your plans: how long you expect to keep the home or loan, and whether payment stability, lower monthly outlay or access to equity is your priority.
Then ask each lender for comparable written terms. Make sure offers use the same loan type, amount and term where possible; otherwise, a rate comparison may conceal a difference in costs or repayment length. Ask what is included in the quoted payment, what costs are paid upfront versus financed, and whether any proposed rate arrangement pays costs by changing the interest rate.
Use the time you expect to keep the loan when weighing costs against benefits. For example, if a refinance has upfront costs, a lower monthly payment needs time to offset those costs before it produces a net benefit. The exact break-even point depends on the written loan figures and how costs are treated. For a cash-out refinance, evaluate the cash received and the larger or otherwise changed loan balance alongside the payment; don’t treat cash at closing as savings.
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There is no universal rate or cost threshold in the VA guidance that establishes when refinancing is worthwhile for every borrower. Lender fees and terms vary, and the VA sources do not determine an individual borrower’s savings. Request quotes from several lenders, compare the same assumptions and evaluate the total dollars and loan balance over the period that matters to you.
How do you apply for a VA refinance?
You apply through a private bank, mortgage company or credit union, not directly through VA. VA advises contacting several lenders because terms and fees vary. The sequence below helps you keep the loan type, eligibility and cost comparison clear.
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- Choose the goal first. If you want to refinance an existing VA-backed loan without receiving cash, ask about an IRRRL. If you want equity or have a non-VA mortgage to refinance, ask about cash-out and its occupancy, eligibility and value requirements.
- Check the relevant eligibility points. For an IRRRL, confirm that your current mortgage is VA-backed, be prepared to certify current or former residence in the home, and disclose any second mortgage. For cash-out, ask the lender about the COE, credit and income standards, occupancy, and how it will determine the property’s reasonable value.
- Collect the information the lender requests. For a cash-out loan, VA names recent pay stubs and W-2s as examples of documents a lender may request. Ask the lender for its exact list; the necessary package varies by loan and lender.
- Get written quotes from several lenders. Request the proposed rate, term, payment, loan amount, itemized costs, applicable funding fee and the amount due at closing or added to the balance. For cash-out, also request the estimated cash to you and how the appraisal value affects the calculation.
- Compare the whole transaction. Check how the new balance relates to the home’s value, how costs are handled, and whether the payment or stability benefit is worth the total cost over your expected time in the loan.
- Review the final documents before signing. Confirm that the final loan type and figures match the offer you chose. Ask the lender to explain any changed fees, rate, payment, loan amount or cash-to-borrower estimate.
What warning signs should you watch for?
Be cautious with refinance pitches promising a skipped payment, an unusually low rate or terms that sound too good to be true. VA warns borrowers about such offers on its IRRRL and cash-out guidance pages.
Ask the lender to put the complete terms and costs in writing, including what happens to any skipped or deferred payment, whether costs are financed or reflected in the rate, and the resulting loan balance. A headline rate or promised payment does not by itself establish that a refinance is cheaper. If you cannot reconcile the offer with its itemized figures, pause and compare another lender’s quote.
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Which VA refinance option should you consider?
Start with the purpose. An IRRRL is the relevant route to investigate when you already have a VA-backed mortgage and want to refinance without taking cash out. A cash-out refinance is the route to investigate when you want to access equity or refinance a non-VA mortgage, provided you can meet the program and lender requirements. Neither option is automatically the cheaper one: compare total costs, the new balance and terms, and how long you expect to keep the loan.
Frequently Asked Questions
What does COE mean for a VA cash-out refinance?
COE means Certificate of Eligibility. VA identifies it as a cash-out refinance requirement; ask the lender what it needs to confirm or obtain your COE for the application.
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The VA guidance cited here does not specify a standard processing time. Timing depends on the lender and the individual loan, so ask each lender for its current estimate and what could delay your application.
Does a VA cash-out refinance guarantee I can borrow 100% of my home’s value?
No. The handbook’s 100% reasonable-value limit, including the funding fee, is a maximum described in its guidance, not an approval guarantee. The lender still applies underwriting and calculates the loan amount for the specific property and borrower.
Can I keep a second mortgage when I get an IRRRL?
A second mortgage holder must agree to let the new VA loan become the first mortgage. Contact the lien holder and lender about that consent before assuming the refinance can close.
