VA IRRRL Guidelines and Requirements | Non-Credit Qualifying Streamline
If you are looking for VA IRRRL guidelines, they are not hard to qualify for. The non-credit qualifying streamline has limited documentation, which does not require a full credit report, written Verification of Employment, or appraisal. The two major VA IRRRL requirements are:
- Meeting the VA IRRRL Net Tangible Benefit Policy.
- Being current for the month due through closing.
VA IRRRL Guidelines
- No minimum credit score required on the non-credit qualifying streamline.
- No appraisal required.
- Primary and non-owner occupied properties allowed.
- Must be current for the month due.
- Manufactured homes permanently affixed to the foundation meeting VA IRRRL requirements are eligible.
- Incidental cash back may not exceed $500.
- VA cash out options are available up to 90% loan-to-value.
Some lenders have tougher guidelines called an VA overlay, which make it harder to qualify for. One of the most common VA lender overlays is requiring a minimum credit score, such as 640, 620, 600 FICO credit score.
New Net Tangible Benefit Policy
The net tangible benefit policy, Circular 26-18-13 was passed March 14, 2018 to prevent loan churning, which is not a benefit to Veterans. The major change includes:
- A comparison statement not to exceed 36 months of recoupment.
This statement determines if all fees, expenses and closing costs, (excluding the funding fee, taxes, and escrow amount) meet the recoupment period. Lender credits can offset these fees, which can be given depending on the interest rate.
Interest Rate Net Tangible Benefit
- Your interest rate must be reduced by .5% for fixed to fixed rate refinances.
- Convert from an ARM to a fixed rate.
- Fixed to ARM rates must have a 2% lower interest rate.
Pricing varies depending on the mortgage company. Interest rates can depend on pricing adjustments, which could include:
- Loan amount.
- Occupancy type.
- Number of units.
- Property state.
- Credit score.
- Or other pricing adjustments.
Some lenders may have higher origination fees, processing, underwriting, or other fees. VA IRRRL refinance rates vary by lender.
- Possibility to bring no money to the closing table.
- Refund of current escrow account.
- Defer up to two mortgage payments.
- VA interests rates can be more competitive than other types of loans and easier to qualify for.
- Minimal paperwork and easy refinance process.
- Can result in a lower payment or shorter term.
VA IRRRL Funding Fee
The percentage for use does not vary depending on the type of Veteran or times used like it does on a purchase. The VA IRRRL funding fee is .5% of the total loan amount. The lender will determine if you are exempt from paying a funding fee. A Veteran may be exempt from a funding fee if:
- Receiving VA compensation for a service-connected disability.
- Entitled to receive compensation for service-connected disability.
- Eligible and rated by VA.
- Not presently in receipt because they are on active duty and entitled to receive compensation.
- Surviving spouses of a Veteran who died in service or from a service-connected disability.
VA IRRRL Guidelines – Bankruptcy
- Chapter 7 bankruptcy must be discharged.
- Chapter 13 bankruptcy is permitted as long as there is a satisfactory payment history with the trustee and court approval.
IRRRL Seasoning Requirements
VA IRRRL guidelines have seasoning requirements before refinancing into a new VA loan. The new loan note date must:
- Be 210 days after the first payment due date, and
- 6 total monthly payments must have been made.