VA Refinance Rates: Your Guide to Mortgage Refinancing Options for Veterans

Understanding VA Mortgage Refinance Loans

A VA refinance loan offers eligible military members and veterans a pathway to improve their mortgage terms. Unlike standard refinancing, this Department of Veterans Affairs-backed option allows you to either lower your interest rate or access your home’s equity. Whether you’re looking to reduce monthly payments or consolidate debt, a VA mortgage refinance rate structure provides flexibility tailored to your service background.

Two Paths to Refinancing: Streamline vs. Cash-Out

The VA refinance program offers two distinct approaches, each serving different financial goals.

Streamline Refinancing (IRRL)

Also called an Interest Rate Reduction Refinance Loan, this option focuses on rate improvement. You can switch from an adjustable-rate mortgage to a fixed-rate loan, or simply secure a lower fixed rate on your existing VA loan. The refinance rates for this product are typically competitive, and the funding fee is minimal at 0.5% of your loan amount.

Cash-Out Refinancing

This path lets you borrow against your home equity or convert a conventional loan into a VA-backed mortgage. Funding fees are higher—2.3% on your first use, 3.6% on subsequent refinances—but the flexibility may justify the cost depending on your financial needs.

What You Need to Apply for VA Mortgage Refinancing

Before approaching a lender, gather these documents:

• Your Certificate of Eligibility (COE)—your proof of military service eligibility
• Recent pay stubs (last 30 days)
• W-2 forms from the previous two years
• Federal income tax returns for the prior two years
• Bank statements or additional documentation your lender requests

Your lender will also order a home appraisal to establish your property’s current value. This step is standard across all VA mortgage refinance rates applications.

Breaking Down VA Refinance Costs

Expect two main expense categories: the VA funding fee and standard closing costs.

For streamline refinancing, the VA funding fee is straightforward: 0.5% of your total loan amount. For cash-out refinancing, first-time users pay 2.3%, while those refinancing again pay 3.6%. Closing costs vary by lender and typically cover appraisals, title searches, and underwriting fees.

The 210-Day Waiting Period: What It Means

Federal law requires a minimum 210-day gap between your first payment on your original VA loan and the closing date of your refinance. This safeguard prevents excessive churning and ensures you’ve built sufficient equity before refinancing.

Factors Affecting Your VA Refinance Rates

Your lender sets your rate based on several variables:

• Your credit score
• Loan amount and remaining balance
• Current debt levels
• Home equity percentage
• Whether you make a down payment

A critical 2018 regulation mandates that if you refinance from a fixed-rate VA loan into another fixed-rate loan, your new rate must drop by at least 0.5%. Switching to an adjustable-rate mortgage requires a minimum 2% rate reduction. Shopping multiple lenders is essential—rates and terms vary significantly based on your financial profile.

Is Now the Right Time to Refinance?

Your refinancing decision depends on specific circumstances: how much equity you’ve accumulated, whether current rates are lower than your existing mortgage rate, or if you need funds for home improvements. Compare your current rate against today’s VA mortgage refinance rates to determine if the savings justify closing costs.

Market Outlook: What’s Driving VA Refinance Rates?

The Mortgage Bankers Association anticipates rate increases throughout the forecast period, driven by rising Treasury yields and the Federal Reserve’s shift toward tightening monetary policy. As the Fed raises its benchmark interest rates to combat inflation, consumer borrowing costs—including VA mortgage refinance rates—will likely climb.

Why Compare Lenders for VA Mortgage Refinancing

Never settle on the first offer. Banks, credit unions, and mortgage companies all compete for your business, and rate differences can mean thousands in savings over your loan’s lifetime. Request quotes from at least three lenders, compare terms, and negotiate based on competing offers.