For a veteran with an existing VA loan looking at a rate-and-term refi, VA IRRRL almost always wins over a conventional refinance. Understanding why comes down to four factors: appraisal, income docs, funding fee, and rate.
Side-by-side
| Factor | VA IRRRL | Conventional Refi |
|---|---|---|
| Appraisal | Not required | Required (in most cases) |
| Income documentation | Not required (most cases) | Full documentation required |
| Funding fee | 0.5% (waived for disabled vets) | No funding fee |
| Typical rate | 0.125–0.375% below conventional | Market rate |
| LTV | No LTV limit | Up to 95% rate-and-term |
| PMI | None | Required if LTV > 80% |
| Close time | 14–21 days typical | 21–35 days typical |
| Existing loan required | VA loan | Any loan |
When VA IRRRL wins
- You have an existing VA loan
- You want a rate-and-term refi (no cash out)
- You want the fastest close possible
- You want to skip appraisal and income documentation
When conventional refinance wins
- You want to release your VA entitlement for a future purchase
- You have 20%+ equity and want to eliminate funding fees permanently
- You want cash out (VA IRRRL is rate-and-term only — use VA cash-out refinance instead for VA cash out)
Note on rate spread
VA rates typically price 0.125–0.375% below conventional for the same file. On a $500K balance, that spread is $40–$115/month — real money over a long hold period. This alone often makes IRRRL the right call for any veteran with an existing VA loan.
FAQs
Can I refinance a VA loan into a conventional loan?
Yes — you can refinance from VA to conventional if you've built up 20%+ equity and want to eliminate the funding fee going forward. This is uncommon since VA usually prices better than conventional, but it happens when veterans want to preserve their VA entitlement for a future purchase.
Is VA IRRRL always better than a conventional refi for veterans?
For pure rate-and-term with an existing VA loan, almost always yes — no appraisal, no income docs, lower funding fee than a full VA refi, lower rate than most conventional refis. Where conventional wins is when a veteran wants to release VA entitlement for a future purchase or has 20%+ equity and wants to eliminate all future funding fees.
What's the VA IRRRL funding fee vs. conventional refi costs?
IRRRL: 0.5% of the loan amount (waived for disabled veterans). Conventional refi has no funding fee but typically has higher lender origination and title insurance costs — the net difference is usually a wash on smaller loans and a win for IRRRL on larger loans.
Do I need an appraisal for either?
VA IRRRL: no. Conventional refi: yes, in most cases. This alone often makes IRRRL the faster and cheaper path.
Related: VA IRRRL Colorado · VA IRRRL Florida · VA cash-out refinance Colorado · VA cash-out refinance Florida · VA loans overview