Short answer: You do not choose between them; your current loan does. A VA Interest Rate Reduction Refinance Loan (IRRRL) is only for refinancing an existing VA loan. An FHA Streamline is only for refinancing an existing FHA loan. Both skip a new appraisal in most cases, both require that your current loan is seasoned (at least six monthly payments made and 210 days since the first payment was due), both must produce a real, defined benefit to you, and neither lets you take cash out. If you have a conventional loan, neither applies, and a standard rate-and-term refinance is the path.
Written by Eric Peterson, Mortgage Loan Originator · NMLS #620962
The Lending Dad, powered by NEXA Lending — NEXA Mortgage, LLC · NMLS #1660690. Based in North Texas; licensed in TX, CA, FL, OK & AR. About Eric →
First: what kind of loan do you have now?
Look at your closing paperwork or your monthly statement. A VA loan will reference the Department of Veterans Affairs and a VA case number; an FHA loan will show an FHA case number and a monthly mortgage insurance premium (MIP) line. If you are not sure, I can tell you in about two minutes from your statement.
VA IRRRL: the VA streamline
- Who: anyone with an existing VA-guaranteed loan who can certify they currently live in, or previously lived in, the home. You do not have to occupy it now, which matters for veterans who have since moved and rented the property out.
- Purpose: lower the interest rate, or move from an adjustable rate to a fixed rate. That is it. No cash out (paying closing costs and a small energy-efficiency allowance are the only additions).
- Seasoning: federal law (38 U.S.C. § 3709) says the new loan cannot be guaranteed until you have made at least six consecutive monthly payments on the loan being refinanced and 210 days have passed since the first payment due date.
- Net tangible benefit: for a fixed-to-fixed refinance the rate must drop by at least half a percentage point; for fixed-to-adjustable it must drop by at least two percentage points. Discount points cannot be the only reason the rate falls unless they are paid at closing rather than rolled into the loan.
- Fee recoupment: the closing costs must be scheduled to be recouped through the payment savings within 36 months. If the math does not work, VA will not guarantee the loan, which protects you from a refinance that only looks good.
- Underwriting: VA does not require a new appraisal or a full credit underwrite for an IRRRL, though lenders can and often do apply their own overlays. This is why an IRRRL is often the right first move for a veteran whose credit or income has changed since the original loan.
- Funding fee: a reduced VA funding fee applies (exempt veterans stay exempt), and it can be financed.
FHA Streamline: the FHA streamline
- Who: anyone whose current mortgage is already FHA-insured and current (not delinquent). HUD offers both a non-credit-qualifying version and a credit-qualifying version.
- Purpose: a lower rate or a more stable payment. HUD's rule is that the refinance must produce a net tangible benefit, and HUD's own page is blunt about cash: cash back over $500 is not allowed.
- Seasoning: HUD Handbook 4000.1 requires that at least six full monthly payments have been made on the current FHA loan and that 210 days have passed since its closing (plus a clean recent payment history).
- Net tangible benefit: HUD defines it by the change in your combined rate (interest rate plus the annual MIP factor) and by the loan type you are moving between. Moving from an ARM to a fixed rate, or shortening the term without a large payment jump, can also qualify.
- Appraisal: the non-credit-qualifying streamline is done without a new appraisal, so being underwater on value does not stop it.
- Mortgage insurance: you will still pay FHA up-front and annual MIP on the new loan; the amounts depend on when your current loan was endorsed and on the new loan term. That is a cost to compare, not a reason to skip the analysis.
- Occupancy: primary residences are the normal case; HUD allows investment properties to be streamlined only without an appraisal.
Side by side
| Question | VA IRRRL | FHA Streamline |
|---|---|---|
| Current loan must be | VA | FHA |
| Seasoning | 6 payments + 210 days from first payment due | 6 payments + 210 days from closing |
| Appraisal | Usually none | None (non-credit-qualifying) |
| Cash out | No | No (under $500 incidental) |
| Must benefit you | Yes: rate-drop minimums + 36-month recoupment | Yes: HUD net tangible benefit test |
| Still live there? | No, prior occupancy is enough | Primary residence normally; investment only without appraisal |
| Mortgage insurance | None (funding fee instead) | FHA MIP continues |
When a streamline is the wrong tool
- You want cash out. That is a VA cash-out refinance, a conventional cash-out, or, in Texas, a home equity loan governed by the Texas 50(a)(6) rules.
- You have an FHA loan with solid equity and good credit. A conventional refinance that removes mortgage insurance entirely may beat an FHA Streamline that keeps it. This has to be run both ways.
- You are planning to sell within the recoupment window. If you will not be in the loan long enough for the savings to cover the costs, the honest answer is usually to wait.
Why I run streamlines first
Streamlines do not re-qualify your credit or income in the way a full refinance does, which is why I check IRRRL and FHA Streamline eligibility before anything else when a homeowner asks about refinancing. If a streamline is available and passes its benefit test, it is usually the simplest, lowest-friction option on the table.
Have a VA or FHA loan and wondering if a streamline fits?
Send me your goal and the basics of your current loan. I'll check seasoning, the benefit test and the recoupment math and tell you plainly whether it makes sense, including if the answer is "not yet."
Sources
- 38 U.S.C. § 3709, Refinancing of housing loans (fee recoupment, net tangible benefit, loan seasoning)
- 38 CFR § 36.4307, Interest rate reduction refinancing loan
- VA.gov: Interest Rate Reduction Refinance Loan (IRRRL)
- HUD.gov: Streamline Refinance Your Mortgage (FHA)
- HUD Single Family Housing Policy Handbook 4000.1 (Section II.A.8.d, Streamline Refinances)
This article is general education, not individualized financial, legal or tax advice, and not an offer or commitment to lend. Program rules change and lenders apply their own guidelines; confirm current requirements with a licensed loan originator before making decisions. No rates, payments or APRs are quoted here. All loans are subject to credit approval, underwriting, property eligibility and program availability. Eric Peterson, Mortgage Loan Originator, NMLS #620962. All mortgage loan origination services are conducted through NEXA Mortgage, LLC dba NEXA Lending, NMLS #1660690, 5559 S Sossaman Rd, Bldg 1, Ste 101, Mesa, AZ 85212. Equal Housing Lender. Texas consumers: see the Texas Complaint & Recovery Fund Notice.