VA Pamphlet 26-7, Revised
Chapter 6: Refinancing Loans
6-6
1. Interest Rate Reduction Refinancing Loans (IRRRLs),
Continued
g. Maximum
Loan
(continued)
Note: There is no maximum dollar amount for VA loans. Since an IRRRL
rolls the above items into the new loan, and VA guarantees at least 25 percent
of the loan amount (without regard to the veteran’s entitlement), the new loan
amount may be more than the limits established by the secondary market. It
is the lender’s responsibilit
to ensure it has a marketable loan.
h. Amount of
Guaranty and
Entitlement Use
No additional charge is made to the veteran’s entitlement for an IRRRL; such
as, the amount of the veteran’s previously used and available entitlement
remains the same before and after obtaining the IRRRL.
The new IRRRL loan amount may be equal to, greater than, or less than, the
original amount of the loan being refinanced. This may impact the amount of
guaranty on the new loan, but not the veteran’s use of entitlement.
Example Of New Loan Amount More Than Old Loan
The existing VA loan was originally made for $110,000 with a guaranty of
$27,500, or 25 percent. The new IRRRL is for $112,000. The guaranty on
the new loan is $28,000 or 25 percent, but the veteran’s entitlement use
remains at $27,500.
Example Of New Loan Amount Less Than Old Loan
The existing VA loan was originally made for $42,000 with a guaranty of
$25,000, or almost 60 percent (the percentage applicable under former law).
The new IRRRL is for $40,000. The guaranty on the new loan is $20,000 or
50 percent, but the veteran’s entitlement use remains at $25,000.
Amount How to calculate the amount of guaranty on an IRRRL
IRRRLs
up to
$45,000
First, calculate the lesser of:
50 percent of the IRRRL loan amount, or
the amount of guaranty used on the VA loan being refinanced.
The amount of guaranty is the greater of:
the above result, or
25 percent of the IRRRL loan amount.
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