What closing costs apply to a VA IRRRL?
An IRRRL may include a VA funding fee for a non-exempt borrower, plus lender, title, recording, discount-point, prepaid, and escrow charges that apply to the transaction. Allowable costs may be paid in cash, financed, or offset with lender credit, but VA's benefit and recoupment protections still apply.
What this actually means.
The Loan Estimate may show lender and title charges, recording fees, discount points, prepaid interest, taxes, insurance, new escrow deposits, and a VA funding fee when the borrower is not exempt. Some allowable charges can be included in the new loan or offset by lender credit. For an IRRRL with a lower principal-and-interest payment, VA's statutory recoupment test generally requires specified fees and closing costs to be recovered within 36 months; that compliance calculation excludes the VA funding fee, escrow, and prepaids. The separate VA comparison disclosure shows a broader cost picture. Subject to current VA guidance and lender overlays.
Where this can move.
VA seasoning rules, net-tangible-benefit recoupment, current loan type, equity, credit, rate environment, and IRRRL vs cash-out eligibility can change the answer.
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Educational only. VA guidelines, lender overlays, rates, fees, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with the VA, HUD, or any government agency.