Yes, if you financed your new build with a VA loan. Once that loan is seasoned, meaning at least 210 days have passed since your first payment was due and you’ve made six consecutive monthly payments, an Interest Rate Reduction Refinance Loan (IRRRL) can replace it. VA also requires a real benefit: on a fixed-to-fixed refinance, the new rate has to be at least 0.5 percentage point lower, and most costs have to be recouped within 36 months. Here’s how those rules apply after you close on a new home around San Antonio.
Brock Bremmer | U.S. Air Force Reserves Veteran | Real Estate Agent | eXp Realty | San Antonio Metro Area
VA Loan & New Construction Specialist
Also see: When to Refinance Your San Antonio Home | VA Loans on New Construction | VA Loan Guide for San Antonio
What Is a VA IRRRL?
VA.gov describes the IRRRL, often called a “streamline” refinance, as a way to lower your monthly payment with a lower rate or make it more stable by moving from an adjustable rate to a fixed one. To be eligible, all of these have to be true:
- You already have a VA-backed home loan.
- You’re using the IRRRL to refinance that VA loan.
- You can certify that you live in the home now or used to live there.
If there’s a second mortgage, its holder has to agree to let the new VA loan be the first lien. If you bought your new build with an FHA or conventional loan, an IRRRL isn’t an option, because it only refinances an existing VA loan.
How Soon Can You Refinance a New Build With an IRRRL?
VA Circular 26-19-22 says the loan you’re refinancing is seasoned only when both of these are true on the day the new loan closes:
- The first monthly payment was due at least 210 days earlier.
- Six consecutive monthly payments have been made.
VA’s example: a loan closed March 8 with its first payment due May 1 is seasoned on November 27, if six consecutive payments were made. If it isn’t seasoned, VA can’t guarantee the refinance.
Here’s an illustration for a new build. Say you close in November 2026 and your first payment is due January 1, 2027. The earliest IRRRL closing date would be July 30, 2027, with January through June paid on time. Your lender confirms the exact date from your payment history.
What Benefit Does VA Require?
VA calls this the net tangible benefit test. For an IRRRL, the circular sets these minimums:
- Fixed rate to fixed rate: The new rate must be at least 0.50 percentage point lower. VA’s example is 3.75% to no higher than 3.25%.
- Fixed rate to adjustable rate: The new rate must be at least 2 percentage points lower.
M26-7 adds that the new principal and interest payment generally has to be lower too, unless you’re refinancing an adjustable-rate loan, shortening the term, or adding energy efficiency improvements.
No one can promise you a lower rate. Whether an IRRRL works depends on market rates at the time and your current note rate.
How Does the 36-Month Recoupment Rule Work?
When the IRRRL lowers your monthly principal and interest, VA requires the lender to certify that the fees, closing costs, and expenses you pay will be recouped within 36 months. Recoupment is those costs divided by your monthly principal and interest savings.
The VA funding fee, escrow, and prepaid items like insurance, taxes, special assessments, and HOA fees are left out of that calculation. Here’s a simple illustration:
- $4,000 in costs ÷ $150 a month in savings = about 27 months. That passes.
- $4,000 in costs ÷ $100 a month in savings = 40 months. That fails.
If the payment stays the same or goes up, the circular says you can’t be charged those fees and costs at all. VA.gov gives similar advice for any refinance: divide your closing costs by your monthly savings to see if it’s worth it.
What Does a VA IRRRL Cost?
VA.gov lists the IRRRL funding fee at 0.5% of the loan amount, the same whether it’s your first use or a later one. On a $350,000 loan, that’s $1,750. Veterans who receive VA compensation for a service-connected disability are generally exempt from the funding fee.
Other cost rules from VA.gov and M26-7:
- Closing costs can be included in the new loan, or the lender can set a rate high enough to pay them.
- Up to two discount points can be included in the loan amount.
- VA doesn’t require an appraisal or credit underwriting, though a lender may still order them and charge for them.
- You can’t take cash out, except reimbursement of up to $6,000 for energy efficiency improvements completed within 90 days before closing.
An IRRRL also doesn’t use more of your VA entitlement. M26-7 says the entitlement you have in use stays the same before and after.
What Happens to a Builder’s Buydown or Your Escrow When You Refinance?
If your builder funded a temporary buydown, VA says any money left in the buydown account is applied to your loan balance when the loan is paid off. You don’t get it back as cash. That’s worth weighing if you’re refinancing during the buydown years.
An IRRRL also won’t fix a rising tax bill. If your payment went up because the finished home was appraised, that’s escrow, not your rate. See why your payment goes up after buying a new build.
VA.gov also warns about refinance offers that sound too good to be true, like skipping payments. Contact several lenders and compare the Loan Estimates.
Frequently Asked Questions: VA IRRRLs on a New Build
How long do you have to wait to do a VA IRRRL on a new build?
Your current VA loan has to be seasoned. VA says that means the first payment was due at least 210 days before the IRRRL closes and you’ve made six consecutive monthly payments.
Can you do a VA IRRRL if you moved out of the home?
Yes, if you can certify that you used to live in the home. VA.gov says you must certify that you currently live in or used to live in the home covered by the loan.
Ready to Plan Your VA New Build Purchase?
Brock Bremmer with eXp Realty is a U.S. Air Force Reserves veteran who has helped buyers and sellers close 120+ homes across the San Antonio metro. He helps VA buyers compare builder incentives, plan for payment changes after closing, and connect with VA lenders in San Antonio, New Braunfels, and Boerne.
- 📞 Call or text: 210-501-5088
- 📧 Email: [email protected]
- 📅 Schedule a free consultation
Also see: Using Your VA Loan Again | Builder Lenders vs Outside Lenders | Disabled Veteran Property Taxes on a New Build
Sources: VA.gov, Interest Rate Reduction Refinance Loan; VA.gov, VA Funding Fee and Loan Closing Costs; VA Circular 26-19-22, IRRRL Policy Guidance (seasoning, recoupment, net tangible benefit); VA Lender’s Handbook M26-7, Chapter 6 (Refinancing Loans); VA Home Loans, Temporary Buydowns.