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An interest rate reduction refinance loan (IRRRL) replaces your VA loan with a new one. VA backs it only if you earn back the cost of the refinance within 36 months through a lower monthly payment. Enter your own costs and savings below to see where you stand, then read how VA runs the test.
VA IRRRL recoupment calculator
Enter the costs and the monthly savings from your own Loan Estimate or Closing Disclosure. The calculator divides one by the other, the way VA does, and checks the result against VA's 36-month limit.
- Months to recoup (VA's test)
- Months to recoup all costs
Estimate for education only, not a Loan Estimate or offer of credit. The figures come only from the numbers you entered. Your lender figures the official recoupment period from your loan documents and certifies it to VA.
Sources: Interest rate reduction refinance loan, VA.gov; VA Circular 26-19-22 (PDF); VA Lender's Handbook (M26-7), Chapter 6. Rules checked on October 22, 2026.
What the 36-month test is
Congress set the recoupment test in 2018, in a law codified at 38 U.S.C. 3709. VA applies it to every IRRRL, including ones where the loan balance goes up, the term gets shorter, or the old loan has an adjustable rate. The lender must certify to VA that your IRRRL meets the test. VA can't guarantee one that fails.
How VA figures recoupment
Divide the fees, closing costs and expenses you pay for the refinance by how much your monthly principal and interest payment drops. Count the costs whether you roll them into the new loan or pay them at closing, an appraisal fee for example. VA doesn't round the answer, so 36.1 months fails the test.
What VA leaves out
VA leaves these out of the 36-month test:
• The VA funding fee
• Money deposited in your escrow account
• Prepaid expenses such as homeowners insurance, property taxes, special assessments and HOA dues
Lender credits reduce the costs you count. Our VA funding fee calculator shows the IRRRL funding fee VA charges.
When your payment doesn't drop
Some IRRRLs keep the principal and interest payment the same or raise it, for example a move from an adjustable rate to a fixed rate, or to a shorter term. In that case the recoupment math doesn't apply. You can't be charged fees, closing costs or expenses other than taxes, escrow amounts and the VA funding fee.
Your full break-even
VA's own advice before you refinance: divide your closing costs by how much you expect to save each month. The 36-month test skips the funding fee, but you still pay it. Add it in the calculator's optional box to see when you earn back every dollar. Your lender must show you that full figure too, on the loan comparison statement you get within 3 business days of applying and again at closing.
Other IRRRL rules
Recoupment is one of several VA tests:
• Seasoning: your current loan's first payment came due at least 210 days before closing, and you have made six monthly payments in a row.
• Net tangible benefit: the new loan must lower your interest rate by at least the amount VA sets, unless you are refinancing out of an adjustable-rate loan.
• Occupancy: you certify that you live in the home now or lived there before.
• The new loan must refinance your existing VA-backed loan.
Our VA IRRRL guide covers the full program.
Key points
• Recoupment = costs ÷ monthly principal and interest savings.
• VA requires 36 months or less, with no rounding.
• The funding fee, escrow and prepaid expenses stay out of the test.
• If your payment won't drop, you can't be charged closing costs beyond taxes, escrow and the funding fee.
• The lender certifies recoupment to VA.
Questions, answered
What is the VA IRRRL 36-month recoupment rule?
VA guarantees an IRRRL only if you earn back the fees, closing costs and expenses of the refinance within 36 months through a lower monthly principal and interest payment. Divide the costs by the monthly savings to get the number of months.
Is the VA funding fee included in IRRRL recoupment?
No. VA leaves the funding fee, escrow deposits and prepaid expenses such as insurance, taxes and HOA dues out of the 36-month test. The loan comparison statement your lender gives you still shows how long it takes to recoup every cost, the funding fee included.
Does VA round the recoupment period?
No. VA uses the exact result, so a recoupment period of 36.1 months fails the test.
What if my IRRRL doesn't lower my monthly payment?
If your principal and interest payment stays the same or goes up, the recoupment math doesn't apply. Instead, you can't be charged fees, closing costs or expenses other than taxes, escrow amounts and the VA funding fee.
Who checks the recoupment period on my IRRRL?
The lender, any broker or agent of the lender, and the servicer must make sure the loan meets the 36-month test and certify it to VA. VA can't guarantee an IRRRL that fails it.
More VA loan guides
VA home loans · VA IRRRL · VA loan tools · VA funding fee calculator · VA cash-out refinance · VA closing costs · Ask a loan officer
Talk an IRRRL through with FLO Mortgage
Call our Flagler Beach team at (386) 882-9980. A loan officer can go over your costs, your savings and VA's other IRRRL rules with you. Loans are subject to credit approval and program guidelines.
Disclosure: This page is general information only and is not a commitment to lend or financial advice. The calculator gives an estimate for education only, not a Loan Estimate or offer of credit. All loans are subject to credit approval and program guidelines. FLO Mortgage is licensed as a mortgage lender in Florida (MLD2621) and Georgia (#1835856), Company NMLS #1835856; Broker Owner Joy McCoy Flores, NMLS #1096400. Equal Housing Opportunity. 212 Moody Blvd, Flagler Beach, FL 32136. (386) 882-9980. FLO Mortgage is not affiliated with or endorsed by the U.S. Department of Veterans Affairs.