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The existing VA loan was originally made for $110,000 with a guaranty of $27,500, or 25 percent.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The existing VA loan was originally made for $42,000 with a guaranty of $25,000, or almost 60 percent (the percentage applicable under former law).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.