Recoupment (VA IRRRL)
Recoupment is the calculation that determines how many months it will take for the savings from a refinance to equal the costs of obtaining the new loan.
For VA Interest Rate Reduction Refinance Loans (IRRRLs), the VA requires that the borrower recoup the costs of the refinance within 36 months through lower monthly payments. This ensures the refinance provides a tangible financial benefit.
Recoupment is not a fee — it is a guideline used to protect veterans from refinancing into loans that do not deliver meaningful savings. If the breakeven point exceeds 36 months, the loan may not meet VA requirements.
Why This Matters: The recoupment calculation keeps you from refinancing into a loan that costs more than it saves. Understanding this metric helps you evaluate whether a refinance truly makes financial sense for your situation.
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