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FHA Streamline

An FHA Streamline refinance loan can lower your interest rate and monthly mortgage payments, using fewer qualification requirements than the FHA loan you used to purchase your home.

Similar to your FHA purchase loan, the streamlined refinance loan is meant to make home ownership as affordable as possible.

What is an FHA Streamline Refinance Loan?

After you purchase your home, you have the option to refinance your mortgage. When you refinance, you replace your current loan with a new one, which comes with various benefits depending on the refinance type.

With the FHA Streamline refinance loan, those who purchased a house with an FHA loan can refinance to reduce their interest rate and lower the amount paid on their loan, all through a simplified process.

Like your original FHA loan, an FHA Streamline is backed by the government through the Federal Housing Administration. It is meant to make it easy for eligible homeowners to refinance their existing loans and make them as affordable as possible.

Backed by the FHA, lenders offer FHA Streamline refinance loans with approvals that allow for less documentation than closing your current loan and no home appraisal. This is simpler than getting a purchase loan, while still getting the benefits of a new interest rate and terms.

How to Get an FHA Streamline Refinance

To learn whether the FHA Streamline loan is the best option for refinancing your home, connect with us. To get you started, we’ve outlined the steps and documentation needed to help you understand the process.

The Refinancing Process

We can help you assess whether your current FHA loan’s interest rate is higher than market rates. If it is, we’ll explain your options for refinancing and see if an FHA Streamline refinance can lower your interest rate enough to make your home loan more affordable.

If you’ve paid at least six months of mortgage payments, and only one late payment in the past year, you may be eligible. We’ll assess the minimum documentation needed for you to refinance.

We’ll also discuss the new potential terms you qualify for and your options, guiding you through each step until we can close your new refinance loan. With the FHA Streamline refinance, the entire process is often completed in weeks, rather than months.

FHA Streamline Refinance Requirements to Meet

These are the common requirements often needed to qualify for an FHA Streamline refinance. If you have questions about these requirements, we’re here to help.

  • A current mortgage statement and note for the FHA loan you have now. You’ll need to show that you’re current on payments, have paid the loan for at least the past six months, and haven’t had more than one late payment within the past year.
  • No credit check is required unless you need a credit-qualifying loan.
  • You may need to show two months of bank statements to prove you can cover additional costs but may not need income or employment verification.
  • There needs to be enough financial benefit for you to refinance, meaning that (in most cases) your new rate needs to be lower and your monthly payment needs to be less than your last month’s loan payment.

FHA Streamline Refinance FAQs

Your home is a major investment. It’s ok to have questions about refinancing it. We’ve compiled answers to the frequently asked ones, but don’t hesitate to ask more.

How do I know if I’m eligible for an FHA Streamline Refinance?

First you need to currently have an FHA loan to move forward with an FHA Streamline refinance.

Beyond that, less documentation is required than when you purchased your house. You may qualify if you’ve made your payments on time for the last six months and have had only one late payment in the past year.

The refinance will also need to lower your interest rate enough to provide you with a “Net Tangible Benefit,” meaning a clear monetary value to get the new loan.

How soon can I refinance my current loan with an FHA Streamline loan?

You can refinance your current FHA loan with an FHA Streamline loan after you’ve made at least six full mortgage payments on the current mortgage you have from purchasing your house. This means you can refinance as soon as seven months (210 days) from the date of your original closing.

Will an FHA Streamline Refinance lower my mortgage insurance premium?

As you likely know, FHA loans require Mortgage Insurance Premiums (MIP) to protect the loans. These are paid as part of your monthly mortgage payment and the amount reduces slightly each year MIP is paid. 

You may be eligible to have some of the MIP you paid in the past refunded if you refinance your FHA loan to another FHA loan within three years. There are also options to shorten lifetime MIP down to 11 years if you refinance with 10% or more equity in your home.

To eliminate MIP completely, you could refinance to a conventional loan. You would need more than 20% equity in your home and it requires a higher credit score.

What is the difference between an FHA Streamline and a conventional refinance?

The FHA Streamline refinance is only available to those who currently have an FHA loan. Because it uses a streamlined process, it makes lowering your interest rate and monthly payments fast and simple.

This simplicity comes with fewer qualification requirements but also means you may have fewer refinance options. 

A conventional refinance can be done from various types of purchase loans, including an  FHA loan. It provides broader options for rate and term refinances or cash-out refinances. However it also requires more documentation, more time, and a higher credit score for approval.

Are there closing costs with an FHA Streamline refinance?

Because the FHA Streamline is so efficient to process, it also allows for benefits like lower loan origination fees and no appraisal costs, meaning you pay lower closing costs.

Closing costs for an FHA Streamline typically range from 1-3% of the loan amount. They can be paid upfront or be rolled into your loan to be paid monthly. Rolling them into your new loan may increase your interest rate.