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FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

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The FHA Streamline Refinance Mortgage

The FHA Streamline Refinance Mortgage

For current FHA home loan borrowers looking to take advantage of falling interest rates, there is a specific refinance option that makes the process easy- the FHA Streamline Refinance.  

Streamlined Refinances for Current FHA Borrowers 

In a nutshell, the FHA Streamline Refinance allows mortgage holders to refinance their home loan without going through the process of second appraisal. Since this is a step that was completed with the first FHA mortgage, the FHA waives it for the refinance, making the process less time consuming AND less expensive. 

An additional benefit for FHA mortgage holders who have changed or lost jobs, is a “non-credit qualifying refinance,” which allows them to skip income and credit checks, that could result in them being disqualified. 

How to Qualify for an FHA Streamline Refinance  

While it all sounds great and easy, there are a few stipulations that FHA borrowers need to know of when considering to apply for a Streamline Refi.  

All applicants must be on time with their monthly mortgage payments to be considered eligible for the Streamline Refi. While some exceptions are made by the FHA regards to late payments, individual lenders can place their own requirements (or “overlays”) that may keep you from qualifying for a refinance. 

Similar to your credit history, all borrowers must have held their loan and made regular payments for a minimum time period. Borrowers are only eligible for a Streamline Refinance if they have made a minimum of six monthly payments and have had their existing FHA mortgage for at least 210 days. Exceptions may be made in the case of lifechanging situations, such as divorce. 

Whether it is a lower interest rate, a shorter loan term, or both, there must be a measurable financial benefit to refinancing for a borrower to be approved for the Streamline Refinance. 
Things to Keep in Mind About the Streamline Refi

Closing costs still need to be paid, and the FHA does not allow financing them into the price of the loan. This does not include the Upfront Mortgage Insurance Premium, which can be financed. You will need lender approval to use gift funds  

If you are considering a cash-out refinance, the FHA Streamline Refi is not the best option. FHA guidelines limit no more than $500 cash-out with a Streamline Refinance to accommodate changes that might be made at closing. 

Falling interest rates are something that all FHA borrowers should keep an eye on to save on interest payments for the life of their loan. Talk to a loan officer if you feel the Streamline Refinance is the right option for you! 


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