FHA Refinance
Learn About Your Mortgage Options
Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.
FHA Cash-Out Refinance
This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash-Out Refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe. To be eligible for an FHA cash-out refinance, borrowers will need at least 15 percent equity in the property based on a new appraisal.
A Cash-Out Refinance can be a smart option for many homeowners. Whether it’s for home improvement, college tuition, debt consolidation (to pay off other high interest rate loans), student loan debt, or home remodeling, you can access money that you have in an illiquid asset.
- Credit Score Guidelines
Applicants must have a minimum credit score of 580 to qualify for an FHA cash-out refinance. - Debt-to-Income Ratio Guidelines
The FHA has guidelines regarding an applicant's debt-to-income ratio in order to keep people from entering into mortgage agreements that they cannot afford. - Maximum Loan-to-Value Guidelines
FHA Cash-Out Refinance loans have a maximum loan-to-value of 85 percent of the home's current value. - Payment History Requirements
Documentation is required to prove that the borrower has made all the monthly payments for the previous 12 months.
- How Soon Can I Cash-Out Refinance an FHA Loan?
- FHA Refinance Loan Questions and Answers
- How to Prepare for an FHA Cash-Out Refinance Loan
FHA Streamline Refinance
This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamline Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
- Your Current Mortgage Must Already Be FHA-Insured
While refinancing from a conventional loan to one backed by the FHA is possible, the Streamline option is only available to borrowers with an existing FHA loan. - The Mortgage Must Be Current
This means that you have not missed any payments. You must have made at least 6 monthly payments and have had your existing mortgage for a minimum of 210 days before you can apply for the Streamline Refinance option. - There Must Be a Net Tangible Benefit
The FHA actually requires that there be some advantage for the borrower if they go ahead with a Streamline Refinance.
- Streamlined FHA 203(k) Rehabilitation Loans
- FHA Refinance Loan Basics
- FHA Streamline Refinancing: Appraisal Required?
FHA Simple Refinance
The FHA Simple Refinance allows homeowners to go from their current FHA Loan into a new one, whether it's a fixed-rate loan or an ARM. This refinance is the most straightforward, and there is no option for cash-out. Lenders will require a credit qualification, income, and assets to ensure the borrower meets the loan requirements.
Homeowners should think about several factors while considering the benefits of refinancing their mortgages. Below are some of the most common goals borrowers have when moving forward with their refinance options.
- Lower Monthly Payments
Refinancing your home gives you the opportunity to get a lower interest rate on your mortgage, which means smaller monthly payments. - Switch to a Fixed Rate Loan
Even by switching from an ARM to fixed rate mortgage, you could avoid higher monthly payments and will have a set amount to pay every month. - Earn Cash on Your Home Equity
It allows you to borrow cash against your home equity in the case of large upcoming expenses. By liquidating this equity you can get cash-in-hand.
- FHA Simple Refinance and the Rate-And-Term Refi
- Calculating Your Monthly FHA Loan Mortgage Payment
- Basic Eligibility Rules for FHA Mortgages
FHA Rehab Mortgages
Many buyers decide to purchase a home that is significantly older, and not in the best condition. The FHA 203(k) Rehabilitation Loan enables borrowers to finance the purchase or refinance of a home, along with its renovation or "rehabilitation" of the property. HUD allows Section 203(k) financing to be used for:
- Structural alterations and reconstruction
- Modernization and improvements to the home's function
- Elimination of health and safety hazards
- Changes that improve appearance and eliminate obsolescence
- Reconditioning or replacing plumbing; installing a well and/or septic system
- Adding or replacing roofing, gutters, and downspouts
- Adding or replacing floors and/or floor treatments
- Major landscape work and site improvements
- Enhancing accessibility for a disabled person
- Making energy conservation improvements
- Rules You Should Know About FHA Rehab Loans
- FHA Rehab Loans for Federal Disaster Areas
- FHA Limited Rehab Loans for Smaller Projects
FREE CREDIT SCORES From All 3 Bureaus
Do you know what's on your credit report?
Learn what your score means.
FHA Loan Articles and Mortgage News
June 11, 2018 - For those who want to cash in on the value built up in the home over time, the FHA cash-out refinance is an important option to consider. Be prepared for a new credit check and request copies of your credit reports. Then examine your FICO scores and your credit history carefully.
May 27, 2018 - When it’s time to refinance, the type of FHA loan you apply for will depend on the outcome of the loan-do you want cash out? A lower mortgage payment? Do you need to do rehab or repairs? Each refinance is different and there isn’t a one-size-fits-all solution.
May 15, 2018 - How does your participating FHA lender decide to approve or deny your FHA mortgage loan? It doesn’t matter if you are applying for a construction loan, refinancing, or buying an existing home. Lenders must follow certain steps to determine your creditworthiness.
May 6, 2018 - Conventional mortgages require private mortgage insurance (PMI) unless the borrower makes a lender-prescribed down payment that eliminates the need. FHA mortgage loans are different. They don’t require PMI, but they do require an Up Front Mortgage Insurance Premium and a mortgage insurance premium (MIP) instead.
April 11, 2018 - The timing of your FHA loan application and when you submit it are among the most popular FHA loan eligibility tips. What do you need to know about successfully applying for an FHA home loan? Here are some of the basics.
April 9, 2018 - FHA home loans and refinance loans are designed for either a single borrower or multiple borrowers; procedures for approving loans for multiple borrowers are more or less the same as for a single applicant. The lender must determine that all parties on the loan are creditworthy.
April 7, 2018 - The FHA loan program has several options to refinance a home loan. Borrowers need to choose mortgage refi options not only based on their financial needs and goals, but also their plans for the property they have purchased long-term.
April 3, 2018 - What does it mean when we talk about locking in FHA home loan interest rates? Simply put, when you decide to commit to buying a specific property with an FHA home loan, there is a length of time between committing, getting loan approval, and closing the deal.
April 2, 2018 - Which FHA home loans feature low down payments? Compared to some non-FHA loan options, the short answer is all of them-FHA loan down payment minimums are as low as 3.5% for financially qualified borrowers.
March 30, 2018 - When you find a house you want to commit to purchasing with an FHA home loan, the appraisal process is what determines the market value of the property compared to the asking price. The FHA appraisal is also a basic review of the home to make sure it meets minimum standards.
FHA.com Reviews
FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!
