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FHA refinance loans and the FHA streamline refinance allow borrowers to reduce the interest rate on their current mortgages. Refinancing your home loan involves the same process and work as you put into your first mortgage.

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FHA Refinance Loans for Homeowners

Learn About the FHA Cash-Out Refi and Other Programs

With home values continuing to rise, homeowners have gained more equity in recent years. This may allow you to refinance your home and eliminate existing monthly mortgage insurance premiums. You may also use that equity to pay off high interest credit debt or use the cash for home repairs.



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 now.

FHA Cash-Out Refinance

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 20 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 80 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.



FHA Streamline Refinance

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.



FHA Simple Refinance

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 Rehab 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



FHA Reverse Mortgages

FHA Rehab Mortgages

An FHA reverse mortgage is designed for homeowners age 62 and older. It allows the borrower to convert equity in the home into income or a line of credit. The FHA reverse mortgage loan is also known as a Home Equity Conversion Mortgage (HECM), and is paid back when the homeowner no longer occupies the property.

There are requirements for an FHA-insured reverse mortgage or HECM;

  • The loan is based on the age of the youngest borrower if there are co-signers.
  • Homeowners are required to get consumer counseling and education before a HECM loan is approved.
  • Borrowers must own and live on the property as the primary residence.



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FHA Loan Articles and Mortgage News

FHA Loan Approval Questions For Self-Employed Borrowers

July 20, 2022 - Because of the global COVID-19 pandemic, many Americans had a job loss or a drop in income over coronavirus-related employment gaps. Those employment gaps can make it harder for a loan officer to approve a mortgage.

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July 15, 2022 - Need to start a home improvement project? Some borrowers want to know if there is an FHA equivalent to some  conventional mortgages that allow you to apply for a home equity loan or a home equity line of credit.

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July 12, 2022 - Which bank offers the best FHA loan choices? Not all lenders offer all FHA loans, and not all lenders price their closing costs the same. You will want to shop around for a lender that meets your requirements. Your lender should be transparent about its loan options.

What Affects Mortgage Loan Interest Rates?

July 2, 2022 - What can affect the interest rate you are offered on an FHA mortgage? Some people think the Fed sets mortgage loan interest rates, but their work only indirectly affects them. Instead, investor reactions to the Fed’s announcements are what sends rates up or down.

What Borrowers Should Know About FHA Loans for Home Renovation

June 26, 2022 - If you need to apply for an FHA home loan to renovate, the first thing you need to know is that while FHA loan rules say you may be allowed to be your own builder or contractor, doing so may be up to lender standards.

The Difference Between FHA Loan Refinancing and Loan Forbearance

June 5, 2022 - Saving a home from loan default and foreclosure may feel like a difficult thing to do, but knowing a few issues in advance can help. One good example? The basic differences between two major choices you have in saving your home; refinancing and loan forbearance.

If You Need to Refinance With an FHA Mortgage

May 27, 2022 - Some might think refinancing a home loan with or without an FHA mortgage is a bad idea in times of rising mortgage rates. But there are borrowers who may require a refinance regardless of the interest rate environment. Not everyone who refinances does so because they want to. 

FHA 203(k) Rehabilitation Loans and Your Next Remodeling Project

May 25, 2022 - Do you want to refinance your home and upgrade it at the same time? The FHA 203(k) Rehabilitation refinance loan is an option. You can use the same type of mortgage to purchase and renovate a home, too. 

What You Should Know About FHA Energy Efficient Mortgages

May 12, 2022 - Are you interested in solar energy? Maybe solar doesn’t appeal directly to you but you have energy-efficient upgrades you’d like to add to the home? Either way, you may have an option through an FHA loan program called the Energy Efficient Mortgage or EEM.

How to Compare Home Loan Offers

May 7, 2022 - Would you buy or rent the very first property you viewed in the house-hunting process? Few people would take the first property available without comparing it to others. Why would you treat the mortgage portion of your home ownership journey any differently?