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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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September 21, 2019
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FHA Refinance

Learn About Your Mortgage Options

FHA Refinance 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

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



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FHA Loan Articles and Mortgage News

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Refinance Loan Tips: Before Your Application

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FHA Home Loans and Housing Counseling

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FHA Announces Changes to Cash-Out Refinancing Loans

August 24, 2019 - The Department of Housing and Urban Development has announced modifications to the FHA Cash-Out Refinance program. On August 1, 2019, the agency issued a press release announcing measures to reduce the risk to its cash out refinance loan program.

Compensating Factors for Home Loan Approval

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Questions and Answers About FHA Refinance Loans

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Things You Can Do With an FHA Loan

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FHA Refinance Loans and Interest Rates

July 1, 2019 - With rates so low, what do you need to know about refinancing to get a better mortgage rate? If you are shopping around for a loan and have not yet applied for a refinance, the rates you see today may change tomorrow.

FHA Appraisal Questions and Answers

June 25, 2019 - There are a lot of questions first-time home buyers have about the FHA appraisal process. Many of these questions have similar answers, and some of them have exactly the same answer-it all depends on variables that are outside the scope of FHA home loan program rules for the appraisal.

Refinance Advice During a Financial Setback

June 24, 2019 - If you are a homeowner experiencing financial difficulty, you have options with your mortgage that can help you get into a lower interest rate or monthly payment. But borrowers should be careful not to let financial hardship spoil their chances to get a more affordable mortgage.

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!