FHA Streamline Refinance: Rates and Requirements 2024

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An FHA streamline refinance is a simplified FHA refinance option, empowering homeowners to refinance with less hassle compared to other options. 

For example, you can reduce your rate and payment – and even change your loan term – with no appraisal or income verification. You might be eligible even if you’ve experienced a loss of income or are “underwater” on your home, meaning you owe more than it’s worth.

Benefits of an FHA Streamline Refinance

Aside from refinancing for a lower interest rate, there are many benefits to an FHA streamline loan.

No Income DocumentationYou don’t have to re-verify your income. The lender will just do a quick check that you’re currently employed.
No Appraisal Required The FHA allows the original purchase price to be used as the current value of the home, regardless of what it’s actually worth at the time of refinance. Homeowners can avoid the time and expenses that come with having a new appraisal conducted.
Lower Credit OKCurrent FHA loan borrowers may not be required to undergo a credit check, depending on the lender. When a credit report is required, most lenders have lenient score requirements.
Less DocumentationWho doesn’t love less paperwork? FHA streamline refinances focus more on the FHA’s existing relationship with the borrower and payment history, reducing the need to check other indicators of financial stability. 
Lower Closing CostsDue to fewer checks and no appraisal, the associated closing costs are generally lower. Some fees and charges might be reduced or waived.
Remove a BorrowerIn cases of death or divorce, you can remove a borrower from title without re-verification of income if you’ve made the last six payments on your own
Option to Switch to a Different Loan TypeFHA loan borrowers who currently have an adjustable-rate mortgage (ARM) can switch to a fixed-rate, securing a stable interest rate.

FHA Streamline Refinance Rates

Interest rates fluctuate with the market, meaning mortgage rates may dip down below the original rate when you originally financed your home. This presents the perfect opportunity to consider refinancing your mortgage to potentially secure a lower interest rate. A lower interest rate means reduced monthly payments, which can lead to greater savings over time. 

Just like interest rates can vary depending on the market, the rate someone receives during an FHA streamline refinance will also be based on their financial standing. The best way to determine your FHA streamline refinance rate would be to speak to a mortgage lender.

A lender can assess your financial situation and give you a personalized quote, allowing you to make an informed decision. Furthermore, they can provide professional insight into the current market and whether an FHA streamline refinance would be in your best interests.

FHA Streamline Refinance Requirements

FHA streamline refinance requirements depend on whether you are seeking a shorter loan term or if you are refinancing with the same loan term. We’ll break down both scenarios.

Refinancing with the Same Loan Term

When you refinance with the same loan term under the FHA Streamline Refinance program, you are essentially restarting your mortgage timeline but maintaining the original duration of your loan. This option is typically chosen to reduce the interest rate and lower monthly payments without altering how long you will be paying the mortgage. The requirements are straightforward:

  • You have made at least six payments on your existing FHA loan
  • You are current on your existing FHA loan payments
  • The refinance must result in a “net tangible benefit”, such as a lower interest rate or monthly payment
  • Pay upfront and monthly mortgage insurance
  • You usually have to pay closing costs out of pocket, since they can’t be rolled into the new loan
  • Optional: Undergo a credit check

A net tangible benefit refers to a measurable advantage from refinancing your existing mortgage. This benefit must result in either a reduction in the combined rate and mortgage insurance premium by at least 0.5%, a switch from an ARM to a fixed-rate mortgage or a reduction in the term of the mortgage.

The Upfront Mortgage Insurance Premium (UMIP) is a one-time fee that homeowners must pay upfront. Conveniently, this can be financed with the new loan. In addition, FHA borrowers are asked to pay for a Mortgage Insurance Premium for the duration of their loan, billed in monthly installments. 

Refinancing to a Different Loan Term

Along with the requirements mentioned previously, switching to a different loan term (e.g., moving from a 30-year to a 15-year mortgage) with an FHA Streamline Refinance usually involves extra qualifying criteria.

While the FHA Streamline Refinance typically does not require income verification or a credit check, changing to a significantly different loan term might prompt some lenders to conduct these checks to ensure you can handle potential increases in monthly payments.

Your payment may not rise by more than $50 when refinancing to a shorter loan term, despite likely saving thousands in interest over the life of the loan. 

Insider Info: Want more details about FHA streamline refinance requirements? Check out our article, FHA Loan Refinance: Requirements and Options, for a comprehensive guide to explore all FHA refinance options available to you.

Start your FHA Streamline Refinance

The FHA streamline refinance is one of the best ways to reduce the rate and payment on your FHA loan. If rates have dropped since you last purchased or refinanced, it’s time to see if you can save money.