What is an FHA streamline refinance? (2024)

Refinance quickly and score lower payments on your FHA loan

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A Federal Housing Administration (FHA) streamline refinance is a simplified refinancing option specifically for FHA loan borrowers. Streamline refinances are often faster and more affordable than refinancing with a conventional loan since they move borrowers from one FHA loan to another.

However, you'll want to think over the pros and cons of an FHA streamline refinance, including the tangible benefits you'll receive. This type of refinance typically only makes sense if you're getting a lower interest rate, a preferable loan term or both.

Key insights

  • An FHA streamline refinance could help you lower the monthly payments on your FHA loan.
  • Most FHA streamline refinances are “low-doc,” meaning you won’t have to submit much paperwork.
  • There are closing costs associated with this type of refinancing, which you'll want to factor in before you apply.
  • Some lenders let you secure an FHA streamline refinance with no out-of-pocket costs in exchange for a higher interest rate.

How does the FHA streamline program work?

An FHA streamline refinance is a mortgage product that applies to homeowners with FHA loans who want to switch to another FHA loan with better terms. If interest rates have dropped substantially or the homeowner wants to move to a longer or shorter repayment term, for example, an FHA streamline refinance can help them do just that.

The term "streamline refinance" refers to the amount of underwriting and borrower credit documentation required for this type of loan. A streamline refinance typically comes with two options:

  • Credit qualifying: These loans require a credit check and usually involve an income verification process.
  • Non-credit qualifying: The lender won't check your credit and typically won't verify your income.

You can generally choose the non-credit qualifying route unless you’re refinancing to remove another borrower from the loan. In this instance, you’ll have to pursue the credit qualifying option since you’ll need to prove you can handle the loan on your own. Credit qualifying loans can come with a more significant interest rate reduction, which is worth considering if your end goal is to save money and you have good credit.

Keep in mind that there are also upfront costs associated with an FHA streamline refinance, including:

  • Closing costs: These (as the name suggests) are due at closing and vary based on the loan amount.
  • Upfront mortgage insurance premium (UFMIP): This is 1.75% of the loan amount (though partial refunds may be available).

» MORE: Best FHA loan lenders

FHA streamline guidelines

An FHA streamline refinance is a refinancing option for borrowers with existing FHA loans. With a streamline refinance, you may be able to secure a lower interest rate and reduce your total monthly mortgage payment. You may also pursue this type of refinance in order to switch up your loan term from what you have now.

To be eligible for an FHA streamline refinance, you must meet the following requirements:

You have an FHA loan already
FHA streamline refinances are only for borrowers who already have an FHA loan. This means you can't refinance with this product if you have another type of mortgage, like a conventional loan, a VA loan or a USDA home loan. There are other refinance products available for those loans.
You aren’t delinquent on the existing loan
Simply put, you can't use an FHA streamline refinance if you're behind on your mortgage payments. Generally speaking, you need to have made at least six payments on an FHA loan to qualify, with no payments made more than 30 days late in the past six months. You’re permitted one 30-day late payment on all mortgages on the property within the past 12 months.
The streamline refinance gives you a net tangible benefit
The refinance must also result in a net tangible benefit for you. This can include a lower interest rate (including mortgage insurance premiums), a shorter loan term that saves you money overall or a change from an adjustable rate to a fixed rate (or vice versa).

Jay Dacey, president of Jay Dacey Mortgage Team in St. Paul, Minnesota, says that anyone who meets the net tangible benefit requirement should at least consider a streamline refinance.

You’re not pursuing the refinance for cash
Whereas some mortgage refinance products let you cash out and receive a large lump sum of money, the FHA streamline refinance only allows this on a limited basis. The U.S. Department of Housing and Urban Development says you can get no more than $500 out when you refinance with this type of loan.
You can pay closing costs
You'll have to pay closing costs for an FHA streamline refinance. However, some lenders let you secure an FHA streamline refinance with no money upfront in exchange for a higher interest rate.
Your original FHA loan is at least seven months old
You can't immediately do an FHA streamline refinance after you close on your original FHA loan. At least 210 days must have passed since your original FHA loan closed.

Streamline refinance pros and cons

An FHA streamline refinance typically takes 30 to 45 days to close, according to Ashley McKenzie-Sharpe, manager of Highlands Residential Mortgage’s branch in Winston-Salem, North Carolina. It may be appealing if you’re looking for lower rates on your existing FHA loan, but there are some potential drawbacks.


The pros of an FHA streamline refinance include:

  • You may secure a lower interest rate and/or reduce your monthly payment.
  • It can involve minimal documentation prep.
  • A home appraisal usually isn’t necessary.
  • You might be able to avoid paying out-of-pocket closing costs.


The cons of an FHA streamline refinance are:

  • The amount of cash you can take out is limited.
  • Payment history requirements are strict.
  • Your loan must be current.

FHA streamline refinance rates

You may be able to get a better rate by refinancing your original FHA loan, although that seems relatively unlikely at the moment since the Fed has raised interest rates many times throughout 2022 and 2023. That said, rates change constantly, so it may be worth shopping around and exploring your options.

You can expect a 30-year fixed-rate refinance loan to have an annual percentage rate (APR) of around 7.125% (as of publication). Your rate may vary from this based on a number of personal and external factors.

Dacey says that if you work with a mortgage broker, they will be able to shop the lenders for you and seek out your best options if your credit scores are on the lower end of the spectrum.

» MORE: Current mortgage rates

What do you prioritize most?


Is income verification required for an FHA streamline refinance?

With a non-credit qualifying FHA streamline refinance, the lender won't check your credit, and it’s unlikely that your income will need to be verified. That makes this type of loan easier to qualify for if you already have an FHA home loan and want to take advantage of lower rates or switch up your loan term.

Do you pay closing costs on an FHA streamline refinance?

An FHA streamline refinance will have closing costs. However, some lenders let you close your loan with no out-of-pocket costs in exchange for a higher interest rate.

What credit score do you need for an FHA streamline refinance?

The FHA does not require a credit check for a non-credit qualifying streamline refinance. However, mortgage expert Jay Dacey says some banks have underwriting overlays — i.e., additional requirements of their own — including minimum credit scores. These requirements vary from one lender to another.

Does refinancing hurt your credit?

A non-credit qualifying FHA streamline refinance should not impact your credit since it does not involve a credit check. With a credit qualifying FHA streamline refinance, however, a lender will place a hard inquiry on your credit reports. This can result in a temporary drop in your credit score.

Bottom line

An FHA streamline refinance can help borrowers with existing FHA loans reduce their monthly mortgage payments. Some of the biggest benefits of a streamline refinance are that you usually don’t have to pay for an appraisal, and you get the chance to refinance with a lot less paperwork and documentation than a regular refinance would require. Also, the process can move fairly quickly.

A streamline refinance can also be a good option if your original loan has an adjustable rate and you want to replace it with a fixed rate. Depending on the market, you may be able to lock in a lower interest rate overall.

Just remember that although a streamline refinance may not require much documentation, there are still a few basic requirements you must meet to qualify. There are also associated costs that you’ll either have to pay upfront or as interest later on. If you’re curious about refinancing, make sure you consider all your options and shop around for the lowest rate you can qualify for.

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. U.S. Department of Housing and Urban Development, " Streamline Your FHA Mortgage ." Accessed April 20, 2023.
  2. Federal Deposit Insurance Corporation, " Streamline Refinance ." Accessed April 21, 2023.
  3. U.S. Department of Housing and Urban Development, " Section B. Property Ownership Requirements and Restrictions ." Accessed April 21, 2023.
  4. Freedom Mortgage, " FHA loans for rental properties ." Accessed April 21, 2023.
  5. U.S. Department of Housing and Urban Development, " Let FHA Loans Help You ." Accessed April 21, 2023.
  6. U.S. Department of Housing and Urban Development, " Upfront Premium Payments and Refunds ." Accessed April 21, 2023.
  7. Federal Reserve, " Open Market Operations ." Accessed April 21, 2023.
  8. U.S. Department of Housing and Urban Development, " Mortgage Insurance Premiums ." Accessed April 21, 2023.
  9. Consumer Financial Protection Bureau, " What's a credit inquiry? " Accessed April 21, 2023.
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