FHA Streamline refinance eligibility and requirements
What is a FHA Streamline refinance?
The FHA streamline refinance program helps current FHA homeowners lower their rate and payment without most of the traditional refinance documentation.
The program simplifies home refinancing by waiving the documentation typically required by a bank, including income and employment verification, bank account and credit score verification, and an appraisal of the home.
FHA streamline eligibility in 2018
If you are currently FHA mortgage holder you may be eligible for a FHA streamline refinance. FHA mortgage loans provide significant benefits for borrowers, such as relaxed credit qualification requirements, small down-payment requirements, and favorable interest rates. An FHA streamline allows a borrower to refinance an existing FHA loan at a lower interest rate.
FHA Streamline loan requirements
For those who do have an FHA home loan, the other requirements for FHA Streamline include:
- You must own the original property for at least 6 months.
- Being current on the existing loan with all mortgage payments made on time for the last year.
- Lender must be FHA-approved.
- FHA Streamline loans do not require an appraisal, but a no-appraisal loan cannot exceed your current loan.
- Closing costs must be paid up front or arranged for through a “no-cost” FHA Streamline loan. You may also choose to include the closing costs into your loan a “with appraisal” FHA Streamline loan. In these cases you must have enough equity in the home to cover the extra amount.
FHA Streamline mortgage insurance
Homeowners can use the program to reduce their FHA mortgage insurance.
FHA borrowers must pay 2 types of mortgage insurance — an upfront payment, which can be wrapped into the new loan, and an annual payment split into 12 installments, paid with your mortgage each month.
If your current loan was endorsed (insured) before June 1, 2009, you qualify for a reduced upfront premium of just 0.10 percent of the loan amount, or $10 for every $100,000 borrowed. Your monthly mortgage insurance is just 0.55 percent of the loan amount annually.
Most of those refinancing newer loans pay 0.85 percent per year, and the upfront MIP is 1.75 percent of the loan amount.
Can I refinance my conventional loan with FHA refinance loan?
If you have a conventional loan you wish to refinance with an FHA refinance loan, you’ll need to apply with the usual employment verification, credit check, debt ratio requirements and other considerations. An FHA refinance loan can get you many of the same results, and you may get better rates and lower payments.
If you qualify to FHA Streamline, you’ll go through an application, approval and closing process. A FHA lender will work with you through every step, and will help determine if FHA Streamline meets your specific needs.
Outlined below are the steps to get started:
Step 1. Verify your eligibility.
Verify if you are eligible for FHA Streamline refinance, using free verification tool online.
Step 2. Shop for the best FHA refinance rates and compare lenders.
Compare refinance rate quotes at least from 3-4 different lenders. Not all FHA-approved lenders offer the same interest rate and costs even on the same FHA loan. To compare online without hurting your credit score click here.
Step 3. Gather your financial information.
Make sure you have your basic financial and loan information on hand when you call your mortgage company.
Step 4. Go through the application, approval and closing process.
If your lender determines that you do qualify, they will guide you through the application, approval and closing process.