Refinancing a mortgage can be similar to applying for your first loan. An FHA home mortgage may qualify for the FHA Streamline mortgage program, which can make it easier for you.
Benzinga has put together this guide to help you understand what you need to qualify for this mortgage product.
Key Takeaways
- The FHA Streamline Refinance program is designed to help homeowners with existing FHA mortgages to refinance without requiring a full credit check or appraisal.
- To qualify for an FHA Streamline Refinance, homeowners must have made at least six mortgage payments on their current FHA loan and be current on their monthly payments.
- The FHA Streamline Refinance program does not require a minimum credit score, making it an attractive option for homeowners with less than perfect credit.
FHA Streamline Rates
When you consider any mortgage product, it’s important to know the term and rate. Take a look at the current rates for FHA Streamline loans.
| Product | Rate | APR |
|---|---|---|
| FHA Streamline 15-Year Fixed | 6.695% | 6.737% |
| FHA Streamline 30-Year Fixed | 6.695% | 6.737% |
Rates gathered on 6/30/2024, for the most updated rate, click here.
What Is an FHA Streamline Loan?
An FHA Streamline loan is a refinancing option available to homeowners who already have an FHA mortgage.
FHA loans are part of a homebuyer program managed by the Federal Housing Administration (FHA). You work with an approved FHA lender if you have an existing FHA mortgage.
Refinancing is a popular option for homeowners because it can allow you to lower your interest rate and payments. To refinance, you go through a similar process as when you applied for your mortgage.
The FHA Streamline earns its name because it provides a quick and simple way for homeowners to refinance their mortgage. Unlike many refinancing programs, the FHA Streamline program does not have as many requirements involved, like income verification and credit scores which allows the process to move along more quickly.
FHA Streamline Refinance Benefits
FHA loans are provided by the federal government and must adhere to specific guidelines. These guidelines require an FHA Streamline refinance loan to benefit you as the borrower. The benefit you receive from a streamline refi could be:
- Lowering the interest rate on your mortgage
- Reducing your monthly mortgage payments
- Converting your current adjustable-rate mortgage (ARM) to a fixed-rate mortgage
A fixed-rate mortgage means that your interest rate would not change for the lifetime of your loan so you know exactly how much your mortgage payment will be each month until your mortgage is paid off.
FHA Streamline Requirements and Documents
Although an FHA Streamline refinance doesn’t have as many requirements as some other refinance products, there are some that you should be aware of. If you apply for an FHA Streamline refinance, you’ll also be required to submit the documentation outlined below.
Requirements
The first requirement that you should be aware of is that to participate in the FHA Streamline Refinance program, you must already have an existing FHA loan. This means the program can't be used to refinance a conventional loan. You also must be current on your mortgage.
Other requirements include:
- Your last 6 mortgage payments must be made on time.
- No more than 1 late payment in the past year.
- You must have made payments toward your original mortgage for 210 or more days.
- Your refinance loan must not be more than the initial amount borrowed.
- You cannot use the refinance program to obtain more than $500 in cash.
- You can only roll closing costs into the streamlined refinance if there is enough equity in the home.
- Lastly, the refinance must benefit you in 1 of the following ways:
- A point reduction of at least 0.5% in the combined interest rate and mortgage insurance premium (MIP).
- Convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage with no more than 2% points greater than the combined interest rate and mortgage insurance premium (MIP).
Documents
As with any application process, you’ll need to submit documentation when you apply for an FHA Streamline. Be sure to have these documents ready before you apply:
- A copy of your mortgage note that shows your current loan rate and term
- A copy of a recent mortgage statement to show that you meet the on-time payment requirement
- Proof of homeowners insurance
- 2 months of bank statements
Best Mortgage Lenders for an FHA Streamline
Remember, the FHA Streamline refinance program is only available to refinance FHA loans that already exist. If you qualify, you’ll probably want to start exploring some approved lenders.
Each of our recommended lenders offers a unique experience to help you save money on your mortgage.
- Best For:Online MortgagesVIEW PROS & CONS:securely through Rocket Mortgage (formerly Quicken Loans)'s website
- Best For:Self-employed BorrowersVIEW PROS & CONS:securely through CrossCountry Mortgage's website
Is FHA Streamline the Best Refinancing Option?
When you purchase a home, the mortgage options can seem overwhelming. The same goes for refinancing. Just because you can refinance with an FHA Streamline loan, should you?
As with any mortgage product, it’s always a good idea to get a quote and compare lenders before you choose. Each refinance product offers its own set of unique benefits. If you have an FHA loan and want to lower your interest rate, the FHA Streamline might be right for you. On the other hand, if you’re looking for an option that will allow you to benefit from actual money in your hands, you might prefer a different refinance product.
The best way to move forward is to enter your ZIP code and start comparing quotes and mortgage products. Don’t hesitate to reach out to a trusted lender to discuss your options and find the right home loan product for you.
Frequently Asked Questions
Does FHA Streamline get rid of PMI?
Refinancing your mortgage with an FHA Streamline will not get rid of your private mortgage insurance (PMI). To cancel your PMI payments, you’ll need to have made at least 60 monthly payments to the FHA. Your loan balance will also need to be 78% or less of your home’s purchase price. While refinancing alone will not remove your PMI, it can reduce the amount of time before you can stop making these payments.
Is the FHA Streamline a good idea?
The FHA Streamline program is a good idea for many homeowners who already have an FHA mortgage. If you’re considering taking advantage of it, you should do your research to determine if it will help you meet your needs. You can also reach out to licensed loan officers and lenders to discuss whether the FHA Streamline is right for you.
How many times can you do an FHA Streamline refinance?
There is no limit to the amount of times you can do an FHA Streamline refinance if you qualify.