If you currently have an FHA mortgage, the FHA Streamline Refinance is the easiest way to get a lower rate and monthly payment.
The FHA Streamline is a “low-doc” refinance with limited paperwork required. The lender doesn’t have to verify your income or credit, and there’s no home appraisal. That means a Streamline Refinance closes faster than other loans and has slightly cheaper closing costs.
Thanks to the FHA Streamline, borrowers with FHA loans have easier access to today’s low rates than most other homeowners.
In this article (Skip to…)
An FHA Streamline Refinance is a mortgage refinancing program specifically designed for homeowners with existing FHA mortgages.
The primary goal of the FHA Streamline Refinance is to make it easier and less costly for borrowers to refinance their existing FHA loans. It aims to lower interest rates, reduce monthly payments, or switch from an adjustable-rate to a fixed-rate mortgage, thereby improving the affordability of the loan.
The “streamline” in its name reflects the reduced amount of paperwork and underwriting involved in the process. It does not typically require a new home appraisal, and in some cases, it doesn’t even necessitate income verification or a credit check.
Today’s average 30-year FHA rate is % ( % APR) according to our lender network. But remember, the FHA mortgage insurance fee adds 0.85% in annual costs. This also applies to Streamline Refinances.
| 30-Year FHA Fixed Rate | % ( % APR) |
| 15-Year FHA Fixed Rate | % ( % APR) |
| 30-Year Conventional Rate | % ( % APR) |
| 15-Year Conventional Rate | % ( % APR) |
Interest rates are for example purposes only. Your own rate will vary. See our rate assumption here.
For the most part, the FHA Streamline works like any other refinance product. You take out a new FHA mortgage — typically with a better interest rate and lower monthly payment — which replaces your existing loan. Your current mortgage must be FHA-backed to use this program.
| FHA Streamline Refinance Pros | FHA Streamline Refinance Cons |
| Easy to qualify, especially with non-credit qualifying option | No cash-back allowed |
| Access today’s lower interest rates | Some lenders have stricter rules (so shop around!) |
| Lower MIP rates for some borrowers | You can’t shorten your loan term |
| No home appraisal is necessary | Closing costs can’t be rolled into the loan balance |
The FHA Streamline Refinance comes with several benefits that make it an attractive option for some homeowners. Here are the key advantages:
An FHA Streamline Refinance offers the opportunity to lower your monthly mortgage payment by securing a lower interest rate.
The FHA has certain guidelines on how this is achieved, but if followed, you can enjoy smaller monthly payments. While you can’t extend your loan term by more than 12 years to achieve this, you can still lower your payment by reducing your interest rate, especially when switching from an adjustable-rate to a fixed-rate mortgage.
The FHA Streamline program allows you to refinance even if you owe more than your home’s current value—an “underwater mortgage.” This is unique in that many refinancing options do not allow this.
You can still refinance through FHA Streamline even if your home value has decreased because the main factor determining your loan amount is the outstanding principal balance of your loan.
The biggest difference between the FHA Streamline and most traditional mortgage refinance options is that the FHA Streamline doesn’t require a home appraisal.
Instead, the FHA will allow you to use your original purchase price as your home’s current value, regardless of what your home is actually worth today.
In this way, with its FHA Streamline Refinance program, the FHA does not care if you are underwater on your mortgage. Rather, the program encourages underwater refinancing.
Even if you owe twice what your home is now worth, the FHA may allow you to refinance your home without added cost or penalty.
The “appraisal waiver” has been a huge hit with U.S. homeowners, allowing unlimited loan-to-value (LTV) home loans via the FHA Streamline Refinance program.
Another big plus is that it’s fairly easy to get an FHA Streamline Refinance loan, especially the non-credit-qualifying type.
The non-credit qualifying Streamline Refinance does not require most of the typical verifications you’d need to get a new mortgage.
As it’s written in the FHA’s official mortgage guidelines:
When you put it all together, you can:
Yet, you could still potentially be approved for an FHA Streamline Refinance’s non-credit qualifying option. That’s not as crazy as it sounds, by the way.
To understand why the FHA Streamline Refinance is a smart program for the FHA, we have to remember that the FHA’s chief role is to insure mortgages, not underwrite them.
It’s in the FHA’s best interest to help as many people as possible qualify for today’s low mortgage rates. Lower mortgage rates mean lower monthly payments, which, in theory, leads to fewer loan defaults.
This is good for homeowners who want lower mortgage rates, and it’s good for the FHA. With fewer loan defaults, the FHA has to pay fewer insurance claims to lenders.
In short, the FHA is helping itself when it helps you, which is why the requirements for the Streamline refi are so lenient.
There’s an additional benefit for FHA-backed homeowners refinancing within the first three years of their existing loan origination.
The FHA provides a partial refund on the upfront mortgage insurance premium (UFMIP) you paid when you first got your FHA loan.
The size of the refund diminishes as the three-year window elapses.
For example, a homeowner who refinances an FHA mortgage after 11 months is granted a 60% refund on their initial FHA UFMIP.
Thirty days later, the refund drops to 58%. After another 30 days, it drops to 56%, and so on.
| Months After Closing | MIP Refund | Months After Closing | MIP Refund | Months After Closing | MIP Refund |
| 7 | 68% | 17 | 48% | 27 | 28% |
| 8 | 66% | 18 | 46% | 28 | 26% |
| 9 | 64% | 19 | 44% | 29 | 24% |
| 10 | 62% | 20 | 42% | 30 | 22% |
| 11 | 60% | 21 | 40% | 31 | 20% |
| 12 | 58% | 22 | 38% | 32 | 18% |
| 13 | 56% | 23 | 36% | 33 | 16% |
| 14 | 54% | 24 | 34% | 34 | 14% |
| 15 | 52% | 25 | 32% | 35 | 12% |
| 16 | 50% | 26 | 30% | 36 | 10% |
Note: FHA homeowners are only eligible for the Streamline Refinance program after six months. Thus, eligibility for an MIP refund starts at seven months.
This is why it’s rarely a good idea to “wait to refinance” an FHA loan.
With the FHA Streamline Refinance program, the sooner you refinance, the bigger your refund and the lower your total loan size for your new mortgage.
This lowers the monthly payment and preserves the home’s equity, which are two huge positives.
Despite the potential advantages of an FHA Streamline Refinance, there are several drawbacks that should be carefully considered.
So, while the FHA Streamline Refinance can offer benefits, these disadvantages can significantly affect its value to potential borrowers. It is crucial to weigh the pros and cons carefully before choosing this, or any, refinancing option.
Although the FHA Streamline Refinance bypasses traditional mortgage standards like income verification and credit qualifying, the program does enforce minimum standards for applicants.
The FHA’s main goal is to reduce its overall loan pool risk. Therefore, its number one qualification standard is that homeowners using the Streamline Refinance program must have a perfect payment history stretching back at least three months.
Homeowners with 30-, 60-, and 90-day late payments are not allowed to use this refinancing option.
One late mortgage payment is allowed in the last 12 months. Loans must be current at the time of closing.
The FHA requires that borrowers make six on-time mortgage payments on their current FHA-insured loan and that 210 days pass from the most recent closing date in order to be eligible for a Streamline Refinance.
Streamline Refinance applicants must demonstrate a “Net Tangible Benefit” from the refinance, meaning there will be a clear monetary benefit to the new loan.
Loosely, Net Tangible Benefit is defined as reducing the “combined rate” by at least one-half of one percent.
For instance, say a homeowner has an FHA loan opened in May 2019 with a rate of 4.00% and an annual mortgage insurance premium equal to 0.85% of the mortgage amount.
Another allowable Net Tangible Benefit is to refinance from an adjustable-rate mortgage to a fixed-rate mortgage.
This is considered a benefit because fixed-rate mortgages have predictable rates and payments that carry less risk of default.
Taking cash out of your equity is not an allowable Net Tangible Benefit, but the FHA does have a cash-out refinance loan that we’ll discuss below.
The Federal Housing Administration offers two different Streamline Refinance options:
The FHA Streamline Refinance is a “low-doc” refinance loan, meaning it requires less paperwork than most other mortgages. But you’ll still need some documentation, including:
If you use the FHA’s credit-qualifying Streamline Refinance, you will need to “re-qualify” with your income and credit score. This option would be required if you were removing a co-borrower from the loan.
Like other FHA loans, the FHA Streamline Refinance requires borrowers to pay mortgage insurance.
Not all refinancing households will pay the full amount of upfront MIP.
As shown in the chart above, those using an FHA Streamline within three years of their original loan stand to get an upfront MIP refund.
This can significantly lower the amount of UFMIP added to your new loan and reduce the amount you have to pay overall.
The annual MIP cost for an FHA Streamline Refinance is as follows:
If you got your existing FHA loan before January 2015, when MIP rates were higher, you could lower your MIP rate with a Streamline Refinance.
The FHA’s MIP rules have changed a lot over the years, and the age of your loan will help determine how much you could save.
If your current FHA MIP is higher than what’s shown above, consider starting a refinance immediately to benefit from a new, lower FHA MIP.
The FHA requires most homeowners to pay mortgage insurance for the life of the loan.
Only homeowners with a starting loan-to-value ratio of 90% or less can cancel mortgage insurance after 11 years. (An LTV of 90% or less means you made at least a 10% down payment.)
Compared to FHA Streamline Refinance loans, the FHA cash-out refinance has an obvious benefit: you can use it to access cash from your home equity.
Say, for example, that you owe $250,000 on your current loan but your home is worth $350,000. The difference between these two numbers—$100,000—is your home equity.
The FHA Streamline is a refinance program that only current FHA homeowners can use. It’s faster and easier than most refinance programs, with no documentation required for income, credit, or home appraisal. An FHA Streamline Refinance can help homeowners lower their annual mortgage insurance premium (MIP) or even get a partial refund of their upfront MIP payment. So if you used an FHA loan as a first-time home buyer or a repeat buyer, this refi program is designed with you in mind.
How does the FHA Streamline Refinance work?The FHA Streamline Refinance resets your mortgage with a lower interest rate and monthly payment. If you have a 30-year FHA mortgage, you can use the FHA Streamline to refinance into a cheaper 30-year loan. 15-year FHA borrowers can refinance into a 15- or 30-year loan. The FHA Streamline does not cancel mortgage insurance premiums (MIP) for those who pay them. But annual MIP rates may go down, depending on when the loan was originated.
Do I have to pay closing costs on an FHA Streamline Refinance?The borrower pays closing costs on an FHA Streamline Refinance. Unlike other types of refinances, you cannot roll these costs into your loan amount. FHA Streamline closing costs are typically the same as other mortgages: 2 to 5 percent of the mortgage amount, which would equal $3,000 to $7,500 on a $150,000 loan. The difference is that you don’t have to pay for an appraisal on an FHA Streamline, which could save about $500 to $1,000 in closing costs.
Does an FHA Streamline Refinance get rid of PMI?No, the FHA Streamline Refinance does not eliminate mortgage insurance. Refinanced FHA loans still have the FHA’s annual mortgage insurance as well as a new upfront mortgage insurance fee equal to 1.75 percent of the loan amount. The upfront fee is added to your loan amount. However, if you use the FHA Streamline Refinance within three years of opening your loan, you’ll be refunded part of your original UFMIP fee, thus lowering the total mortgage amount.
Who qualifies for an FHA Streamline Refinance?To qualify for an FHA Streamline Refinance, your current home loan must be insured by the FHA. If you’re not sure whether it is, ask your loan officer. FHA also requires three months of on-time payments and a 210-day waiting period since your home’s last closing date (either purchase or refinance). Finally, the FHA Streamline Refinance must have a purpose. That usually means the refinance needs to lower your combined interest and insurance rate by at least 0.50 percent.
Does FHA Streamline require a credit check?Technically, the FHA Streamline does not require a credit check. That means homeowners could potentially use the Streamline Refinance even if their credit score has fallen below the 580 threshold for FHA loans. However, some lenders may check your credit report anyway. So if your credit is on the lower end, be sure to shop around.
Can you cash out on an FHA Streamline?No, you cannot take cash out on an FHA Streamline Refinance.
When can I do an FHA Streamline Refinance?FHA homeowners are eligible for a Streamline Refinance 210 days after their last closing. That means you must have made six consecutive mortgage payments since you purchased or refinanced the home.
Can I use an FHA Streamline twice?Yes, you can use the FHA Streamline Refinance more than once. You just need to meet FHA’s guidelines—meaning it’s been at least 210 days since your last refinance, you’ve made your last three payments on time, and you can lower your rate by at least 0.50 percent.
What are the benefits of an FHA Streamline?The big benefit of an FHA Streamline Refinance is that you can switch your FHA loan to a lower rate and monthly payment. You can save money by getting rid of your existing higher interest rate without as much hassle as traditional refinancing options. Another benefit of the FHA Streamline is that there’s no home appraisal, so you can refinance into a lower FHA mortgage rate even if you have very little equity or your loan is underwater.
Is the FHA Streamline Refinance worth it?The FHA Streamline Refinance is probably worth it if you can lower your mortgage rate and monthly payment by a significant amount. It’s an especially good deal for homeowners who purchased or refinanced from 2010 to 2015 because the FHA has since lowered its annual mortgage insurance rates. By refinancing a pre-2015 mortgage with the FHA streamline program, you may be able to drop your annual mortgage insurance rate from over 1 percent to just 0.85 percent.
How do I get rid of PMI on an FHA loan?The FHA mortgage insurance premium (MIP) lasts 11 years if you make a down payment of 10 percent or more. It lasts the full life of the loan if your down payment is less than 10 percent. The only way to get rid of FHA mortgage insurance is by refinancing your current FHA loan into a conventional loan without PMI. To do this, you’ll need at least 20 percent equity in your home and a credit score of at least 620 or higher. You’ll also need to pay closing costs and complete the new loan’s underwriting process.
Does a Streamline Refinance affect your credit score?A non-credit-qualifying FHA Streamline Refinance Loan won’t affect your credit score very much because your new loan balance will be about the same size as your old loan balance. Since the FICO scoring model considers the age of your loans, you may lose a few points by replacing an older mortgage with a new one. But the effect tends to be minimal, especially if you’ve had your current loan for only a few years. The credit-qualifying Streamline Refinance will check your credit score, which could temporarily lower your score a little.
What are the cons of an FHA Streamline Refinance?The FHA Streamline Refinance’s biggest strength is its simplicity. But that could also be seen as its greatest weakness. Because you’re skipping the home appraisal and the credit qualifying process in many cases, you can’t increase your loan amount to get cash back. Another con: You can’t refinance out of paying mortgage insurance like you can with a conventional loan.
How long does an FHA Streamline Refinance take?The FHA Streamline Refinance skips the home appraisal. This means you could close on the loan about a week sooner than you could with other refinance loans. Still, you’ll likely need four to five weeks to close on the new loan.
FHA mortgage rates are low, and homeowners typically close faster with a Streamline Refinance. Remember: the sooner you close, the bigger your FHA MIP refund.
Start by comparing current FHA refinance rates to see how much you could save.
Authored By: Dan Green The Mortgage Reports contributorDan Green is an expert on topics of money and mortgage. With over 15 years writing for a consumer audience on personal finance topics, Dan has been featured in The Washington Post, MarketWatch, Bloomberg, and others.
Updated By: Ryan Tronier The Mortgage Reports EditorRyan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Reviewed By: Paul Centopani The Mortgage Reports EditorPaul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.
