FHA Refinance Loan Options and Guidelines


There are two possible scenarios when considering an FHA refinance. Both of these scenarios are based on what kind of current loan you are trying to refinance.

FHA Refinance First Step

The first step in determining your FHA refinance options is determining if your current mortgage is an FHA loan or not. If you are not sure or you can't remember, you can call your mortgage servicer. You should be able to find their phone number on your most recent statement. If it turns out that your current mortgage is not an FHA loan, you can still refinance via the FHA, you just won't have available the FHA Streamline Refinanceoption.

FHA Refinance Second Step

The second step in the FHA refinance process is deciding whether you want to do a cash out refinance. A cash out refinance allows a homeowner who has built up equity in their home to payoff their current loan with the new refinanced loan and get some cash back at the same time. If you are not looking for a cash out refinance and your current loan is an FHA loan, then you can opt for the FHA Streamline Refinance option mentioned above.

FHA Refinance-Current Mortgage is not an FHA loan.

Even if your current mortgage is not an FHA loan, there are still many benefits from refinancing through the FHA. Below are some of the benefits of refinancing a conventional loan through an FHA approved lender:

  • Easier to Qualify: FHA lending standards are less strict than a non-FHA lender and thus it will be much easier to refinance your loan even if your credit rating is only fair.
  • Income Level: You are more likely to qualify for an FHA refinance even if your income level is below the level required for a conventional loan.
  • Cash Out Easier: You have a better chance of qualifying for a cash out fha refinance loan than a conventional cash out refinance even if you have filed for bankruptcy in the past.
  • Costs Less: FHA loans have competitive interest rates because the Federal government insures the loans. Always compare an FHA refinance loan with other loan types.
  • Helps You Keep Your Home: The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after refinancing your home, the FHA has many options to help keep you in your home and avoid foreclosure.

FHA Refinance-Current Mortgage is an FHA loan.


If you current mortgage was financed through the FHA loan program, then you have two distinct options.

  • Option 1-Cash Out: If you have built up equity in your home, you can of course consider the cash out refinance option mentioned above. The cash out refinance permits you to access the equity you have built up in your home and put it to good use where needed. All of the benefits mentioned above apply and the lender will require an appraisal.
  • Option 2-FHA Streamline Refinance:The FHA created the streamlined refinance program over 25 years ago to make it simple and fast for anyone with an FHA loan to lower their interest rates. They did this through a "streamlined" process which utilizes minimum paperwork; enabling you to use the already existing paperwork from your original loan to serve as the foundation of the process. No credit check or appraisal is required. This eliminates a huge amount of time!

Get More FHA Refinance Information

HUD's internet site can provide additional information on FHA refinance by going to: www.hud.gov/buying/index.cfm.

Interested in the FHA Streamline Refinance Program? Then see these two articles: FHA Streamline Refinance which discusses in detail the FHA Streamline Refinance program that FHA has had in place for over 25 years. Still have questions, then read the FAQ: FHA Streamline Refinance FAQ.

You can also find an FHA approved lender in your area by going to: www.hud.gov/ll/code/llslcrit.html.

You may also wish to contact a HUD approved housing counseling agency in your area for unbiased and free counseling on your particular situation. Find a list of these agencies at: www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.

Related Articles

Source: FHA.gov and HUD.gov
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