FHA Refinance, explained in plain English
If your current mortgage is an FHA loan, you have three refinance paths, including one with dramatically less paperwork. Here's how each works and who it fits.
Your three FHA paths
1. FHA Streamline Refinance
The shortcut. Because FHA already insures your loan, it allows a refinance with limited documentation: typically no appraisal, and under the non-credit-qualifying option, no income or employment verification. The trade-off is that the new loan must deliver a clear benefit to you, called the net tangible benefit, and you generally can't take cash out beyond $500.
Best for: FHA borrowers whose rate is meaningfully above today's market and who want the fastest, lightest path down. See the full requirements checklist.
2. FHA rate and term (full documentation)
A standard refinance of your FHA loan with full underwriting: income, assets, credit, and usually an appraisal. It takes more paperwork than a Streamline but can make sense when you want to change your term, add or remove a borrower, or when your situation has improved enough that full documentation gets you better terms.
3. FHA cash-out
Replaces your loan with a larger one and gives you the difference in cash, up to FHA's equity limits. Requires full documentation and an appraisal. If you're weighing this against other equity options, read our cash-out guide first.
Streamline requirements at a glance
Existing loan
The Streamline only refinances FHA loans into new FHA loans. Conventional loans don't qualify.
Seasoning
You need at least six monthly payments made and 210 days since your current loan closed.
Payment history
Generally no more than one late payment in the past 12 months, and your loan must be current now.
Net tangible benefit
FHA requires a measurable benefit, such as a sufficient drop in your combined rate or a move from an ARM to a fixed rate.
The MIP question every FHA borrower should ask
Most FHA loans carry mortgage insurance premiums (MIP) for the life of the loan. That means even after you build significant equity, the monthly MIP charge stays. Refinancing into a conventional loan is the standard way to remove it once you have roughly 20% equity and qualifying credit.
Rule of thumb: if your home has appreciated and your credit has improved since you bought, price both options: an FHA Streamline (keeps MIP, less paperwork) and an FHA-to-conventional refinance (can remove MIP, full paperwork). The right answer depends on your equity, credit, and how long you'll keep the home.
FHA refinance questions
Do I need an appraisal for an FHA Streamline?
Generally no. The Streamline was designed to skip the appraisal, which also means it works even if your home's value has dipped.
Can I roll closing costs into an FHA Streamline?
FHA doesn't allow closing costs to be financed into the new Streamline loan amount. Costs are typically paid in cash at closing or offset through lender credits in exchange for a somewhat higher rate. A licensed professional can show you both structures.
Will I get an MIP refund if I Streamline?
If you refinance FHA-to-FHA within three years of your original loan, you may receive partial credit of your original upfront mortgage insurance premium toward the new one. The credit shrinks every month, so timing matters.
What if my credit has dropped since I got my FHA loan?
The non-credit-qualifying Streamline doesn't require income or employment verification, which makes it one of the few refinance options that can work after a credit dip, as long as your mortgage payment history is clean.
Ready to see your options?
Five quick questions. A licensed professional reviews your situation, then reaches out only with your written consent.