How Does An FHA Streamline Refinance Work?

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What is an FHA streamline refinance?

An FHA streamline refinance is a type of refinance loan available to FHA loan borrowers. As with any refinance, it involves taking out a new mortgage that you use to pay off your current one — but it’s called a streamline refinance because it has fewer requirements than a standard refinance. You typically don’t need a home appraisal, for example.

How does an FHA streamline refinance work?

The FHA streamline program is divided into non-credit qualifying and credit-qualifying refinances. Both types are designed to lower the monthly principal and interest payments on a mortgage insured by the FHA, but the FHA requires a credit-qualifying refinance if refinancing would reduce the mortgage payment by more than 20 percent.

Here’s how they differ:

FHA streamline refinance rates

General refinance rates tend to be slightly higher than FHA refinance rates. However, as of July 8, 2025, a 30-year FHA loan refinance came with a 7.14 percent mortgage rate vs. a 6.85 percent for a conventional 30-year mortgage refinance. Keep in mind that rates fluctuate daily.

You can use a mortgage refinance calculator to see how lowering your rate or adjusting your loan term would impact your mortgage payment and total interest.

FHA streamline refinance closing costs

The closing costs for an FHA streamline refinance will likely be lower than those for your original FHA mortgage because you won’t need to jump through as many hoops to get it. For example, you won’t need to pay for an appraisal. 

However, there will still be closing costs, and it’s important to budget for them. Unlike with your original loan, you can’t roll the closing costs of your streamline refinance into your loan amount. 

FHA streamline eligibility guidelines

The FHA streamline refinance program has more relaxed lending guidelines than traditional refinances when it comes to an appraisal, credit check and income verification. Yet it still imposes a number of eligibility requirements. Lenders may also have their own requirements, but these are the minimum standards.

1. You must refinance an FHA loan

To take advantage of the FHA streamline program, you must already have an FHA-insured mortgage.

2. You must receive a ‘net tangible benefit’

It’s only possible to do an FHA streamline refinance if it results in what the FHA calls a “net tangible benefit” for the borrower. These net tangible benefits include:

• At least a 0.5 percent reduction in your fixed-rate mortgage payment, including the mortgage insurance premium
• Changing from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage
• Shortening the loan term or extending it to lower payments

ARM streamline refinances have other specific requirements, as well. If you’d like to streamline refinance a one-year ARM to a fixed-rate loan, for example, the new interest rate can’t be more than two percentage points higher than the current ARM rate. The inverse is also true: If you’re refinancing a fixed-rate loan to a one-year ARM, the new rate must be at least two percentage points lower than the fixed rate.

3. You can only apply after a waiting period

You can’t apply for a streamline refinance immediately after closing your FHA loan. You’ll need to wait until:

• You’ve made at least six on-time payments
• Six months have passed since your first payment due date
• It’s been 210 days since your FHA loan closed

4. You must have a history of on-time payments

If your FHA loan is less than a year old, you’ll need to have made all of your monthly payments on time. If you’ve had your mortgage for more than a year, you’re allowed one 30-day late payment in the past 6 months — but, you must have made all mortgage payments on time for the three months before applying for the refinance.

5. You must pay mortgage insurance premiums

Like all FHA loans, you’ll pay mortgage insurance premiums (MIP) on an FHA streamline refinance. This means another upfront MIP, plus annual MIPs, at the following rates:

• Upfront MIP: 1.75 percent of the loan amount
• Annual MIP: Varies based on loan amount, LTV ratio and loan term, between 0.15 percent and 0.75 percent

Depending on when you got your initial FHA loan, you might be able to get a portion of the upfront MIP refunded when you refinance. The longer it’s been, the lower the refund. This refund could help you pay the MIP on the new loan.

Pros and cons of FHA streamline refinances

How to apply for an FHA streamline refinance

1. Check your credit. Any time you apply for a new loan, it’s smart to check your credit report and score. Although the FHA allows lenders to forgo a credit pull on non-credit qualifying streamline refinances, some lenders might still do one. If your credit could use some work, you’ll have time to improve your score, which raises your chances of a better rate.
2. Find an FHA-approved lender. While you could go back to your current FHA lender, it pays to shop around, as rates vary from one lender to another. Many types of lenders offer FHA loans, including streamlines. Here are some of Bankrate’s picks for best FHA lenders.
3. Prepare for the application. Although you won’t need to provide as many documents for an FHA streamline refinance, you’ll still need to furnish some details about your mortgage and financial situation. This includes information like your current mortgage statement and homeowners insurance policy.

FAQ

• Will an FHA streamline refinance impact your credit score?
  

  All new forms of debt appear on your credit report, including new mortgages. If you apply for a credit-qualifying FHA streamline refinance, the lender will do a hard credit pull that could lower your credit score for a short period.

• Can you do an FHA streamline refinance more than once?
  

  You can do an FHA streamline refinance more than once, provided you meet the program’s guidelines to qualify for a new loan each time. This includes the waiting period and net tangible benefit rules.