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The FHA Streamline Refinance Process: How It Works, The Benefits And What Rates To Expect

Kevin Graham4-Minute Read
April 05, 2021

One of the primary motivations for tends to be lowering your rate or changing your loan term to lower your payment, save on interest or maybe both. If you have an FHA loan, an FHA Streamline Refinance could be a great way to go about doing that. We’ll go over what it is, how one works, the requirements and pros and cons before touching on the rates.

What Is An FHA Streamline Refinance?

An FHA Streamline Refinance allows homeowners with FHA loans to refinance in a more straightforward – or “streamlined” – process that cuts down on time, paperwork and stress. In most cases, an FHA Streamline Refinance can bypass the appraisal process entirely.

FHA Streamlines are specifically intended to be rate/term refinances. This means they’re used to do things like lowering your rate, shortening your term so you pay less interest or lengthening your term as a strategy to lower your payment. You can’t take cash out using an FHA Streamline.

How Does An FHA Streamline Refinance Work?

When you apply for a traditional home refinance, you’re reapplying for an entirely new mortgage. You’ll go through a process very similar to the one you had when you bought your home.

In a typical refinance, there are checks of your credit, income and assets. At the same time as you’re undergoing this personal underwriting, your home is appraised so that it can be assigned a value.

This is a safeguard because your lender doesn’t want to loan you more than your home is worth. If you default on your loan and the lender needs to sell, they want to get back as close to the value of the loan as possible.

With an FHA Streamline, the FHA allows lenders to do more limited checks. Many times, little or no income or asset documentation is necessary. Usually, an appraisal can also be skipped. The theory is that your history of on-time payments shows the FHA everything they need to know about you being a good risk for the loan. Moreover, the net tangible benefit gained from refinancing should only help you. We’ll get into what that benefit looks like in a minute.

Requirements For An FHA Streamline Refinance

If you’re looking for the benefits offered by an FHA Streamline Refinance, you have to meet the following guidelines in order to qualify:

  • FHA-backed mortgage: You have to have an existing FHA loan. If you go from any other loan type to an FHA loan, it’s a full refinance process.
  • On-time payments: You have to be current on your existing mortgage. For the purposes of this loan option, that means you can’t have any 30-day late payments in the last 6 months and only one in the last year prior to application.
  • No cash back: You can’t convert your equity into money in an FHA Streamline Refinance. If you need cash to accomplish a goal, we recommend you look into a cash-out refinance.
  • Net-tangible benefit: Refinancing has to benefit you in some way, but that benefit can vary based on what you’re trying to accomplish with you refinance. If your term is being lowered, there are limits on how much your payment can go up. But other benefits might be a lower rate or payment or going from an adjustable-rate mortgage (ARM) to the stability of a fixed-rate mortgage.
  • Closing costs: You’ll still have to pay closing costs associated with your loan, but they may be cheaper than they were in your home purchase. For starters, you may not have to pay for an appraisal and there’s less to do with the title. Additionally, the upfront mortgage insurance premium (MIP) associated with FHA Streamlines is only 0.01% of the loan amount and it can be built into the loan. Closing costs on a refinance are somewhere between 2% – 5% of the loan amount.
  • Timing: At least 210 days have to pass between the time your previous mortgage closes and you apply for your new loan. In addition, at least 6 months have to pass between the time your first payment was due and the date your FHA Streamline closes. You also have to make at least six payments before applying for a new loan.

FHA Streamline Refinance Pros And Cons

As with any loan, there are pros and cons to an FHA Streamline. Here they are:


An FHA Streamline has the following benefits:

  • You can lower your payment and/or your interest rate.
  • You’ll have lower MIP. The upfront mortgage insurance premium is just 0.01% of the loan amount. Meanwhile, the annual mortgage insurance premium is 0.55% split into monthly increments.
  • You could go to a more stable option like a fixed rate.
  • Verification of employment, income credit and assets may be more limited, speeding things up.
  • You often don’t need an appraisal.


There are just a couple of downsides to an FHA Streamline:

  • You’ll have MIP. The mortgage insurance might be lower, but it’ll still exist for up to the life of the loan depending on how much equity you have heading into the refinance.
  • You can’t take cash out. In order to do that, you’ll need to do a refinance with full documentation.

What Are The Rates For An FHA Streamline Refinance?

Your mortgage rate depends on a variety of factors including not only the type of loan you have and market demand for underlying mortgage bonds, but also a number of personal factors.

If people think the economy isn’t doing very well, they’ll invest in bonds including mortgage-backed securities (MBS) because there’s a guaranteed return to these FHA bonds which are backed by Ginnie Mae, an agency of the U.S. government. If they’re more optimistic, people tend to invest in higher risk securities like stocks in exchange for the potential higher return.

Beyond the market forces, the other factors that determine your rate are things like the amount of equity you have heading into the refinance as well as your credit score and the amount of prepaid interest points you pay.

As of this writing, the average rate for an FHA 30-year fixed mortgage with 2.25 points paid is 2.625% with a 720 FICO® Score and 25.09% equity. You can check out the mortgage rates for Rocket Mortgage®.

The Bottom Line

An FHA Streamline could be a great way for homeowners in an existing FHA loan to lower their payment or interest rate, change their term or both. You can also refinance with a lower mortgage insurance payment.

If you think an FHA Streamline might be right for you, you can . Check out the rest of our blog to see more homeowner tips.

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Kevin Graham

Kevin Graham is a Senior Blog Writer for Rocket Companies. He specializes in economics, mortgage qualification and personal finance topics. As someone with cerebral palsy spastic quadriplegia that requires the use of a wheelchair, he also takes on articles around modifying your home for physical challenges and smart home tech. Kevin has a BA in Journalism from Oakland University. Prior to joining Rocket Mortgage he freelanced for various newspapers in the Metro Detroit area.