FHA Streamline refinance: rules, MIP and refunds
An FHA Streamline lets you lower the rate on a loan that’s already FHA-insured with less paperwork and, in most cases, no appraisal. These are the rules from HUD’s handbook.
Who can use an FHA Streamline
- Your current loan must be FHA-insured and not delinquent.
- Seasoning: on the date the new FHA case number is assigned, you must have made at least six payments on the current loan, at least six full months must have passed since its first payment was due, and at least 210 days must have passed since it closed.
- Payment history: all mortgage payments made within the month due for the last six months, no more than one 30-day late payment in that time, and the payment for the month before closing made on time.
The net tangible benefit test
FHA looks at your combined rate: your interest rate plus your annual mortgage insurance premium (MIP) rate. If you keep the same term (or shorten it by less than three years), the most common cases work like this:
| From | To | New combined rate must be |
|---|---|---|
| Fixed rate | Fixed rate | At least 0.5 percentage points lower |
| Fixed rate | One-year or hybrid ARM | At least 2 percentage points lower |
| ARM | Fixed rate | No more than 2 percentage points higher |
An adjustable-rate mortgage (ARM) keeps its starting rate only for an initial fixed period; after that, the rate and payment can go up.
If you shorten your term by three years or more, a fixed-to-fixed streamline just needs a lower combined rate, and the new principal, interest and MIP payment can’t be more than $50 higher than the old one.
No appraisal, two ways to qualify
FHA doesn’t require an appraisal for a streamline and uses your home’s original value to figure mortgage insurance. There are two versions:
- Non-credit-qualifying: no credit report or income check. Everyone on the current loan stays on the new one (a borrower can be removed after a divorce, legal separation or death if the remaining borrower has made six months of payments).
- Credit-qualifying: a full credit and income review, which lets you remove a borrower as long as at least one existing borrower stays on.
Either way you can receive no more than $500 cash back at closing (a refund of your old escrow balance doesn’t count). The new term can be no longer than the lesser of 30 years or your remaining term plus 12 years.
Mortgage insurance: upfront premium and refund
The upfront MIP is 1.75% of the base loan amount. If your current FHA loan is less than three years old, part of the upfront premium you paid is credited toward the new one:
| Months since your current loan closed | Refund of the old upfront MIP |
|---|---|
| 1–12 | 80% down to 58% (2 points less each month) |
| 13–24 | 56% down to 34% |
| 25–36 | 32% down to 10% |
| After 36 | No refund |
Annual MIP in 2026
For loans endorsed on or after March 20, 2023, annual MIP on a term longer than 15 years is:
| Base loan amount | Loan-to-value | Annual MIP | How long |
|---|---|---|---|
| Up to $726,200 | 90% or less | 0.50% | 11 years |
| Up to $726,200 | Over 90% to 95% | 0.50% | Life of loan |
| Up to $726,200 | Over 95% | 0.55% | Life of loan |
| Over $726,200 | 90% or less | 0.70% | 11 years |
| Over $726,200 | Over 90% to 95% | 0.70% | Life of loan |
| Over $726,200 | Over 95% | 0.75% | Life of loan |
Terms of 15 years or less have lower rates (0.15% to 0.65%). If your current FHA loan was endorsed on or before May 31, 2009, a streamline pays only 0.01% upfront MIP and 0.55% annual MIP.
FHA Streamline or conventional refinance?
If your home has gained enough value that you’d have 20% equity, compare a conventional refinance: it can drop mortgage insurance altogether, though it needs an appraisal and full underwriting. If you have less equity, or want the lightest paperwork, the streamline is usually the easier path. Compare today’s FHA Streamline rates.
Frequently asked questions
Does an FHA Streamline require an appraisal?
No. FHA doesn’t require one and uses the original value of your home to calculate mortgage insurance.
How soon can I do an FHA Streamline?
When the new case number is assigned you need six payments made, six full months since your first payment was due, and 210 days since your current loan closed.
Can I take cash out with an FHA Streamline?
No more than $500 at closing. For more, you’d need a cash-out refinance.
Will I get part of my upfront MIP back?
If your current FHA loan is less than three years old, a sliding share (80% in month one, down to 10% in month 36) of the upfront MIP you paid is credited toward the new loan’s upfront MIP.
Sources
- HUD Handbook 4000.1 (Update 18)
- HUD: Single Family Streamline
- HUD Mortgagee Letter 2023-05 (annual MIP)
By refinancing an existing loan, your total finance charges may be higher over the life of the loan. Go Direct Lenders is not affiliated with or acting on behalf of the Department of Housing and Urban Development, the Federal Housing Administration, the Department of Veterans Affairs or any other government agency.