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If you’re interested in any type of FHA refinance loan, you must first answer one very important question: do you qualify?
While you’ll never know for sure until you apply, learning more about qualifications can help you save time and aggravation.
The qualifications for an FHA refinance loan vary by type. Your options include:
With all these options available to you, understanding the basics — including both qualifications and available terms and conditions — is critical to making the right decision.
If you have an existing FHA loan, a streamline refinance allows you to take advantage of lower rates. As the name implies, the process is both quick and efficient.
In addition to reduced credit and underwriting requirements, there’s no employment or income verification. The requirements that you are subject to include:
A simple FHA refinance focuses on the current term and rate of your existing FHA loan. Requirements include:
There are many benefits of a simple refinance, including but not limited to:
An FHA cash-out refinance is exactly what it sounds like. It’s for both conventional loan borrowers and existing FHA loan borrowers interested in cashing out and moving into a new FHA loan.
By refinancing your existing loan, you gain access to any remaining equity. You can then use this money as you best see fit, such as to repair your property, start a business, or consolidate debt.
The eligibility requirements of a cash-out refinance loan include:
If you want to refinance while also gaining access to equity in your home — in the form of cash — this is your best option.
As a current FHA borrower, there’s no requirement that you refinance into another FHA loan product. Paying down your balance and gaining equity in your home may position you to secure a conventional loan.
Even though the interest rate may be slightly higher than what you’re paying, you can eliminate mortgage insurance payments. Comparing these numbers will help you see if you can come out on top financially.
Are you interested in refinancing your mortgage? Do you have a less than desirable credit score? If you answered yes to both questions, refinancing into an FHA loan could be the answer.
Although you’re required to pay mortgage insurance — possibly for the life of the mortgage — you’re in a position to secure a lower interest rate.
Now that you understand the qualifications to refinance any type of FHA mortgage, it’s time to decide if you should do so. There’s no simple answer to this question, as it varies based on your personal and financial circumstances.
Some of the reasons to consider a refinance include:
These aren’t the only reasons to consider a refinance, but they’re among the most common. If you have any reason to believe it could benefit you, it doesn’t cost anything to learn more.
Even if you’ve refinanced a mortgage in the past, you’re likely to have questions about the process, qualifications, benefits, and more. The following are a handful of frequently asked questions associated with FHA refinance loans:
These questions are great points of discussion between you and your lender. You should feel fully prepared for a refinance before you take the plunge.
My Perfect Mortgage has the tools and expertise to match you with the right lender for your situation.
The qualifications for an FHA refinance loan vary from one type to the next. The information above will help you determine if now’s the time to learn more about refinancing your current mortgage.
If you’re ready to take the first step in the process, review our refinance guide and then get started.
We’ll walk you through the process of refinancing your current FHA mortgage into one that better suits you, your financial circumstances, and your goals.
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Our advice is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.