June 4, 2020

Vimeo Channel YouTube Channel

FHA Credit Qualifying Streamline Refinancing

FHA loans feature a refinancing option known as Streamline Refinancing, which features no credit check, no cash back to the borrower, and reduced paperwork due to the borrower’s status as an FHA borrower in good standing.

An FHA Streamline Refinancing loan has several requirements including a rule which states the new loan must result in lower payments, lower interest rates, or both.

But there’s also a credit qualifying FHA streamline loan option. According to the FHA rulebook, “Credit qualifying streamline refinances contain all the normal features of a streamline refinance, but provide a level of assurance for continued performance on the mortgage.” For these types of refinancing loans, “The lender must provide evidence that the remaining borrowers have an acceptable credit history and ability to make payments.”

In what circumstances would a borrower need to consider a credit qualifying FHA streamline loan instead? FHA rules say credit qualifying is required when the new loan would result in an increase of mortgage payments by more than 20%. Borrowers refinancing from adjustable rate mortgages could face that scenario, but it’s not the only thing that might require a borrower to apply for a credit qualifying version of the streamline loan.

FHA rules also state, “A credit qualifying streamline refinance must be considered…when deletion of a borrower or borrowers will trigger the due-on-sale clause,” and also following “the assumption of a mortgage that occurred less than six months previously, and does not contain restrictions (i.e. due-on-sale clause) limiting assumption only to a creditworthy borrower…”

There are other circumstances which may apply in such cases–these are just a few examples.

The FHA restricts these types of refinancing loans in some cases. “The use of a credit qualifying streamline refinance for situations in which the change in mortgage term will result in an increase in the mortgage payment is only permissible for owner-occupied principal residences” as well as qualifying “secondary residences” and investment properties owned by the government and “eligible non-profit organizations”.

Joe Wallace - Staff Writer

By Joe Wallace

November 4, 2011

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

Connect with Joe:


Browse by Date:

About FHANewsBlog.com
FHANewsBlog.com was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

5850 San Felipe Suite #500, Houston, TX 77057 281-398-6111.
FHANewsBlog.com is privately funded and is not a government agency.

Share This