A reader asks, “Is there a cutoff date for when the original mortgage (FHA) was started? I have been getting letters that I am prequalified and I finally called one lender today. After giving them all of my information so they could check my credit, they said I was not in the house long enough. From the info on this website and the FHA website I don’t see anything about the length of time.”
The FHA issued guidance on this issue in 2011 with Mortgagee Letter 2011-11, which was a policy update on a variety of requirements for FHA refinance loan transactions in general, but specifically addressing issues such as the “seasoning period” for FHA loans before a borrower can apply for FHA refinancing.
According to FHA Mortgagee Letter 2011-11, when applying for FHA Streamline Refinance Loans:
- The mortgagor must have made at least six payments on the FHA- insured mortgage that is being refinanced, and
- At least six full months must have passed since the first payment due date of the refinanced mortgage, and
- At least 210 days have passed from the closing date of the mortgage being refinanced.
To help clarify the closing date issue, the FHA official site provides an example.”…if the FHA case number on the mortgage being refinanced was closed on or before December 1, and if mortgagor’s first payment on that mortgage was due on January 1, the mortgagee may request assignment of an FHA case number for the refinancing mortgage no earlier than July 1.”
It should be pointed out that this is an FHA minimum policy and a lender may be free to require a longer seasoning period as long as the requirement is applied in accordance with Fair Housing Act laws. The FHA loan rules do not prevent a lender from requiring more time, but the lender cannot allow a shorter seasoning period that specified in the FHA loan rules.
When it comes to cash out refinances, there are similar requirements. According to the mortgagee letter, the borrower must meet the following:
- Has made all payments on the mortgage being refinanced within the month due for the previous 12 months.
- For mortgages with more than 6 months and less than 12 months of payment history, the mortgagor must have made all payments when due. Mortgages with less than 6 months of payment history are not eligible for a cash-out refinance.
For more information on FHA loan rules in this area, contact the FHA directly at 1-800 CALL FHA.