January 13, 2022
Are FHA refinance loans only permitted to refinance existing FHA mortgages? The short answer is that it depends on the loan you wish to refinance and why. Some FHA refi options can be used for any mortgage loan, while others are only for existing FHA mortgages.
The First Thing You Should Know
FHA mortgages are not need-based loans and neither are most refinance options under the FHA Single-Family Home Loan program.
FHA loans have no income limit, no household income caps, and are not specifically targeted at a first-time borrower. If you have a stable income, have been in the job market for more than a year (two years or better is considered ideal), and have 12 months or more of on-time payments, you may be able to qualify for an FHA mortgage or refinance loan.
FHA loans require a minimum FICO score, have no income minimum or maximum, and have more generally lenient application requirements than many conventional mortgages.
Some refinance loans require you to pay a certain number of mortgage payments in order to be considered (think cash-out refinance loans here) and others may be used to help a borrower get current on their mortgage and avoid foreclosure. In short, your circumstances and needs may determine the type of refinance you need.
FHA Refinance Loans Are Available For Non-FHA Mortgages
FHA refinance loans are not limited to existing FHA loans, at least where rehab loans, cash-out loans, and simple refinance options are concerned.
If you have purchased a home with a different type of mortgage or you have inherited a property you want to refinance with an FHA loan you should ask a participating lender about these options and how they can help.
Some FHA refinance options can only be used with existing FHA mortgages.
These are known as FHA Streamline Refinance loans. They have no FHA-required credit check or appraisal. (Your lender may, depending on circumstances, require a new appraisal/credit check depending on circumstances).
FHA-To-FHA Refinancing
The Streamline Refinance option is a good choice for some depending on the borrower’s needs. Future plans can play a big part in this decision–are you planning to remain in the home for the entire mortgage?
If so, do you want lower monthly payments?
Do you plan to sell the home at some point? Trying to save as much money as you can in the interim? If so a Streamline Refinance might help more than other types of refinancing where you may need to purchase discount points to reduce your interest rate.
Ask a lender about these refinance loan options and compare rates, terms, and costs of the loan overall.
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.
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