May 27, 2025
Are you planning to buy your first home and wondering about your refinance loan options later down the line? Do you already own a house you need to refinance?
Good news: refinancing with an FHA mortgage can help you lower your mortgage payment, get out of an adjustable-rate mortgage, or even renovate your house.
What does it take to refinance a home loan with an FHA mortgage?
Choose The Refinance Loan You Need
There are several FHA refinance loan options. If you need to remodel or repair your home at the same time you refinance, you can apply for an FHA 203(k) rehab loan that provides funds for approved upgrades and improvements.
However, the FHA rehab refinance loan (also available as a forward mortgage to purchase a fixer-upper) is not the same as the FHA Cash-Out Refinance loan option, so you must select the right mortgage product.
Why Some People Choose FHA Cash-Out Refinance Loans Over FHA Rehab Loans
FHA Rehab loans have certain restrictions. You can make approved improvements, but those improvements can’t include adding luxury items such as a new pool or barbecue pit.
Cash-out refinance loans have no such restrictions and if you are interested in refinancing in order to add a pool, barbecue, hot tub, etc. the FHA cash-out refinance loan option is definitely the better choice provided you have enough equity in the property to take value out in cash.
FHA Refinance Loans For Existing FHA Mortgages
You are not required to have an existing FHA mortgage loan in order to refinance into an FHA mortgage, but if you do have an existing FHA mortgage you may be able to get into a lower mortgage loan monthly payment.
How? Taking advantage of the FHA Streamline Refinance Loan does not provide cash back but generally requires a benefit to the borrower such as a lower payment or interest rate.
FHA Streamline Refinancing can also be used to refinance an existing FHA mortgage with an adjustable rate into either a new adjustable rate loan or a fixed-rate mortgage.
Ask your lender about your FHA refinance loan options. Remember that you are not required to use the same lender to refinance your home loan; you are free to shop around for a new lender if needed.
How do you refinance a home loan? Choose the right refi loan for you, discuss your needs with a loan officer, and start preparing your refinance application like you prepared for your original mortgage loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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