An FHA streamline refinance is a quick and easy process for refinancing an existing FHA home loan. FHA streamline mortgage loans can be used by homeowners to lower their monthly mortgage payments and mortgage interest rates.

The FHA streamline refinance is designed to reduce the documentation needed to refinance a mortgage loan. The streamline term refers to the amount of documentation and underwriting that needs to be performed by the mortgage lender to complete the transaction.

Some of the conditions that are required to perform an FHA streamline refinance include: the mortgage to be refinanced must be an existing FHA insured home loan, the mortgage loan has to be current regarding the monthly mortgage payments that are due a current delinquency is not allowed, the refinance transaction has to result in a lower monthly mortgage payment for the borrower and there is no cash out for mortgage loans that are refinanced with the streamline refinance process.

Additional conditions for a n FHA streamline refinance cover appraisal rules and mortgage payment histories. An FHA streamline refinance can be done without an appraisal, but the new mortgage loan amount cannot exceed the original loan amount and new FHA home loan borrowers that want to refinance their loan are required to make at least six monthly mortgage payments on the mortgage being refinanced before they can do a streamline refinance.

The FHA has outlined mortgage payment history guidelines for lenders to follow when reviewing a streamline request in addition to the requirement that the mortgage loan be current on the present monthly payment. At the time of the mortgage loan application, the borrower must display an acceptable payment history based on FHA guidelines. For FHA mortgages with less than a 12 months payment history, the borrower must have made all monthly mortgage payments within the month the payment was due. For those borrowers with mortgages that have a 12 months payment history or greater, the borrower must have had no more than one 30 day late payment in the last 12 months,

Borrowers that have a conventional loan, not an FHA home loans, that want to refinance with an FHA loan need to apply with an FHA mortgage lender and go through the standard approval process that requires a standard credit check, employment verification, debt-to-income ratio requirements, an appraisal and other underwriting considerations. Borrowers that have an FHA mortgage and need to do a traditional FHA mortgage refinances because they want cash back or do not meet the other streamline requirements will need to apply for the FHA loan as a traditional refinance transaction with the credit check, appraisal and other standard loan approval requirements.

To apply for a streamline refinance, borrower need to apply to an FHA approved lender. The borrowers current lender may be considered but it is not required that the borrower apply with their existing lender, any bank can be chosen that is FHA approved.

FHA updates their guidelines from time to time to cover changes in the underwriting and approval process. FHA mortgage refinance regulations are often modified to create new rules to control delinquencies and tighten lending guidelines as well as to clarify existing FHA refinance rules.

Additional resources can be found at What is FHA, What is an FHA Loan and FHA Mortgage Rates.

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