Wendy Wilson

Federal Housing Administration (FHA) procures mortgage insurance on credits granted by FHA-approved lenders. A homeowner gets into a legal agreement with a lender for money in exchange for the property’s title deed.

FHA mortgage is also suitable for people buying homes for the first time. It requires small credit scores and an advance fee. To facilitate this, the FHA offers fixed rates of interest with an allowed payment period of between 15-30 years.

What Is the FHA Streamline Program?

FHA streamline is a program available for only current homeowners with existing FHA. The need for an FHA loan varies from lender to lender. Comparing quotes from different FHA-approved lenders helps you get the best deals.

The FHA Streamline allows a homeowner to refinance a mortgage fast and at lower rates. FHA refinancing involves less credit or income documentation. Most times, FHA streamline refinance allows a homeowner to skip the appraisal process.

Refinancing is revising the terms of the loan, e.g., interest rates and payment schedules. You can cut down the rate of interest on an existing mortgage without checking your total credit. But you must have been paying for your mortgage for over one year. A homeowner can either get;

  • lowered annual mortgage insurance premium (MIP) or
  • fractional repayment of the upfront MIP amount.

The types of FHA streamline refinance are;

  • Credit qualifying – lender checks the borrower’s credit and ability to repay the loan. The lender also calculates their debt-to-income ratio.
  • Non-qualifying credit – this does not need any checks.

FHA short refinance is a program that assists owners whose credit exceeds home value. The home must be where the borrowers primarily stay as this program offers no refinance to second home properties. This mortgage type is also known as an underwater home loan.

For a borrower to be eligible for an FHA new home loan, their home mortgage must owe more than their home value. Also, they must be active in their current mortgage and not defaulting on their repayment.

The FHA Streamline Refinance Rules for Adding/Removing Borrowers

Do the FHA rules allow an actual borrower to include or exclude a third party to the title? Yes, they do.

A refinancing borrower who is getting married would want to include their spouse’s name in the title. On the other hand, a borrower who is divorcing would refinance an asset under their name.

In such scenarios, the FHA rules permit the borrower to add or remove a name. You can add a name without reviewing credit value and prompting the due-on-sale clause.

Adding a borrower is simple because FHA streamline does not give cash back to the borrower. There is no need to check for credit as they reduce the interest rates and monthly repayments. It is also simple to get the loan approval and add a new name to the title.

Removing the name of a borrower on the title is possible but a bit complex. It is possible to delete an individual’s name from the title under the terms specified in Handbook 4115.1, 6.C.2.d:

  • If a mortgage with no due-on-sale clause took place more than six months ago, and the assumptors document mortgage payments made during this time; or
  • Following an assumption of a mortgage where transferability restriction is not a trigger, a property transfer resulted from a divorce or inheritance. And the assumption took place more than six months ago, and the remaining owner demonstrates that they made the mortgage payments during this time.

Removing a borrower from the title puts a proof task on the FHA borrower. They must show that they can manage the financial obligations of the loan. They must have done so before exclusion of the other name on the title.

Also, you need to present documents of their payments on the mortgage-canceled checks.

FHA Streamline Guidelines

As much as the FHA streamline involves less paperwork, there are terms and conditions to note. The list of terms includes;

  • You cannot be late or fail to repay your current FHA loan. Credit qualifying streamline refinance different rules from non-credit qualifying type. The standard line here is that the borrower has a good history of repaying for their mortgage.
  • The guidelines narrow down borrowers to cash of 500 USD. There is room to take in changes at the time of closing.
  • The period must be a minimum of six months since the issue of your current mortgage. Credit qualifying is an exception as cases like divorce bring the need to make changes.
  • The borrower pays the closing costs. In case they need money to cover the costs, your lender must approve the source of your property.
  • The borrower must get a ‘net tangible benefit’ as the final result of the streamline refinance. By this, FHA either reduces the interest rates of your mortgage or the term.

A mortgage refinance calculator helps you to learn financial trade-off between reducing payment and increasing the years to your term.

FHA Streamline Refinance Costs

With an FHA streamline finance, a borrower pays new upfront mortgage-premiums of insurance. They also continue spending on premium monthly repayments. FHA mortgages that came before the year 2009 pay an upfront premium of 0.01%. Mortgages that came later than that pay an upfront premium of 1.75%.

You can cover upfront mortgage insurance premiums but not any other closing costs— allowing you to access a more significant amount of loan as part of refinancing. A no-cost refinance covers the closing costs but charges higher rates of interest.

The FHA streamline refinance worksheet helps a borrower know his loan eligibility limit. If you have your home’s worth as in the appraisal, calculate the most mortgage that you can get.

FHA Streamline Refinance Pros and Cons


  • There is no appraisal. Instead, use the original sale price as the actual value regardless of the home’s current worth.
  • Whether you work or not, you are free to refinance. There is no verification of income.
  • Even with the decline in the value of your property, you can still refinance. You cannot get penalties for being underwater.
  • A drop in your credit score cannot hinder you from refinancing with FHA.
  • FHA loan rates, 2.5% (3.48% APR), are lower than other mortgage companies.
  • FHA loans between 2010-2015 receive a reduced insurance premium with FHA streamline refinance.


  • The FHA streamline program is available for current FHA borrowers only.
  • Limited cash-back of 500 USD.
  • The borrower must pay closing costs and UFMIP.
  • An FHA loan does not remove Mortgage Insurance Premiums.

FHA Simple Refinance vs Streamline

Both simple and streamline refinance meet a borrower’s needs based on the situation.

Whether you refinance a home with a slight rise in value or plan to sell soon, streamline is the best. It eliminates extra closing costs to your principal. With Simple refinance, the out-of-pocket costs are less. Especially with reduced interest rates with the availability of home equity. Choosing between the two depends on the borrower’s current needs and goals in the long run.

Related post