FHA Streamline
FHA loan dashboardAn FHA-to-FHA refinance with no appraisal. The loan is capped by what you owe, and it must pass FHA's benefit test, usually a lower combined rate.
How this tool works
The loan amount. With no appraisal, the new base loan is the lesser of what you owe (the principal balance plus the interest and mortgage insurance due, and any late charges or escrow shortage) and the original loan, less any refund of the upfront premium. The new upfront premium, 1.75% of the base loan, is added to it. Closing costs and prepaids cannot be added, so they are paid at closing or covered by a lender credit.
The premium refund. Refinance an FHA loan into a new FHA loan within 3 years and part of the upfront premium you paid comes back as a credit: 80% in the first month, 2 percentage points less each month, 10% in month 36.
Mortgage insurance. The yearly premium follows FHA's table by term, loan amount and loan-to-value, measured on the value from your original loan. A loan endorsed on or before May 31, 2009 refinances with 0.01% upfront and 0.55% a year.
The benefit test. FHA compares combined rates: the interest rate plus the yearly mortgage insurance rate. Fixed to fixed, the new combined rate must be at least 0.5 percentage point lower; fixed to a hybrid ARM, 2 points lower; an ARM to fixed, no more than 2 points higher. A fixed-rate term at least 3 years shorter also qualifies when the new interest rate is below your current combined rate and the new principal, interest and MIP are no more than $50 higher.
Sources: HUD Handbook 4000.1 II.A.8.d (Mortgagee Letter 2020-30), Mortgagee Letter 2023-05, HUD upfront premium refund chart.
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