FHA Streamline Refinance

DEFINITION of 'FHA Streamline Refinance'

A mortgage-refinancing option offered by the Federal Housing Administration (FHA). An FHA streamline refinance requires the mortgage to be FHA insured and not delinquent. The refinance must result in a reduction in the homeowner’s interest and principal payment, and no cash can be taken out of the refinanced mortgage. There are two forms of this refinance available: non-credit qualifying and credit qualifying.

BREAKING DOWN 'FHA Streamline Refinance'

The FHA does not require an appraisal on a streamline refinance and instead uses the homeowner’s initial purchase price. It also does not require a credit report for non-credit qualifying streamline refinances. A credit report is required for credit qualifying streamline refinances. Despite this, the lender might ask for a credit report as a part of its own policy. 

Non-credit qualifying refinancing is available to homeowners who have owned the property for at least six months, and the refinance must take place at least 210 days after the closing date of the original mortgage. 

The FHA began allowing streamlined refinancing for insured mortgages in the 1980s. The words “streamline refinance” actually refer to the reduced amount of paperwork and underwriting that the lenders must deal with.

Lenders involved with this FHA refinancing program offer a number of payment options. A “no cost” option charges the borrower no out-of-pocket expenses, but carries a higher interest rate than if the borrower paid closing costs in cash. The new mortgage amount is not permitted to include closing costs. 

RELATED TERMS
  1. Federal Housing Administration ...

    A United States government agency that provides mortgage insurance ...
  2. USDA Streamlined Refinancing

    A mortgage-refinancing option offered by the United States Department ...
  3. Uninsurable Property

    A home that is not eligible for insurance through the United ...
  4. Up-Front Mortgage Insurance - UFMI

    An insurance premium that is collected, typically on Federal ...
  5. National Housing Act

    Federal legislation passed in 1934 to create the Federal Housing ...
  6. Home Equity Conversion Mortgage ...

    A type of Federal Housing Administration (FHA) insured reverse ...
Related Articles
  1. Home & Auto

    FHA Money Trouble Causes Concern For Homebuyers

    The FHA says it's operating in the black, but reports say otherwise. If it goes bankrupt, what will the repercussions be?
  2. Retirement

    Understanding FHA Home Loans

    Don't be overwhelmed when filling out these forms. Find out what you need to do here.
  3. Credit & Loans

    Before You Choose An FHA Mortgage: 7 Key Points

    FHA mortgages offer flexibility and low down payments, though they're often pricier than traditional loans backed by private mortgage insurance.
  4. Home & Auto

    When Does It Pay to Refinance Your Mortgage?

    Mortgage interest is among a homeowner’s biggest expenses, so refinancing is a popular way to lower costs, but it doesn’t always make sense.
  5. Home & Auto

    Insuring Federal Housing Authority Mortgages

    This insurance has an edge over private mortgage insurance. Find out why.
  6. Home & Auto

    Should You Refinance Your Home if You're Over 50?

    Whether you should refinance your mortgage depends on your savings but for people over the age of 50 there are other specific factors to consider.
  7. Home & Auto

    Refinancing Your Mortgage Isn’t Always Worth It

    The housing industry has experienced its share of ups and downs over the last few years, but one bright spot has been affordable mortgage rates.
  8. Investing Basics

    Finding And Investing In FHA Condos

    Interested in a buying an FHA-approved condo? Read this first.
  9. Credit & Loans

    All-Time Low Mortgage Rates: Time To Refinance?

    Interest rates keep dipping lower and lower. Find out what it takes to tip the scales toward a refinance.
  10. Home & Auto

    Mortgage For A Manufactured Home? Try The FHA

    FHA loans are often a good alternative for those who have trouble obtaining a conventional mortgage, although you do have to pay an insurance premium.
RELATED FAQS
  1. What are the requirements for an FHA loan?

    Qualify for homeownership with an FHA-backed mortgage. Borrowers with imperfect credit benefit from this government-sponsored ... Read Answer >>
  2. Do FHA loans have prepayment penalties?

    Learn whether FHA loans have prepayment penalties, and find out the rules governing interest charges when prepaying your ... Read Answer >>
  3. Do FHA loans require mortgage insurance?

    Learn about FHA loans that require borrowers to pay an upfront mortgage insurance premium and subsequent monthly mortgage ... Read Answer >>
  4. Can FHA loans be used for condos?

    Learn about Federal Housing Administration (FHA) loans and how individuals can use them to buy condos on the FHA-approved ... Read Answer >>
  5. Are FHA loans assumable?

    Learn the advantages and disadvantages of assuming an FHA-insured mortgage. Assuming loans with lower interest rates can ... Read Answer >>
  6. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Understand the difference between a conventional mortgage that requires primary mortgage insurance and a Federal Housing ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center