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. FHA 203(k) Loan

    A type of federally insured mortgage product for individuals ...
  2. Federal Housing Administration ...

    A United States government agency that provides mortgage insurance ...
  3. FHA Loan

    A mortgage issued by federally qualified lenders and insured ...
  4. Balloon Payment

    An oversized payment due at the end of a mortgage, commercial ...
  5. Backlog

    A build-up of work that needs to be taken care of. The term "backlog" ...
  6. Modified Tenure Payment Plan

    A way to receive reverse mortgage proceeds that gives the borrower ...
Related Articles
  1. Retirement

    Understanding FHA Home Loans

    Don't be overwhelmed when filling out these forms. Find out what you need to do here.
  2. Home & Auto

    The FHA's Minimum Property Standards

    If you're thinking about purchasing a home with an FHA loan, here are some standards that must be met for the deal to go through.
  3. Home & Auto

    Applying For An FHA 203(k) Loan

    If you have the time and energy, the 203(k) loan is often the only way to finance a property needing significant repairs.
  4. Home & Auto

    An Introduction To The FHA 203(k) Loan

    If you're looking at a fixer-upper, the Federal Housing Administration rehab loan may be the mortgage for you.
  5. Retirement

    Best Mortgage Companies Friendly to Retirees

    If you’re no longer in the workforce and need a loan to buy a home, which companies are the most welcoming? Plus, good news about qualifying for a loan.
  6. Credit & Loans

    Don't Get Overcharged for Your Mortgage

    Don't pay more for a mortgage than necessary. Here’s a quick look at the different categories and how to be sure you're getting the best deal.
  7. Credit & Loans

    What is an Alt-A Mortgage?

    Called "liar loans" for their low documentation requirements, Alt-A mortgages were hot until the subprime crisis. Now Wall Street wants to bring them back.
  8. Home & Auto

    Rent-To-Own Homes: How The Process Works

    A rent-to-own agreement can benefit homebuyers with bad credit or insufficient funds for a down payment. Here’s how one works.
  9. Home & Auto

    7 Must-Have Real Estate Contract Conditions

    Buying a home can bury you in paperwork. But it’s worth your time to make sure your contract contains these seven important conditions.
  10. Home & Auto

    The Pros and Cons of Buying Vs. Building a Home

    Before you decide whether to buy or build a home, you should weigh the advantages and disadvantages of each scenario.
RELATED FAQS
  1. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  2. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  3. Do FHA loans require escrow accounts?

    Federal Housing Administration (FHA) loans require escrow accounts for property taxes, homeowners insurance and mortgage ... Read Full Answer >>
  4. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  5. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  6. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center