What it is
A refinance of an existing FHA loan into another FHA loan, with most of the file stripped out. No appraisal is required, and on a non-credit-qualifying streamline no income documentation and no credit check.1 It is the FHA counterpart of the VA IRRRL, and it works the same way for the same reason: the government already insures the loan, so re-proving the borrower buys the insurance fund very little.
What it cannot do
- It cannot be used to buy a home — the loan being refinanced has to already be FHA-insured.2
- It cannot be used to take cash out. Cash in excess of $500 may not be taken out on a loan refinanced this way.2 For actual cash out you are looking at an FHA cash-out refinance, which is capped at 80 percent of value — measured on the base loan amount, so the upfront premium is financed above the cap rather than out of your proceeds.3,4
The waiting period
Two clocks, and both have to have run: at least 210 days from the closing date of the loan being refinanced, and at least six payments made on it. You also have to have been current for the six months before the case number is assigned.1
If you closed recently and rates have moved, this is the number to check first. It is also the reason a lender who tells you in month four that nothing can be done is usually right, and worth calling back in month eight.
The tangible benefit test
A streamline has to leave you better off — a reduction in rate, in term, or both.2,1 An adjustable-rate loan converting to a fixed rate is treated differently: there the new rate has to be at least two percentage points below the current one.1
The test exists because the transaction is cheap enough to be worth doing repeatedly, and without it somebody would.
There are two versions. Non-credit-qualifying is the default: no credit check, no income documents. Credit-qualifying puts the income and credit back in.1
Nobody asks for the harder one without a reason, and there are reasons: removing a borrower from the loan, or a lender requiring it. We write them non-credit-qualifying unless something in the file calls for the other. If you are told you need the credit-qualifying version, ask which of those two it is.
The premium on an older loan
If the loan being refinanced was endorsed before June 2009, the streamline gets the reduced premiums: an upfront premium of 0.01 percent instead of 1.75, and an annual premium of 0.55 percent.1 That is a narrow window and a shrinking one, but on a loan that old it is worth checking the endorsement date before anything else.
On every other file the ordinary premium schedule applies, and the duration rules come with it — which is worth a look, because a streamline restarts the clock on a 30-year term.
Sources
These references support the factual explanations above. Where this page states a preference rather than a fact, it says so — those are our editorial judgement, not a claim that any one channel always costs less.
Next
FHA mortgage insuranceTwo premiums, not one — and whether the second one ever ends is settled on the day you close.The VA IRRRL, and the rule that governs itSeasoning, the 36-month recoupment test, and why it shapes how the loan is structured.Priced against your actual file
FHA limits are set county by county, and what the mortgage insurance costs depends on where your loan-to-value lands. Send us the basics and we’ll price it properly — no credit pull, and it commits you to nothing.