How to streamline refinance your FHA, VA, or USDA mortgage

  • A streamline refinance lets you refinance your FHA, USDA, or VA mortgage without an appraisal.
  • You may not need to show your credit score or debt-to-income ratio, either.
  • You’ll refinance into the same type of mortgage, like from one FHA loan into another FHA loan.
  • See Insider’s picks for the best mortgage refinance lenders »

What is a streamline refinance?

With a streamline refinance, you can refinance your mortgage without going through an appraisal. In many cases, you won’t need to show your credit score, debt-to-income ratio, or proof of income, either.

You can streamline refinance government-backed home loans — including mortgages through the FHA, VA, or USDA — but not conventional mortgages. You’re refinancing from one type of mortgage into the same type again. For example, you’d refinance from an FHA loan into another FHA loan.

You may decide to refinance with the same lender you used for your initial mortgage, but you don’t have to. Shop around for the lender with the lowest rates and fees.

FHA streamline refinance

An FHA streamline refinance switches out your FHA mortgage for a new FHA mortgage with a different term length and interest rate.

You can refinance into either a 30-year or 15-year term. If your initial FHA mortgage had a 30-year term, you can’t refinance into a 15-year term. But you can refinance from a 15-year term into a 30-year term to get lower monthly payments. You can choose between a fixed-rate mortgage and an adjustable-rate mortgage.

The FHA requires that a streamline finance would financially benefit you. The exact rules depend on several factors, but in general, you’ll need to get a lower rate to qualify. Switching from an ARM to a fixed-rate mortgage is also considered a net tangible benefit, because predictable fixed rates can make it easier for you to stick to a budget and stay current on your mortgage payments.

VA streamline refinance

A VA streamline refinance, also known as a VA Interest Rate Reduction Refinance Loan (IRRRL) is a type of refinance for people who already have a mortgage backed by Veterans Affairs. You refinance from one VA mortgage into another.

The home doesn’t have to be your primary residence right now, but you must have lived there at one point. You must benefit financially from the refinance to qualify.

USDA streamline refinance

When it comes to streamlining your USDA refinance, you have two options: a USDA streamline refinance and USDA streamlined assist refinance.

They are both tools for refinancing from one USDA mortgage into a new one, and in most cases, neither requires an appraisal. But there are some key differences between the two.

With a USDA streamline refinance, you need to show the lender your credit score and debt-to-income ratio to qualify. You can add or remove someone’s name on the mortgage.

USDA streamlined assist refinance does not require you to show your credit score or DTI ratio. You can add someone’s name to the mortgage, but you can only remove a name if the person has died.

A USDA streamline refinance doesn’t mandate that you benefit financially from getting a new loan, but the USDA streamlined assist refinance does.

Pros and cons to streamline refinancing

Pros

  • No appraisal. You almost never need to go through an appraisal when you do a streamline refinance. This saves you money and time. It’s a huge perk if your home has lost value, because the lower value won’t hurt your chances of being approved or receiving a good rate.
  • Easy to qualify. Because you don’t need an appraisal, you don’t have to have a certain amount of equity in your home to refinance. In many cases, the lender won’t need to check your credit score or debt-to-income ratio, either.
  • Save money. In most cases, you must financially benefit from a refinance to be eligible to streamline. You could get a better rate, lower monthly payments, or a different term length.
  • Low funding fee for VA mortgages. When you get a VA mortgage, you’ll have to either pay a funding fee at closing or roll it into your mortgage. For your initial VA loan, the fee was likely 2.3% of the amount borrowed, or 3.6% if you’d used a VA loan before. But your funding fee is only 0.5% with a VA streamline refinance, which is especially useful if you’ve opted to roll the fee into your mortgage — you’ll save more money this way. 

Cons

  • Closing costs. As with any refinance, you’ll pay closing costs all over again with a streamline refinance. This will include mortgage insurance for an FHA loan, a guarantee fee for a USDA loan, and possibly a funding fee for a VA loan.
  • No cash-out refinances. If you’ve gained equity in your home, you may want to borrow against it to pocket some cash. You don’t have the option to receive cash with a streamline refinance, though. You’ll have to do a cash-out refinance instead.
  • Limited term options. You can choose from several term lengths when you refinance your VA loan. But for a USDA streamline refinance, you can only get a 30-year term. For an FHA loan, you have to choose either a 30-year or 15-year term.

Alternatives to streamline refinancing

Maybe you want to refinance your government-backed mortgage, but you aren’t sure streamlining is the way to go. Here are some other options:

Non-streamlined refinance

With an FHA or USDA mortgage, you can refinance into the same type of loan without streamlining the process. This means you’ll need to go through an appraisal and show your credit score and debt-to-income ratio.

A non-streamlined refinance could be the right move if your home has gained value since you bought it, or if your finances have improved. Higher home value and stronger finances could land you a better interest rate.

Conventional refinance

Maybe you have an FHA, VA, or USDA mortgage, but you want to refinance into a conventional mortgage, which is what you probably think of as a “normal mortgage.” Switching to a conventional mortgage lets you choose from more term options.

If you have at least 20% equity in your home, switching to a conventional mortgage lets you get rid of mortgage insurance, which could save you money. You’ll have to pay for mortgage insurance or a funding fee if you refinance into any type of government-backed mortgage, unless you qualify to waive it with a VA mortgage.

Cash-out refinance

Have you gained equity in your home since buying it? You may qualify for a cash-out refinance. You’ll take out a mortgage larger than the amount you still owe, and you receive a portion of your home’s gained value in cash. Then you can use the money however you see fit.

If you have an FHA or VA mortgage, you can refinance into the same type of loan and cash out your equity. But with a USDA mortgage, you’ll have to refinance into a conventional loan to receive cash.

Your choice between streamlining and other types of refinancing will depend on your finances and goals. If you’ve gained a lot of equity in your home, you may prefer a conventional or cash-out refinance. And deciding between a streamline or non-streamlined refinance may come down to how your credit score and debt-to-income ratio are holding up.

Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.

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