Refinancing your current adjustable-rate mortgage (ARM) with FHA is a great option to secure a 15 or 30 year fixed rate term. FHA refinance loans are easier to qualify and offer more flexibility than conventional loans. You can also cash out equity to pay off high-interest debt, make home improvements or pay any other expenses.
Mortgage interest rates have stayed near all-time low levels and now might be the perfect time to refinance. Please contact us anytime with questions.
Recent Positive Changes To Help Home Owners – HUD recently announced the monthly FHA mortgage insurance costs (PMI) is going to be reduced. This is not only great news for new home buyers purchasing with FHA financing but also wonderful news for existing FHA mortgage holders that pay higher mortgage insurance costs each month.
If you received an FHA mortgage over the last 5 years, you are likely paying the higher FHA MIP rate of 1.15% – 1.35%. Please contact us below to see if an FHA refinance with the new lower .85% MIP makes sense for you. In addition to the FHA MIP reductions, interest rates are near all-time lows. This means qualified homeowners may be able to lower their interest rate at the same thus increasing their monthly savings even more. Read more about the FHA reduced monthly mortgage insurance here.
FHA offers (3) separate refinancing options in 2023:
1. FHA Rate/Term Refinance:
The FHA Rate/Term Refinance is for U.S. homeowners who currently have a conventional fixed rate or ARM mortgage and wish to refinance into a lower interest rate. Remember, you do NOT have to currently have an FHA home loan to refinance into one. The FHA rate/term refinance program helps borrowers who wish to have a secure FHA-insured fixed-rate mortgage.
2. FHA Cash-Out FHA Refinance:
A cash-out FHA refi is perfect for the homeowner who would like to access the equity in their home. The FHA loan program is beneficial to homeowners whose property has increased in value since it was purchased. As of 2023, you can access up to 80% of your home’s value (Loan to Value) and use the money to pay off higher-interest debt like credit cards. Or use the money for needed home improvements, etc.
3. Streamline FHA Refinance:
The FHA Streamline Refinance is designed to lower the interest rate on a current FHA mortgage OR convert a current FHA adjustable rate mortgage into a fixed rate. A Streamline loan can be performed quickly and easily.
It typically requires less paperwork than a normal refinance and often no appraisal, qualifying debt ratios or income verification. Current home loan to value or “LTV” is not important. So if you are underwater on your home value, this is the program for you.
Learn about the latest FHA Streamline information here.
FHA Loan Amount and Financing Details:
The maximum loan amount allowed for an FHA Refinance Loan varies from county to county as stated over in the FHA Details page above. FHA home loans do have a maximum allowed loan amount limit depending on the county/location of your new home.
Example: Nearly all the counties in Florida have a maximum mortgage limit of at least $498,257 for single 1 unit properties. Some Florida counties like Duval, Monroe, Collier, Miami-Dade, Broward, Manatee and Palm Beach County have maximum loan amount limits even higher. Please click here to look up your county FHA loan limit.
The maximum FHA financing for an FHA Rate/Term Refinance (No Cash-Out) or FHA Streamline Refinance (No Cash-Out) will be 97.75% of the appraised value of the home or its selling price, whichever is lower. The maximum mortgage financing for an FHA Cash-Out Refinance is 80%.
How to know if you will be approved for an FHA Refinance?
To be eligible and approved for the FHA refi, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income. Your credit background and past mortgage payment history will be carefully considered as well. A minimum credit score of 580 is usually required to obtain an FHA approval.
Borrowers that have a 10% down payment can possibly obtain loan approval with a credit score as low as 550. Additionally, you must have enough monthly income to pay your housing costs (PITI) plus all revolving monthly debt like car loans, credit card payments, etc.
Questions about the FHA program requirements or pre-approval? To expedite your request quickly, please fill out the short information request form on this page, 7 days a week.
If you are looking to refinance a different type of mortgages like VA, USDA, or Conventional, please submit the info request to learn more about refinancing alternatives.