FHA Streamline Refinance Loan Requirements

FHA Streamline Refinance Loan requirements include having a tangible benefit to the borrower in the form of a lower interest rate, a lower monthly payment, shorter mortgage term, and/or refinancing into a fixed rate loan from an FHA adjustable rate mortgage.

But there are other requirements for streamline refi loans above and beyond the “tangible benefit” rules. Did you know that FHA streamline loans have “seasoning” rules, too? Seasoning in this case means how long the borrower has been paying on the existing FHA home loan before the assignment of a new FHA loan case number for the refinance transaction.

How long do you have to own your home before you can refinance with an FHA Streamline?

HUD 4000.1, the FHA single family home loan handbook, states that on the date of the new case number assignment, the following criteria must be met:

-the Borrower must have made at least six payments on the FHA- insured Mortgage that is being refinanced;

-at least six full months must have passed since the first payment due date of the Mortgage that is being refinanced;

-at least 210 Days must have passed from the Closing Date of the Mortgage that is being refinanced; and

-if the Borrower assumed the Mortgage that is being refinanced, they must have made six payments since the time of assumption.

FHA Mortgage Loan Payment Requirements

HUD 4000.1 adds that there are payment rules for FHA streamline refinance loans-payments on the existing mortgage must be current. According to the FHA loan rules, there are standards for credit-qualifying and non-credit qualifying FHA Streamline loans. For non-credit qualifying transactions:

“The Borrower must have made all Mortgage Payments for all Mortgages on the subject Property within the month due for the six months prior to case number assignment and have no more than one 30-Day late payment for the previous six months for all Mortgages on the subject Property. The Borrower must have made the payments for all Mortgages secured by the subject Property within the month due for the month prior to mortgage Disbursement.”

For credit-qualifying FHA streamline refinancing, HUD 4000.1 instructs the lender:

“For all mortgages on all properties with less than six months of Mortgage Payment history, the Borrower must have made all payments within the month due.”

But what about mortgages that have more than six months of payment history?

“For all mortgages on all properties with greater than six months of Mortgage Payment history, the Borrower must have made all Mortgage Payments within the month due for the six months prior to case number assignment and have no more than one 30-Day late payment for the previous six months. The Borrower must have made the payments for all Mortgages secured by the subject Property within the month due for the month prior to mortgage Disbursement.”

Speak to a loan officer to determine whether you are eligible for credit-qualifying or non-credit qualifying FHA streamline refinance loan options. Some lenders may only offer credit-qualifying streamline loans, and additional lender standards may apply.

2017-06-20T06:15:08+00:00

About the Author:

Patrick is the CEO and Broker of Record for The Local Realty, Inc. (a boutique lifestyle real estate company) which powers 10+ trademarked brands and 500+ networks including partnerships with 10,000+ referral partners across the world.