FHA Refinance FAQ

The U.S. Department of Housing and Urban Development’s Federal Housing Administration offers its own streamlined mortgage refinancing application. By applying for an FHA compact refinance, debtors may cut several steps out of the sometimes-complicated loan refinancing procedure. Borrowers, however, will need to meet specific requirements to qualify for the FHA compact mortgage refinance.

The Benefits

FHA streamline refinances are popular because they can cut a significant amount of the paperwork that debtors need to submit when applying for a conventional mortgage refinance. Under a FHA streamline refinance, lenders do not need to see as much paperwork to verify a homeowner’s income or pre-tax percentage. That is because FHA refinances are insured by the national government. Lenders, then, do not take on as much risk as when they are taking to a refinance. Since they are taking on less risk, lenders do not always need as much paperwork. Within an streamline FHA refinance, lenders are not required to ask for copies of debtors’ last two paychecks, most recent federal income tax return or bank savings and checking account statements, all records that lenders typically ask for in a conventional refinancing. It is important to note, however, that lenders can ask for these records during an FHA refinancing in their discretion.


To qualify for an FHA streamline refinance, borrowers should already be paying an current FHA-insured loan. Lenders can’t offer borrowers the streamline procedure if the borrowers are paying off a conventional mortgage loan. The FHA also requires that borrowers be current on their mortgage payments, and that the refinance enhances the monthly interest and principal payments of the debtor. Borrowers also may not take any money during an FHA streamline refinance.

No Credit Checks, Appraisals

FHA streamline refinances come with an additional benefit: Lenders handling these refinances do not need to conduct the credit histories of borrowers or send house appraisers to find out the current market value of the borrowers’ homes. This saves both time and money. Lenders charge varying prices to conduct borrowers’ credit and employ appraisers to ascertain their housing worth. Again, it’s important to note that lenders can select on their own to conduct borrowers’ credit histories and ship out real estate appraisers. They are simply not required to do so with an FHA streamline refinance.

Private Bank Originated

The FHA nor the Department of Housing and Urban Development originate FHA refinances. The FHA merely covers these refinances. Private lenders, banks, credit unions and thrifts manage the true origination of these products. It follows that homeowners that need an FHA streamline refinance will probably need to shop around with private lenders to get the one that delivers the best service and rates.

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