Streamline Refinance guide for 2022: Process and benefits
A Streamline Refinance can lower your rate fast
With mortgage rates on the move, many homeowners are looking to refinance. And they want to do it fast, in case rates rise further.
The best way to do that is with a Streamline Refinance.
If you qualify for one, a Streamline Refinance program lets you refi into today’s rates with next to no work.
You don’t have to verify your income or employment. Some lenders won’t look at your credit score. And you can even skip the home appraisal.
If you currently have an FHA, VA, or USDA mortgage, you might qualify for a streamlined rate reduction.
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What is a Streamline Refinance?
The Streamline Refinance is designed to make refinancing easier for homeowners who have government–backed mortgages.
With a Streamline Refinance, the lender is not required to re–check your income, credit, or employment – so the process can go a lot faster. These are also called “low–doc” mortgages because there’s less paperwork involved.
And there are other benefits to a Streamline Refinance:
- No home appraisal means you can often refi with little or no home equity
- No credit check means a lower credit score won’t raise your interest rate (though some lenders create their own minimums)
- No income or employment verification means you may be able to refinance into a new mortgage even if you lost your job or took a pay cut
Plus, government–backed loans typically have lower interest rates than other mortgage loan options.
So by using a Streamline Refinance, you could potentially secure a rate below market averages.
Who can use a Streamline Refinance?
All the major government–backed loans offer Streamline Refinancing. So if you have an existing FHA loan, VA loan, or USDA loan, there’s a good chance you could use a Streamline Refi to lower your rate.
You may notice conventional loans are missing from this list. Typically, homeowners with Fannie Mae or Freddie Mac mortgages are not eligible for any type of Streamline Refinance.
And not all candidates with a government–backed loan are automatically eligible for a Streamline Refinance.
You still have to meet certain requirements, which usually include a history of on–time payments and a clear benefit to the new loan. (Benefits can include a lower interest rate or lower monthly payments. We’ll go into more detail on that below.)
Some types of Streamline Refinancing will require income verification and credit qualifying. For example, if you’d like to remove a co–borrower from your loan, you’d need a credit–qualifying Streamline Refi.
FHA Streamline Refinance loan
The Federal Housing Administration backs FHA Streamline Refinance loans for homeowners with existing FHA–insured mortgages.
To qualify for an FHA Streamline Refinance loan, you’d need to meet these guidelines:
- 3 months of on–time mortgage payments
- At least 210 days since your last refinance
- There must be a clear benefit. Usually you must lower your current FHA loan rate by around 0.50%
The FHA backs two kinds of Streamline Refinance loans:
- Non-credit qualifying: With this loan, income, assets and credit are not verified; nor is employment. Appraisals are not required, either
- Credit-qualifying: This refinance option requires a credit check and income verification but does not require a home appraisal
Choosing the credit qualifying Streamline Refi helps homeowners drop a co–borrower from their loan.
Or, if you got a higher interest rate because you had credit problems on your closing date, it may be in your best interest to go with the credit–qualifying loan option.
With the FHA Streamline Refinance, homeowners whose FHA mortgage was endorsed on, or prior to, May 31, 2009 are eligible for special, reduced FHA mortgage insurance rates.
The FHA Streamline Refinance can be used to refinance any existing FHA mortgage, even if you’re currently using the home as a vacation home or investment property.
FHA Streamline Refinance rates
FHA Streamline Refinance rates follow current rates for all FHA loans. Today’s average FHA rate is short code, as reported to The Mortgage Reports on March 19, 2022*.
| Loan Type | Current Rate* |
| FHA 30-year fixed-rate | % (% APR) |
| FHA 15-year fixed-rate | % (% APR) |
*Rates shown reflect an average interest rate for a “prime” borrower. Your own rate will vary. See our full loan assumptions here.
VA Streamline Refinance or “IRRRL”
The VA Streamline Refinance program is available to homeowners with VA–guaranteed mortgages.
The program’s official name is the Interest Rate Reduction Refinance Loan (IRRRL) and it’s backed by the Department of Veterans Affairs.
To be eligible for a VA Streamline Refinance (IRRRL), you need to meet these guidelines:
- You must certify that you currently or previously occupied the home
- Your mortgage payment must be reduced by the refinance, unless you’re replacing an adjustable–rate mortgage with a fixed–rate mortgage
- Your mortgage payment history may not include more than one late payment in the last 12 months
VA Streamline Refinance guidelines state that income, assets and credit should not be verified; nor should employment. Furthermore, in most cases, home appraisals are not required to refinance.
Mortgage insurance is not required for the VA IRRRL, regardless of loan–to–value ratio (LTV).
Unlike an FHA Streamline Refinance Loan, the VA’s IRRRL lets homeowners cash out part of their home equity – up to $6,000 worth to be spent on energy efficient home improvements.
VA streamline refinance rates
VA streamline refinance rates are in line with current rates on other VA loans. Today’s average VA rate is short code, as reported to The Mortgage Reports on March 19, 2022*.
| Loan Type | Current Rate* |
| VA 30–year fixed–rate | % (% APR) |
| VA 15–year fixed–rate | % (% APR) |
*Rates shown reflect an average interest rate for a “prime” borrower. Your own rate will vary. See our full loan assumptions here.
USDA Streamline Refinance
The USDA Streamline Refinance program is available to homeowners with USDA–guaranteed home loans.
This program is now available in all 50 states. (It started as a pilot program in just 34 states.)
The eligibility requirements for the USDA Streamline Refinance are as follows:
- Your home to be refinanced must be your primary residence
- Your mortgage payment history may not include mortgage lates within the last 12 months
The USDA runs two Streamline Refinance loan programs:
- USDA Streamline-Assist: There is no income, credit, or employment verification; nor are appraisals required
- USDA Standard Streamline: The USDA will check your credit report, verify your income, and check your debt–to–income ratio. But there is still no home appraisal requirement
As with FHA and VA streamline refinancing, underwater properties may be refinanced via the USDA Streamline Refinance program.
Is there a conventional Streamline Refinance?
Fannie Mae and Freddie Mac do not offer a conventional Streamline Refinance.
Until recently, Fannie Mae had a low–doc conventional refi program known as HIRO, which resembled a Streamline Refi, but the program has since been suspended.
Homeowners with conventional loans can still get rate–and–term mortgage refinances which could lower their monthly mortgage payments. Rate–and–term refis roll your existing loan balance into a new loan with a new rate, a new term, or both.
Unlike with a Streamline Refi, lenders will put conventional rate–and–term applicants through the entire underwriting process, checking credit reports, income, and current debt load to make sure the borrower qualifies.
Lenders will also order a home appraisal for most new loans.
Appraisals and refinancing
The new appraisal matters because it shows your home’s current market value. With a conventional refinance, your new loan can’t exceed 97% of your home’s value.
For example, if your home is appraised at $300,000, your new loan can’t exceed $291,000.
If you owe more than $291,000 on your current mortgage – or if you need to roll in closing costs which would push your loan balance past $291,000 – your refi won’t get off the ground.
This rule is the refinance equivalent of making a 3% down payment on a home purchase loan.
Waiving the refinance appraisal
Some lenders will waive the in–person appraisal, speeding up the loan process and knocking hundreds of dollars off the new loan’s upfront costs.
If the lender agrees to waive your appraisal, it will rely on existing data to come up with your home’s value instead of sending a real estate appraiser to check out your property.
A lender will more likely waive the appraisal if you’ve closed your home recently, because you’ll already have a recent appraisal on file, or if you made a large down payment which generated a lot of equity upfront.
Your lender may not agree to waive your appraisal, but it’s worth asking. Be sure to ask before applying for the loan.
Conventional refinance rates
| Loan Type | Current Rate* |
| Conventional 30-year fixed–rate | % (% APR) |
| Conventional 15-year fixed–rate | % (% APR) |
*Rates shown reflect an average interest rate for a “prime” borrower. Your own rate will vary. See our full loan assumptions here.
Streamline Refinance FAQ
If you qualify, using the Streamline Refinance is often a very good idea. It lets you refinance into a lower rate and monthly payment with very little effort or time required. And you can do so even if your mortgage is underwater, meaning you owe more than the home is currently worth. Note that you will be required to pay closing costs on a Streamline Refinance.
The main benefits of a Streamline Refinance are that you can lower your mortgage interest rate and monthly payment; there’s no income, credit, or employment verification; no home appraisal is required; and you can use it even if your mortgage is underwater. These benefits of a Streamline Refinance are basically unmatched by any other refinance program.
Yes, the FHA streamline refinance has closing costs just like any other mortgage. FHA Streamline closing costs should be about 2 to 5 percent of your loan amount (less the home appraisal fee, which is generally about $500 to $1,000). If your current FHA loan is less than three years old, you can save money by getting a partial refund of the FHA’s upfront mortgage insurance premium.
The rules to qualify for a Streamline Refinance vary depending on whether you have an FHA, VA, or USDA loan. In most cases, the minimum requirements to qualify for a Streamline Refinance are that your loan is the same type as the one you’re refinancing to (e.g. FHA to FHA); you have a proven history of on–time payments; and there’s a measurable benefit (“net tangible benefit”) to refinancing.
In some cases, a Streamline Refinance does not require a credit check. VA, FHA, and USDA will all accept Streamline Refi applications without re–verification of your credit score. In practice, however, many lenders set their own credit minimums. So if your credit score has fallen and your current lender will not approve you for a Streamline Refinance, it’s worth shopping around with other lenders to see if one will approve you.
No, you cannot take cash out with a Streamline Refinance. Homeowners will need a cash–out refinance to borrow cash from their existing home equity. There is one exception: the VA Streamline Refinance, also known as the IRRRL, can cash out up to $6,000 from equity, but only to pay for energy–efficient home improvements.
The FHA Streamline Refinance Loan does not get rid of PMI. Every FHA loan requires mortgage insurance, regardless of whether it’s a purchase or Streamline Refinance. However, you may be eligible for a refund of your upfront mortgage insurance premium (UFMIP). That’s if you use the FHA Streamline Refinance within three years of getting the original loan.
You can use the FHA Streamline more than once as long as it’s been at least 210 days since your last refinance, you’ve made on–time payments, and there’s a benefit to the refinance. You can use the VA Streamline Refi more than once too – again, provided you meet the minimum requirements for on–time payments and net tangible benefit.
A “streamline rate reduction” is the same thing as a Streamline Refinance. Specifically, the VA calls its refinance option the “Interest Rate Reduction Refinance Loan” (IRRRL). But the same could be said for similar offerings from FHA and USDA. All Streamline Refinances allow you to lower your mortgage rate and monthly payment with minimal paperwork and easy qualification standards.
A Streamline Refinance (or streamline mortgage) works differently than other refinancing options. You can only apply for one if you have an FHA, VA, or USDA loan. Also, you do not have to re–verify your income, employment, or home value for a Streamline Refinance – which is the norm with almost all other mortgage programs.
The FHA, USDA, and VA back Streamline Refinance loans because these loans help borrowers, but also because they help lenders and loan programs. Lenders lose money when borrowers default. And when lenders lose money, the FHA, USDA, and VA step up to cover the lenders’ losses. So helping a homeowner into a more stable mortgage helps all parties.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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