You can refinance an FHA loan, but the best path depends on what you want the new loan to do.
Some borrowers want a lower rate or monthly payment. Others want to change the loan term, move into a fixed-rate loan, access home equity or find a path out of FHA mortgage insurance.
The main options are an FHA Streamline refinance, an FHA Simple refinance, an FHA cash-out refinance or refinancing from FHA into a conventional loan. Each option has different documentation, appraisal, cash-back and mortgage insurance rules.
| FHA Refinance Basics |
What To Know |
| FHA Streamline refinance |
May help existing FHA borrowers refinance with reduced documentation and often no new appraisal. |
| FHA Simple refinance |
An FHA-to-FHA rate-and-term refinance that generally uses full underwriting and a new appraisal. |
| FHA cash-out refinance |
Lets eligible borrowers access home equity as cash, subject to FHA loan-to-value and other requirements. |
| FHA-to-conventional refinance |
May help qualified borrowers remove FHA mortgage insurance if they have enough equity and meet conventional loan requirements. |
| Key comparison |
Compare the full payment, closing costs, mortgage insurance, loan term and break-even point. |
FHA Refinance Types
The four main refinance paths serve different goals. Start with what you want to accomplish, then compare the option that fits that goal.
| Refinance Type |
Best For |
Appraisal |
Cash Back |
| FHA Streamline refinance |
Lowering the rate or payment with less paperwork. |
Often not required. |
No meaningful cash out. |
| FHA Simple refinance |
Changing the rate or term with full underwriting. |
Usually required. |
No. |
| FHA cash-out refinance |
Accessing home equity as cash. |
Required. |
Yes, if you qualify. |
| FHA-to-conventional refinance |
Potentially removing FHA mortgage insurance. |
Usually required. |
Depends on the refinance structure. |
When An FHA Streamline Refinance May Make Sense
An FHA Streamline refinance is designed for borrowers who already have an FHA-insured mortgage and want a simpler way to improve the loan. It may fit when your goal is to lower the rate, lower the payment or move into a more stable loan structure without starting over with a full appraisal and full underwriting package.
For an FHA Streamline refinance, the mortgage being refinanced must already be FHA-insured, the loan must be current and the refinance must provide a net tangible benefit. Cash back is limited because cash in excess of $500 is not allowed through the Streamline process,
In many cases, you should expect the refinance to require at least 210 days from the closing date of the mortgage being refinanced and at least six monthly payments before the new loan can close. Payment history and lender requirements can also affect eligibility, according to HUD rules.
An FHA Streamline refinance may fit if you want:
- A lower interest rate.
- A lower monthly payment.
- A more stable loan structure.
- A faster FHA-to-FHA refinance path with reduced documentation.
- No meaningful cash out.
This option may not fit if you want to access equity, remove FHA mortgage insurance or rely on a new appraised value to qualify.
When An FHA Simple Refinance May Make Sense
An FHA Simple refinance is a rate-and-term refinance of an existing FHA mortgage. It usually involves a new appraisal, income review, credit review and standard underwriting.
That extra review can make sense if you need the new loan to be based on current income, assets, credit and appraised value. It can also be useful if you want a more traditional FHA refinance instead of the reduced-documentation Streamline path.
This option may be a better fit if:
- You already have an FHA loan.
- You want to change the rate or term without taking cash out.
- You want a new appraisal to reflect the home’s current value.
- Your income, assets or credit profile has improved.
- The lender needs a fully underwritten file.
An FHA Simple refinance is not a cash-out refinance. If your goal is to borrow against equity, you would need to compare cash-out options instead.
When An FHA Cash-Out Refinance May Fit
An FHA cash-out refinance is the FHA refinance option designed to let eligible borrowers access home equity. It replaces the current mortgage with a larger FHA-insured loan and gives you the difference in cash, subject to FHA limits.
FHA cash-out refinance mortgages are generally capped at 80% loan-to-value and combined loan-to-value for case numbers assigned on or after Sept. 1, 2019.
Because the loan balance increases, an FHA cash-out refinance usually works best when you have a clear use for the funds and can comfortably handle the larger long-term loan cost.
This option may make sense when you have a clear use for the cash, such as:
- A major renovation.
- A planned debt payoff strategy.
- A large financial need with a defined repayment plan.
If you want to keep your existing FHA loan and access equity separately, you may also compare a HELOC or home equity loan. Those options are separate from your first mortgage, but they still use your home as collateral.
Can Refinancing Remove FHA Mortgage Insurance?
You usually cannot remove ongoing FHA mortgage insurance premium, or MIP, if you refinance from one FHA loan into another FHA loan.
FHA-to-FHA refinances generally keep FHA mortgage insurance in the transaction. That means borrowers who want to get out of long-term FHA mortgage insurance costs often compare an FHA refinance with a conventional refinance.
A conventional refinance may help remove FHA mortgage insurance if you have enough equity and meet conventional loan requirements. If your loan-to-value ratio is too high, private mortgage insurance may still apply on the new conventional loan.
FHA Refinance vs. Conventional Refinance
An FHA refinance keeps you in the FHA program. A conventional refinance replaces your FHA loan with a conventional mortgage, if you qualify.
| Goal |
FHA Refinance |
Conventional Refinance |
| Lower rate or payment |
May be possible. |
May be possible. |
| Reduce paperwork |
FHA Streamline may help if you qualify. |
Usually full underwriting. |
| Access equity |
FHA cash-out refinance may be available. |
Conventional cash-out refinance may be available. |
| Remove FHA mortgage insurance |
Usually no. |
May be possible if you have enough equity and qualify. |
| Use a new appraisal |
Depends on the FHA refinance type. |
Usually required unless an appraisal waiver applies. |
How To Choose The Right FHA Refinance Option
The easiest way to choose is to start with your goal.
If You Want Less Paperwork
Start by reviewing FHA Streamline refinance eligibility. This option may reduce documentation and often does not require a new appraisal, but you must already have an FHA-insured mortgage and meet Streamline requirements.
If You Want A Full Rate-And-Term Reset
Compare an FHA Simple refinance. This may fit if you want a fully underwritten FHA-to-FHA refinance, need a current appraisal or want the new loan to reflect your current income, assets and credit profile.
If You Want Cash Out
Compare FHA cash-out refinance options and make sure the long-term math works. A cash-out refinance increases your loan balance, so the use of funds and repayment plan should be clear.
If You Want To Remove FHA Mortgage Insurance
Compare FHA-to-FHA options with a conventional refinance. Staying in FHA usually means FHA mortgage insurance remains, while a conventional refinance may create a path out if you qualify.
Costs To Compare Before Refinancing An FHA Loan
Before refinancing, compare the full cost of the new loan against your current loan. Do not focus only on the interest rate.
Review:
- The new interest rate.
- The annual percentage rate, or APR.
- Principal and interest payment.
- Mortgage insurance premium.
- Upfront mortgage insurance premium, if applicable.
- Closing costs.
- New loan term.
- Break-even point.
- Cash to close.
- Whether the new loan restarts your payoff timeline.
A refinance can lower your monthly payment and still cost more over time if it extends the loan term or adds significant upfront costs. Compare both monthly savings and total cost.
The Bottom Line
You can refinance an FHA loan, but there is more than one way to do it.
An FHA Streamline refinance may fit if you already have an FHA loan, meet seasoning and payment history requirements, and want a reduced-documentation FHA-to-FHA refinance. An FHA Simple refinance may fit when a full appraisal and full underwriting provide needed flexibility. An FHA cash-out refinance may fit when you have enough equity and a clear use for the funds.
If the goal is to remove FHA mortgage insurance, compare FHA-to-FHA refinancing with a conventional refinance. The right choice depends on your equity, credit, income, loan terms and long-term cost.
Frequently Asked Questions
Can You Refinance An FHA Loan Into Another FHA Loan?
Yes. FHA Streamline and FHA Simple refinances are both FHA-to-FHA options for borrowers who already have FHA-insured mortgages.
Can You Refinance An FHA Loan Into A Conventional Loan?
Yes. Many borrowers compare this option when they have enough equity and want a chance to remove FHA mortgage insurance. You still need to meet conventional loan requirements.
Can You Refinance An FHA Loan Into A USDA Loan?
Possibly, but USDA loans have their own income, property and geographic eligibility rules. That makes FHA-to-USDA refinancing a narrower path than FHA-to-FHA or FHA-to-conventional refinancing.
How Soon Can You Refinance An FHA Loan?
FHA refinance timing depends on the refinance type and payment history. Streamline, Simple and cash-out refinance rules are not the same, so ask which timing rule applies to the option you are considering.
Does An FHA Refinance Always Require An Appraisal?
No. An FHA Streamline refinance often does not require a new appraisal. FHA Simple and FHA cash-out refinances generally do.
Can You Get Cash Out With An FHA Streamline Refinance?
No meaningful cash out is allowed. Cash in excess of $500 is not allowed through the FHA Streamline process.
Which FHA Refinance Is Best?
The best option depends on your goal. FHA Streamline may fit reduced-documentation refinancing, FHA Simple may fit a fully underwritten rate-and-term refinance and FHA cash-out may fit equity access.
Can Refinancing An FHA Loan Remove Mortgage Insurance?
Usually not if you stay in an FHA loan. A conventional refinance may help remove FHA mortgage insurance if you have enough equity and qualify for the new loan.
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