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    How to Refinance Your FHA Mortgage To A Conventional Loan

    Updated: April 28 2026 • 6 min read
    Written by Bennett Leckrone
    Bennett Leckrone

    Written by
    Bennett Leckrone
    Writer / Reviewer / Expert

    Bennett Leckrone is the editorial manager and an analyst for Lower. He specializes in making complicated mortgage topics accessible for consumers. That includes both in-depth product guides and analysis on what economic moves mean for homebuyers and refinancers. He is also a licensed loan officer in Ohio, NMLS ID 2782574. He was previously a business reporter with a focus on higher education and fintech at BestColleges. In that role, he reported on the development of fintech and AI curriculum, as well as the rapidly changing nature of finance education. He also wrote guides to help business students navigate AI and online education. He also reported on state politics at Maryland Matters, with a focus on how policy affected people and businesses. He holds a bachelor of science in journalism degree from Ohio University.
    Our Editorial Standards

    Key Takeaways

    • Refinancing an FHA loan to a conventional loan can remove the mortgage insurance premium (MIP).
    • Conventional loans have private mortgage insurance (PMI) requirements, but unlike FHA MIP, those fall off once you reach sufficient equity.
    • You'll need to meet lender credit score and income requirements to qualify for a conventional refinance.
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    FHA loans come with flexible requirements that can make them easier to qualify for, but that has a caveat: Mortgage insurance premiums.

    Also known as MIP, mortgage insurance premiums last for the life of an FHA loan if you put less than 10% down.

    In a conventional loan, private mortgage insurance (PMI) can be cancelled once you reach sufficient equity. Borrowers can request PMI cancellation when they hit 80% loan-to-value on a conventional loan, and it falls off automatically at 78% of the original home value under the Homeowners Protection Act.

    That means that, if you’ve built up enough equity, refinancing from an FHA to a conventional loan could mean no MIP or PMI requirements if your LTV is above 80%.

    Benefits Of An FHA To Conventional Refinance

    The primary advantage of an FHA to conventional refinance is the ability to eliminate FHA mortgage insurance.

    FHA loans require both an upfront and annual mortgage insurance premium. For borrowers who put down less than 10%, the annual MIP typically remains for the life of the loan.

    Conventional loans use PMI, which can be removed once you reach 20% equity based on your home’s original value and payment schedule.

    Eligibility Requirements For A Conventional Refinance

    Conventional underwriting standards are typically more sensitive to credit, income stability, and debt levels than FHA guidelines.

    Most lenders look for:

    • A minimum 620 credit score for a rate-and-term refinance, also called a no cash-out refinance.

    • Higher minimum scores, often in the mid-600s, for cash-out refinances.

    • A manageable debt-to-income ratio, commonly below 43%, although some approvals may allow higher ratios depending on compensating factors

    • Stable income and full asset documentation

    • A property appraisal to confirm current market value

    • Sufficient equity, especially if your goal is to avoid PMI

    Unlike an FHA Streamline refinance, which may reduce documentation requirements, a conventional refinance almost always requires full income verification and a new appraisal.

    Assessing Home Equity And Loan-To-Value Ratio

    Your loan-to-value ratio, or LTV, measures how much of your home’s value is financed.

    LTV is your current mortgage balanced divided by your appraised Home Value

    To avoid PMI on a conventional refinance, you generally need at least 20% equity, which equals an LTV of 80% or lower.

    For cash-out refinances, many lenders cap the new loan around 80% LTV for primary residences, though exact limits vary by loan type and occupancy.

    You can use our LTV and CLTV calculator to get an idea of your LTV. Keep in mind this calculator is only illustrative, and you’ll need to consult with an expert loan officer to get a  personalized LTV.

    CLTV Borrowing
    Capacity Calculator

    Estimate how much you can borrow against your home based on Combined Loan-to-Value (CLTV) — the ratio of all home-secured debt to your home’s value.

    Estimated Borrowing Capacity

    $0

    What’s driving this estimateLive from your current assumptions
    Use the sliders for quick comparisons or tap the blue value pills to type exact numbers.

    Illustrative estimate only. Actual HELOC and home equity loan limits depend on lender guidelines, credit score, income, property type, and appraisal. This calculator does not constitute a loan offer or commitment to lend.

    How this calculator works

    Move the sliders to test scenarios, or tap any blue value pill to type an exact number. The headline result and supporting detail pills update live as you change inputs.

    Methodology: CLTV = (Mortgage balance + other liens) ÷ Home value. Given your chosen maximum CLTV limit (commonly 80–90%), the calculator finds the maximum total debt allowed, then subtracts what you already owe: Borrowing capacity = (Home value × max CLTV) − existing debt. If existing debt already exceeds the CLTV limit, capacity is $0.

    Worked example: Home value $500,000, mortgage balance $275,000, no other liens, max 80% CLTV: max total debt = $500,000 × 0.80 = $400,000; existing debt = $275,000; borrowing capacity = $400,000 − $275,000 = $125,000.

    Use these estimates to compare options and prepare questions for a lender. Final pricing, eligibility, and approval depend on a full application and lender review.

    Connect with an expert loan officer to explore your options.

     

    Preparing Your Credit, Income, And Financial Documents

    A stronger financial profile can help you secure better pricing and smoother approval. Paying down revolving balance where possible and avoiding opening new credit accounts can help you shore up your financial situation before applying.

    When you do apply, be prepared to provide:

    • Recent pay stubs and W-2 forms

    • Federal tax returns if self-employed

    • Bank and asset statements

    • Homeowners insurance declarations page

    • Government-issued identification

    • HOA documentation if applicable

    Because conventional refinances require full underwriting, documentation is more extensive than FHA Streamline options.

    Choosing The Right Conventional Refinance Option

    There are two primary types of conventional refinances.

    Rate-and-term refinance: This option replaces your current mortgage to lower your interest rate, reduce your monthly payment, or change your loan term. No cash is taken out at closing.

    Cash-out refinance: This option allows you to convert a portion of your home equity into cash. Loan-to-value ratios are typically capped near 80% for primary residences.

    If your loan exceeds the conforming limit for your area, it may be considered a jumbo loan with different qualification standards.

    Feature

    Rate-And-Term Refinance

    Cash-Out Refinance

    Primary Purpose

    Lower rate or adjust term

    Convert equity to cash

    Typical Max LTV

    Program dependent, often above 80%

    Often around 80%

    Typical Minimum Credit

    620+

    Mid-600s often preferred

    Appraisal Required

    Yes

    Yes

    Mortgage Insurance Impact

    Can remove FHA MIP. PMI applies if LTV exceeds 80%

    Same

    Closing The Refinance

    You’ll review and sign final loan disclosures as you close on your refinance. That includes paying closing costs, which often range from 2% to 6% of the loan amount and may include appraisal, title, and escrow fees. Those can often be lumped into the refinance.

    Common closing cost components may include:

    • Origination charges if applicable

    • Appraisal fee

    • Title, escrow, and recording fees

    • Prepaid interest and escrow setup for taxes and insurance

    Your new conventional loan will replace your existing FHA mortgage, and if your LTV is less than 80% on the new loan, you won’t have PMI.

    Even if you’re close to that figure, you won’t have PMI forever: On a conventional loan, you can request PMI cancellation at 80% of your home’s original value, and it typically terminates automatically at 78% under federal law, assuming you are current on payments.

    The Bottom Line

    Refinancing an FHA loan to a conventional loan can eliminate your MIP. While MIP can last for the life of an FHA loan, private mortgage insurance (PMI) in a conventional loan automatically falls off once you reach sufficient equity.

    Lenders generally require a credit score of at least 620 to qualify for a conventional refinance, but exact requirements vary by lender and your unique financial situation. 

    Frequently Asked Questions

    Can I Refinance My FHA Loan To A Conventional Loan?

    Yes. Once you meet a lender’s credit, income, and equity requirements, you can refinance from an FHA loan to a conventional mortgage.

    What Are The Advantages Of Removing FHA Mortgage Insurance?

    Eliminating FHA MIP can lower your monthly payment and reduce your total borrowing cost, especially if you have enough equity to avoid PMI entirely.

    When Is The Best Time To Refinance From FHA To Conventional?

    It may make sense when your credit improves, you reach at least 20% equity, or market interest rates fall enough that your long-term savings exceed closing costs.

    What Credit Score And Financial Criteria Do Conventional Lenders Require?

    Many lenders look for a credit score of at least 620 for a rate-and-term refinance, stable income, and a debt-to-income ratio near or below 43%. Cash-out refinances may require stronger credit and additional equity.

    How Do I Know If Refinancing Will Save Me Money After Closing Costs?

    Divide your total refinance costs by your expected monthly savings to calculate your break-even point. If you expect to remain in the home beyond that point, refinancing may be financially beneficial.

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