FHA Streamline Refinance Loans That Lower Your Payment Every Month

What an FHA streamline refinance actually is

If you already have an FHA loan, the FHA streamline refinance is one of the simplest ways to lower your interest rate and your monthly payment without starting over from scratch. The program is built for speed, so it skips a lot of the steps a regular refinance puts you through, and in most cases there is no new home appraisal and no income verification required. You keep your FHA loan, you replace it with a new FHA loan at a better rate, and the paperwork is light compared to what most homeowners expect. At PBT Bancorp we walk you through it from the first phone call to closing, and our goal is for this to be the easiest loan you have ever completed.

One thing to know up front, the FHA streamline is only for homeowners who already have an FHA loan. If you are a Veteran or active-duty service member with an existing VA loan, you would use the VA IRRRL (sometimes known as a VA streamline loan) instead, which works in a similar way but follows VA rules. We handle both, so if you are not sure which one fits your situation, we can sort that out in a few minutes.

Who an FHA streamline refinance helps

This loan tends to help homeowners who took out their FHA mortgage when rates were higher and now want to bring that payment down. If rates have dropped since you bought or last refinanced, even a modest reduction can put real money back in your pocket every month. As a quick example, lowering an FHA rate from 6.5% to 6.0% on a $300,000 balance saves about $100 per month, which adds up to roughly $1,200 a year that can go toward your family’s priorities instead of interest.

It also helps homeowners who are sitting in an adjustable-rate FHA loan and want the predictability of a fixed rate. Switching from an ARM to a fixed-rate loan means your principal and interest payment stays the same for the life of the loan, so you are not left guessing where your payment lands when the rate adjusts. Of course, no refinance is perfect for everyone, so we will always run your actual numbers before recommending it.

What you need to qualify

The requirements on an FHA streamline are lighter than a standard refinance, but there are still a few boxes to check. You need an existing FHA loan that you have held for at least six months, with a solid recent payment history, typically no payments more than 30 days late in the past 12 months. The refinance also has to pass what the FHA calls a net tangible benefit test, which simply means the new loan has to leave you measurably better off, usually through a lower rate or a lower combined principal, interest, and mortgage insurance payment. We check that benefit for you before we ever move forward, so you are not refinancing into something that does not actually help.

Credit is where the lender you choose really matters. Most lenders set a minimum credit score of 580 on these loans, but we have lenders who accept credit scores as low as 500, which means we can often help families that a bigger lender already turned away. The home also needs to be your primary residence, since the FHA streamline is not available for investment properties.

A note on FHA mortgage insurance

FHA loans carry mortgage insurance, and that does not go away just because you refinance. You will still pay an upfront mortgage insurance premium (MIP) and an annual MIP built into your monthly payment, the same way you do now. This is one of the real differences between FHA and VA loans, since VA loans do not require monthly mortgage insurance at all. We bring this up honestly because the goal of the streamline is to lower your overall payment through a better rate, not to pretend the mortgage insurance disappears. In many cases the rate savings more than offset the MIP, and we will show you exactly how the full payment compares before you commit.

How the process works at PBT Bancorp

We have streamlined our side of the process as much as the loan itself. After a short conversation to confirm an FHA streamline is the right move, you complete a simple online application, and we typically only need your current mortgage statement and a copy of your driver’s license to get started. From there we verify your existing FHA loan, confirm the net tangible benefit, and move you toward closing as fast as possible. Many lenders take 30 days or longer to close a refinance, but at PBT Bancorp we are usually able to close in 2 to 3 weeks from start to finish, sometimes faster if your timeline requires it.

As an FDIC member bank with access to over 35 wholesale lenders, we are able to shop your loan and find pricing that a single big lender often cannot match. That combination of bank stability and broker flexibility is a big part of why homeowners come to us, particularly those who were told no somewhere else. Closing costs on a streamline can frequently be rolled into the new loan balance so you have little or nothing out of pocket, though rolling costs in sometimes calls for an appraisal depending on the loan.

Is now a good time to refinance?

If your current FHA rate is higher than what is available today, it is worth a few minutes to find out where you stand, because waiting often just means more months of paying a rate you do not have to. The honest answer is that it depends on the gap between your rate and today’s rate, your remaining balance, and how long you plan to stay in the home, and we will walk through all of that with you rather than push you into a refinance that does not pay off. If the numbers work, an FHA streamline is one of the easiest ways to lower your payment and free up some breathing room in your budget.

Give us a call at 800-697-4371 or complete our online pre-qualification form and we can usually tell you in about 15 minutes whether an FHA streamline makes sense for you. We would love to help you lower that payment and make this the simplest loan you have ever closed.

Still deciding between options? Read our breakdown of FHA streamline vs cash-out refinance to see which one fits your goals.

FHA streamline questions