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Community Refinance Lenders Recommendations

Interested to see which home refinance lenders are most recommended in your state and area? Thousands of homeowners in your state and area provide their feedback on their refinance lender. See which one could help refinance your FHA more easily.

What Affects Your FHA Rate

Credit Score:

• 740+: Best available FHA rates
• 680-739: Good rates with most lenders
• 620-679: Standard FHA rates
• 580-619: Higher rates but still qualify
• 500-579: Limited lenders, higher rates

Loan-to-Value Ratio:

• 80% LTV or lower: Best rates available
• 80-90% LTV: Standard FHA rates
• 90-97.75% LTV: Slightly higher rates
• Above 97.75%: Maximum FHA allows

Mortgage Insurance Premium (MIP):

• Upfront MIP: 1.75% of loan amount (can be rolled into loan)
• Annual MIP: 0.45% to 1.05% depending on loan amount and LTV
• MIP required for life of loan in most cases

MFP Tip: FHA rates are often competitive vs conventional loans, but factor in the required mortgage insurance when comparing total costs.

What is an FHA 30-Year Refinance?

An FHA 30-year refinance replaces your current mortgage with a new loan insured by the Federal Housing Administration. You get a fixed interest rate for 30 years with more flexible qualification standards than conventional loans.

How It Works

The FHA doesn’t lend money directly. Instead, approved lenders make the loan, and the FHA insures it against default. This insurance lets lenders offer loans to borrowers who might not qualify for conventional financing.

You make the same monthly payment for 360 months, including principal, interest, and mortgage insurance premium (MIP). Your rate is fixed and never changes.

Types of FHA Refinances

FHA Rate-and-Term Refinance: Replace your current loan with a new FHA loan to get better rates or terms. No cash out allowed.

FHA Cash-Out Refinance: Refinance for more than you owe and take the difference in cash. Maximum 80% loan-to-value ratio.

FHA Streamline Refinance: Simplified refinance for existing FHA borrowers with reduced documentation and no appraisal required in many cases.

Main Features of FHA 30-Year Refinances

Lower Credit Score Requirements: Accept scores as low as 500 (though 580+ is more common).

Higher Debt-to-Income Ratios: Allow DTI ratios up to 57% in many cases.

Low Equity Requirements: Refinance with as little as 2.25% equity in some cases.

Fixed Rate Protection: Rate never changes during the 30-year term.

Required Mortgage Insurance: MIP protects lenders but adds to your monthly cost.

Compared to Conventional Refinances

Credit Requirements:

• FHA: Minimum 500-580 credit score
• Conventional: Typically 620+ required

Debt-to-Income Ratios:

• FHA: Up to 57% DTI allowed
• Conventional: Usually 43% maximum

Equity Requirements:

• FHA: As low as 2.25% equity
• Conventional: Typically 20% equity preferred

Mortgage Insurance:

• FHA: MIP required for life of loan (in most cases)
• Conventional: PMI can be removed at 20% equity

Interest Rates:

• FHA: Competitive rates, sometimes slightly higher
• Conventional: Often slightly lower for high-credit borrowers

MFP Tip: FHA refinances work best if you have lower credit scores, high debt-to-income ratios, or limited equity in your home.

Pros and Cons of FHA 30-Year Refinance

Benefits

Accept Lower Credit Scores: Qualify with credit scores as low as 500-580, much lower than conventional loans.

Higher Debt-to-Income Allowed: Accept DTI ratios up to 57%, helping borrowers with higher debt loads.

Low Equity Requirements: Refinance even if you have very little equity built up in your home.

Competitive Interest Rates: Often offer rates close to or equal to conventional loans.

Government Backing: FHA insurance gives lenders confidence to approve riskier borrowers.

Streamline Option: Existing FHA borrowers can often refinance with minimal documentation.

Assumable Loans: Future buyers can take over your FHA loan if rates are favorable.

Cons

Mortgage Insurance Required: MIP adds $100-500+ to your monthly payment and usually can’t be removed.

Loan Limits: FHA loans have maximum amounts that vary by county, limiting options in expensive areas.

Property Requirements: Stricter property condition standards than conventional loans.

Upfront Costs: 1.75% upfront MIP adds to closing costs or loan balance.

Limited Cash-Out: Maximum 80% LTV for cash-out refinances vs. 85-90% for conventional.

Owner-Occupancy Required: Must be your primary residence, not for investment properties.

When to Get an FHA 30-Year Refinance

Your Credit Score is Below 620: FHA loans are often your best option when conventional lenders won’t approve you.

You Have High Debt-to-Income Ratios: When your monthly debts are high relative to income, FHA’s flexible standards help.

You Have Limited Home Equity: Refinance even with very little equity, unlike conventional loans that typically require 20%.

You Currently Have an FHA Loan: The FHA Streamline refinance makes it easy to get better rates with minimal paperwork.

You Need Cash Out but Have Credit Issues: FHA cash-out refinances accept lower credit scores than conventional options.

Rates Have Dropped Significantly: Even with mortgage insurance costs, FHA refinancing can save money if rates have fallen enough.

You Want Payment Stability: Fixed 30-year rates provide predictable payments, especially important for borrowers with tighter budgets.

You’re Switching from an Adjustable Rate: FHA refinances offer fixed-rate stability when your ARM is about to adjust higher.

MFP Tip: Calculate whether the rate savings offset the mortgage insurance costs. FHA refinancing works best when you save at least 0.75-1.00% on your interest rate.

How to Qualify for FHA 30-Year Refinance

Main Qualification Requirements

Credit Score:

• 580+ for maximum financing (up to 97.75% LTV)
• 500-579 requires 10% equity minimum
• Below 500: Very limited options
• Higher scores get better rates

Debt-to-Income Ratio:

• Maximum 57% DTI including new mortgage payment
• 31% maximum for housing payments alone (with exceptions)
• Lower ratios improve approval odds
• Manual underwriting required for high DTI ratios

Equity/Loan-to-Value Requirements:

• Rate-and-term refinance: Up to 97.75% LTV
• Cash-out refinance: Maximum 80% LTV
• Streamline refinance: No LTV limit for existing FHA loans
• Home value determined by FHA appraisal

Employment and Income:

• Two years of steady employment preferred
• Stable or increasing income
• All income sources must be documented
• Self-employed borrowers need tax returns

Property Requirements:

• Must be your primary residence
• Property must meet FHA condition standards
• FHA appraisal required
• No investment properties allowed

Loan Limits:

• Varies by county (check FHA website for your area)
• 2024 base limit: $498,257 in most areas
• High-cost areas: Up to $1,149,825
• Cannot exceed FHA limits for your county

Seasoning Requirements:

• Rate-and-term: 6 months since last refinance
• Cash-out: 12 months since last refinance
• Streamline: 6 monthly payments on existing FHA loan
• Recent late payments can disqualify

Assets and Reserves:

• Money for closing costs
• Reserves recommended but not always required
• Gift funds allowed for closing costs
• Assets must be documented

MFP Tip: Gather two years of tax returns, recent pay stubs, and bank statements before applying. FHA lenders require thorough income documentation.

FHA 30-Year Refinance FAQs

What’s the Difference Between FHA Streamline and Regular FHA Refinance?

FHA Streamline Refinance:

• Only for existing FHA borrowers
• No appraisal required in most cases
• Limited income and credit verification
• Must show net tangible benefit (lower payment or rate)
• Faster processing, usually 2-3 weeks
• No cash out allowed

Regular FHA Refinance:

• Available to anyone who qualifies
• Full appraisal required
• Complete income and credit verification
• Cash out options available
• Standard processing timeline (4-6 weeks)

Can I Remove FHA Mortgage Insurance?

For loans after June 2013, MIP is required for the life of the loan in most cases. You can only remove it by:

• Refinancing to a conventional loan (if you have 20% equity)
• Paying off the loan completely
• If you put down 10% or more originally, MIP drops off after 11 years

This is different from conventional PMI, which can be removed at 20% equity.

How Much Does FHA Mortgage Insurance Cost?

Upfront MIP: 1.75% of loan amount (can be rolled into the loan)

Annual MIP rates for 30-year loans:

• LTV 90% or less: 0.45% to 0.70% annually
• LTV above 90%: 0.70% to 1.05% annually
• Rates depend on loan amount and credit score

Example: On a $300,000 loan with 95% LTV, annual MIP might be 0.85%, costing $212.50 per month.

Can I Do a Cash-Out FHA Refinance?

Yes, but with limitations:

• Maximum 80% loan-to-value ratio
• Credit score requirements may be higher
• Must demonstrate ability to repay larger loan
• 12-month seasoning period from last refinance
• Cash can be used for any purpose

Conventional cash-out refinances typically allow higher LTV ratios (up to 85-90%).

What Credit Score Do I Really Need for FHA Refinance?

While FHA guidelines allow scores as low as 500, most lenders have higher requirements:

• Most lenders: 580+ minimum
• Better rates: 620+ credit score
• Best rates: 740+ credit score
• Some lenders: 600+ for streamline refinances

Shop with multiple FHA lenders, as requirements can vary significantly.

How Long Does FHA Refinancing Take?

FHA Streamline: 2-3 weeks due to reduced documentation

Regular FHA Refinance: 4-6 weeks

• Application and documentation: 1 week
• FHA appraisal: 1-2 weeks
• Underwriting: 2-3 weeks
• Closing preparation: 1 week

FHA appraisals can take longer than conventional appraisals due to stricter property requirements.

MFP Tip: If you currently have an FHA loan, consider the Streamline option first. It’s faster, easier, and often has the same great rates.

More Refinance Resources for Homeowners:

Best Refinance Lenders 

Home Refinance Calculator

FHA – Homeowners Guide

30 Year Fixed Refinance Rates (by State)

15 Year Fixed Refinance Rates (by State)

Loans Comparison Calculator: Heloc, Cash-Out, Home Equity, Renovation.

More Resources for Homeowners.