Yes, you can use an FHA loan to refinance your current FHA loan. It’s called an FHA streamline refinance loan. The streamlined process with minimal required documentation from underwriting makes this product extremely attractive.*
An FHA loan can be very affordable. Lower up-front and annual insurance premiums required by the FHA could mean lower payments. And even simply refinancing your current loan may help lower your interest rate and monthly payment.
While there are potential advantages to refinancing with an FHA streamline loan, there are also some disadvantages. Be sure that you're informed before making any financial decision.
*Full documentation/credit qualifying may be required in certain situations when removing existing borrowers.
The interest rate is the cost of borrowing the principle loan amount. It’s determined by current rates and the borrower’s credit profile (including credit score).
There are two different ways to qualify for an FHA streamline refinance loan: credit qualifying and non-credit qualifying. With a credit qualifying loan, a new credit profile will be reviewed. However, non-credit qualifying means that the loan can be processed without a new credit profile and is possible if specific requirements are met.
Only current FHA loans can be refinanced with a streamline loan. All other loan types, including conventional, VA, and USDA, do not qualify.
To qualify for a streamlined refinance loan, you must show that it will be financially beneficial, such as providing a shorter loan term or more favorable interest rate. These financial gains are called net tangible benefits.