Does an FHA Streamline Refinance Require an Appraisal or Income Verification?

What Is an FHA Streamline Refinance?

An FHA Streamline Refinance is a refinance option built specifically for homeowners who already have an FHA-insured mortgage. It is designed to lower the interest rate or monthly payment with less documentation than a typical refinance, and it is generally a rate-and-term refinance rather than a way to pull out cash. Because this option only lowers your rate or payment if a better rate is actually available, it tends to make sense mainly for borrowers whose current FHA rate sits meaningfully above prevailing market rates at the time they refinance.

Do You Need a New Appraisal?

Generally, no. Under HUD's FHA program rules, a new home appraisal is typically waived for a Streamline Refinance, with the loan instead based on the existing value already on file. One common exception is when a borrower wants to roll certain closing costs into the new loan balance beyond program limits, which can trigger a lender-required appraisal.

Do You Need Income Verification?

It depends on which streamline path applies:

• Non-credit-qualifying streamline (the more common path): No income, employment, or asset documentation is required. Eligibility is based mainly on having made mortgage payments on time for roughly the past 12 months.
• Credit-qualifying streamline: Required in specific situations, such as adding or removing a borrower from the loan, or when the new payment would increase above a set threshold. This path does require full income and employment verification, much like an ordinary refinance.

What Does It Cost?

FHA loans do not charge a "funding fee." That term applies to VA loans. Instead, FHA loans carry an Upfront Mortgage Insurance Premium (UFMIP), currently around 1.75% of the base loan amount, plus an ongoing annual mortgage insurance premium (MIP). If a Streamline Refinance closes within three years of the original FHA loan's start date, many lenders apply a prorated refund credit toward the new UFMIP. That credit is largest in the first year and shrinks the longer a borrower waits, phasing out completely after 36 months.

It Depends on Your Situation

• If you've paid your current FHA loan on time for about the last 12 months and aren't changing who's on the loan, you'll likely qualify for the non-credit-qualifying path with no appraisal and no income documentation.
• If you want to add or remove a borrower, or the new payment would rise above the allowed threshold, expect the credit-qualifying path, which does require income and employment verification.
• If it's been less than 3 years since your original FHA loan closed, some or most of your original upfront mortgage insurance premium may be credited toward the new loan's UFMIP.
• If it's been more than 3 years, no UFMIP refund credit typically applies.

Related questions

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Sources

• https://entp.hud.gov/sfohlp/f17cnafdhlp.html
• https://www.zeitro.com/faqs/requirements-for-fha-streamline
• https://themortgagereports.com/1604/fha-streamline-refinance-mip-refund
• https://www.lower.com/mortgages/do-you-need-an-appraisal-to-refinance-a-government-backed-loan
• https://www.carringtonwholesale.com/wp-content/uploads/2019/02/CMS-FHA-Streamline-Matrix.pdf
• https://www.rocketmortgage.com/learn/fha-streamline-refinance
• https://hometownlend.com/fha-streamline-refinance-requirements/
• https://shiningstarfunding.com/fha-loan/two-types-of-fha-mortgage-insurance-premiums/refund-of-ufmip-with-refinance/
• https://www.rocketmortgage.com/learn/fha-mip-refund-chart