| FHA Loan Programs |
What is a FHA streamline
refinance?
refinance?
Streamline refinances are designed to lower the monthly
principal and interest payments on a current FHA-insured
mortgage and must involve no cash back to the borrower,
except for minor adjustments at closing not to exceed $250.
Streamline refinances can be made with or without an
appraisal. On streamline refinances with an appraisal, Form
HUD 92564-VC is required, but the Homebuyer Summary is
not required. FHA does not require repairs to be completed
(except for lead-based paint repairs) on streamline refinances
with appraisals; however, the lender may require completion
of repairs as a condition of the loan.
HUD's Credit Alert Interactive Voice Response System
(CAIVRS) need not be checked, but HUD’s Limited Denial of
Participation (LDP) and General Services Administration (GSA)
exclusion lists are still required checks for all borrowers.
FHA does not require a credit report (except for the credit-
qualifying streamline refinances described below) or a termite
inspection on this type of loan, but the lender may require
either one or both as part of its credit policy.
principal and interest payments on a current FHA-insured
mortgage and must involve no cash back to the borrower,
except for minor adjustments at closing not to exceed $250.
Streamline refinances can be made with or without an
appraisal. On streamline refinances with an appraisal, Form
HUD 92564-VC is required, but the Homebuyer Summary is
not required. FHA does not require repairs to be completed
(except for lead-based paint repairs) on streamline refinances
with appraisals; however, the lender may require completion
of repairs as a condition of the loan.
HUD's Credit Alert Interactive Voice Response System
(CAIVRS) need not be checked, but HUD’s Limited Denial of
Participation (LDP) and General Services Administration (GSA)
exclusion lists are still required checks for all borrowers.
FHA does not require a credit report (except for the credit-
qualifying streamline refinances described below) or a termite
inspection on this type of loan, but the lender may require
either one or both as part of its credit policy.
Lenders may use an abbreviated version of the Uniform Residential Loan Application (URLA) that omits
sections IV, V, VI, and a-k of VIII, provided all other required information is captured. Furthermore, while
the lender must assure itself that it is in compliance with Equal Credit Opportunity Act (ECOA) and all
other regulations, the loan application need not be signed by the borrower(s) until loan closing.
Streamline refinance processing and underwriting instructions are described below. The mortgage
amount limits may never exceed the statutory limits except by the amount of any new upfront MIP. A.
Streamline Refinances WITHOUT an Appraisal. The maximum insurable mortgage is the lower of the two
calculations shown below:
1. Original Loan Amount: The original principal balance on the
mortgage (which will include any upfront mortgage insurance
premium) plus the new upfront premium that will be charged on
the refinance, or
2. Existing Debt: Add the sum of the existing FHA insured first lien,
closing costs, reasonable discount points and the prepaid expenses
necessary to establish the escrow account, and subtract any refund
of upfront mortgage insurance premiums (UFMIP). The existing
first lien may include the interest charged by the servicing lender
when the payoff is not received on the first day of the month as is
typically assessed on FHA mortgages, but may not include
delinquent interest, late charges or escrow shortages.
This mortgage calculation process applies only to owner-occupied
properties. Investment properties, even if originally acquired as
principal residences by the current borrowers, may only be
refinanced for the outstanding principal balance. The term of the
mortgage is the lesser of 30 years or the remaining term of the
mortgage plus 12 years.
Streamline refinances by investors or for secondary residences may only be made without an appraisal
and may be made solely in the business entity's name if previously insured in the business entity's
name. The new security instruments will contain FHA's standard provision permitting acceleration of the
mortgage upon assumption by an investor or as a secondary residence; however, FHA does not
intend to authorize the lender to exercise the acceleration provision if the investor assumptor is found to
be creditworthy.
Although a property purchased as a principal residence, under certain circumstances as described in the
security instruments, may be rented, a streamline refinance without an appraisal does not "convert" the
mortgage to one eligible for assumption by an investor.
B. Streamline Refinance WITH an Appraisal (No Credit Qualifying).
The maximum insurable mortgage is the lower of the appropriate loan-tovalue
ratio applied to the appraiser’s estimate of value or the sum of the
existing indebtedness and related closing costs and prepaid expenses for
the refinance; both are described below.
1. LTV Ratio Applied to Appraised Value: Multiply the appraised
value of the property by the appropriate factor as shown in the
chart below for the property’s value and the State where it the
property is located. (A list of states and their closing costs
averages may be found in Appendix II.)
Maximum Loan-to-Value Percentages States with Average Closings Costs At or Below 2.1 Percent of
Sales Price
• 98.75 percent: For properties with appraised values equal to or less than $50,000.
• 97.65 percent: For properties with appraised values in excess of $50,000 up to $125,000
• 97.15 percent: For properties with appraised values in excess of $125,000. States with Average
Closings Costs Above 2.1 Percent of Sales Price
• 98.75 percent: For properties with appraised values equal to or less than $50,000.
• 97.75 percent: For properties with appraised values in excess of $50,000.
2. Existing Debt: Add the sum of the existing FHA insured first lien, closing costs, reasonable discount
points and the prepaid expenses necessary to establish the escrow account, and subtract any refund of
upfront mortgage insurance premiums (UFMIP) as described below. The existing first lien may include the
interest charged by the servicing lender when the payoff is not received on the first day of the month as is
typically assessed on FHA mortgages, but may not include delinquent interest, late charges or escrow
shortages.
C. "Credit-Qualifying" Streamline Refinances. “Credit-qualifying” streamline refinances contain all the
normal features of a streamline refinance, but provide a level of assurance of continued performance on
the mortgage. The lender must provide evidence that the remaining borrowers have an acceptable credit
history and ability to make payments.
The following must be considered when processing a credit-qualifying transaction:
1. Mortgage Amount. The maximum loan amount is the same as in
A (without appraisal) or B (with appraisal) above, as appropriate.
2. Credit Documentation/Qualifying. The lender must provide a verification of income, a credit report,
compute the debt-to-income ratios and determine that the borrower will continue to make mortgage
payments.
3. Purposes. Credit-qualifying streamline refinances may be used for the following:
D. Additional Information on Streamline Refinances.
1. Appraisal, Termite Inspection, and Credit Report Fees. We do not require an appraisal, termite
inspection, or credit report on streamline refinances (except credit qualifying streamline refinances).
However, the associated fees may be paid by the borrower out-of-pocket (i.e., not financed) if law,
banking regulations, or its secondary market investors require the lender to obtain these services on a
streamline refinance made without a FHA appraisal.
2. Cash-to-Close. Borrowers are not required to provide evidence of cash-to-close.
.
3. Withdrawn Condominium Approvals. If approval of a condominium project has been withdrawn, FHA will
insure only streamline refinances without appraisals for that condominium project.
4. Underwriting. Mortgage credit underwriting is not required except for credit qualifying streamline
refinance. The loan application and form HUD 92900-WS must be submitted; however, the sections
regarding income, assets, and debts and obligations need not be completed (unless the borrowers are
credit qualified).
5. Shortening the Term of Mortgage. A mortgage on a principal residence may be refinanced to a shorter-
term mortgage, provided the new monthly principal and interest payment increases no more than $50.
(The $50 latitude is not available for mortgages on investment properties or secondary residences,
unless the borrower qualifies under the provisions described in paragraphs 1-3 and 1-4.) Since
streamline refinances are designed to reduce the borrower's principal and interest payments on a current
FHA-insured mortgage, that portion of the borrower's payment for escrowed items need not be
considered.
6. Delinquent Mortgages. Delinquent mortgages are not eligible for streamline refinancing until the loan is
brought current. However, if the mortgage is delinquent by no more than two monthly payments, the
refinancing lender may pay the borrower's mortgage to bring the payments current provided no obligation
is placed on the borrower to repay the funds used to bring the mortgage current.
7. "No-Cost" Refinances. “No-cost” refinances, in which the lender charges a premium interest rate to
defray the borrower's closing costs and/or prepaid items, are permitted. The lender may also offer an
interest-free advance of amounts equal to the present escrow balances on the existing mortgage to
establish a new escrow account.
8. Holding Period before Eligibility. A borrower who assumed or took title subject to an FHA-insured
mortgage, without being credit qualified and with the previous mortgagors receiving a release of
liability, must have owned the property for at least six months before being eligible for the streamline
refinance program without credit qualifying. This rule applies to mortgages that do not contain restrictions
limiting the assumption only to creditworthy assumptors. Typically those mortgages were made prior to
December 1989.
9. Adding or Deleting Individuals on Title. Individuals may be added to the title on a streamline refinance
without credit worthiness review and without triggering due-on-sale clauses. Individuals can be deleted
from the title on a streamline refinance only under the circumstances described in paragraph 1-12 C,
above or:
a. When an assumption of a mortgage not containing a dueon-
sale clause occurred more than six months previously
and the assumptor can document that he or she has made
the mortgage payments during this interim period; or
b. Following an assumption of a mortgage in which the
transferability restriction (due-on-sale clause) was not
triggered, such as in a property transfer resulting from a
divorce decree or by devise or descent, and the assumption
or quit-claim of interest occurred more than six months
previously and the remaining owner-occupant can
demonstrate that he or she has made the mortgage
payments during this time.
10. Seven-Unit Exemptions. An eligible investor that has a financial interest in more than seven rental
units, as described in 24 CFR 203.42, may only refinance without appraisals.
11. Subordinate Financing. Subordinate financing may remain in place, regardless of the total
indebtedness against the property on streamline refinances, with or without appraisals. The borrower is
not required to satisfy any outstanding subordinate liens, as long as they will clearly be subordinate to the
new FHA-insured refinance mortgage.
12. Proceeding as if No Appraisal was Completed. If the appraised value is such that the borrower would
be better advised to proceed as if no appraisal had been made, the appraisal may be ignored and not
used. A notation of this decision must be made in the "remarks" section of form HUD-92900-WS.
13. Geographic Areas. Lenders may solicit and process streamline refinances applications from any area
of the country, provided the lender is approved for DE by at least one HOC.
14. ARM to ARM. An ARM may be refinanced to another ARM, provided that an immediate payment
reduction occurs and that the maximum interest rate of the new mortgage does not exceed the
maximum interest rate of the old mortgage being refinanced. these refinances may be transacted with or
without an appraisal.
15. ARM to Fixed Rate. An ARM may be refinanced to a fixed rate mortgage, with or without an appraisal,
provided the interest rate on the new fixed-rate mortgage will be no greater than 2 percentage points
above the current rate of the ARM. In addition, all mortgage payments must have been made within the
month duefor the past 12 months or the period the mortgage has been in force, if shorter. If the new fixed
rate mortgage will be at a rate lower than the existing rate of the ARM thus reducing the homeowner’s
monthly mortgage payment, the “within the month due,” (i.e., not more than 30 days late), rule is not
applicable.
16. Fixed-Rate to ARM. Fixed-rate mortgages may be refinanced to a one-year ARM, with or without an
appraisal, provided the interest rate of the new mortgage is at least 2 percentage points below the
interest rate of the current mortgage. An ARM may be used for refinancing only on principal residences.
17. Graduated Payment Mortgages (GPM) to Fixed-Rate. Section 245 GPMs may be refinanced, with or
without an appraisal, to a fixed-rate mortgage provided the new mortgage payment will not exceed the
current mortgage payment. (If the streamline refinance is completed without an appraisal, the new
mortgage amount may exceed the statutory limit by the accrued negative amortization and the new
UFMIP.)
18. GPM to ARM. A GPM may be refinanced to an ARM, provided the note rate results in a reduction to
the current principal and interest payments. (If the streamline refinance is completed without an appraisal,
the new mortgage amount may exceed the statutory limit by the accrued negative amortization and the
newUFMIP.)
19. Section 203(k) to Section 203(b). Section 203(k) Rehabilitation mortgages may be refinanced into a
Section 203(b) mortgage after all work is complete. The rehabilitation work is considered complete by a
fully executed certificate of completion, the rehabilitation escrow account has been closed with a final
release, and the lender has entered the required close out information into the FHA Connection or its
functional equivalent. The new mortgage will be subject to the appropriate insurance premium applicable
to a new Section 203(b) mortgage.
20. Section 235 to Section 203(b). Lenders may refinance Section 235 mortgages to Section 203(b)
mortgages using the streamline underwriting procedures described in paragraph 1-12. Any overpaid
subsidy that has been paid by the lender to HUD and is part of the borrowers' mortgage account can be
included in the Section 203(b) mortgage amount, provided the mortgage amount does not exceed the
maximum mortgage permitted under paragraphs 1-12 A or 1-12 B as appropriate.
Furthermore, if HUD has a junior lien that was part of the original Section 235 financing, HUD will
subordinate the junior lien to the Section 203(b) mortgage that refinances the Section 235 mortgage.
sections IV, V, VI, and a-k of VIII, provided all other required information is captured. Furthermore, while
the lender must assure itself that it is in compliance with Equal Credit Opportunity Act (ECOA) and all
other regulations, the loan application need not be signed by the borrower(s) until loan closing.
Streamline refinance processing and underwriting instructions are described below. The mortgage
amount limits may never exceed the statutory limits except by the amount of any new upfront MIP. A.
Streamline Refinances WITHOUT an Appraisal. The maximum insurable mortgage is the lower of the two
calculations shown below:
1. Original Loan Amount: The original principal balance on the
mortgage (which will include any upfront mortgage insurance
premium) plus the new upfront premium that will be charged on
the refinance, or
2. Existing Debt: Add the sum of the existing FHA insured first lien,
closing costs, reasonable discount points and the prepaid expenses
necessary to establish the escrow account, and subtract any refund
of upfront mortgage insurance premiums (UFMIP). The existing
first lien may include the interest charged by the servicing lender
when the payoff is not received on the first day of the month as is
typically assessed on FHA mortgages, but may not include
delinquent interest, late charges or escrow shortages.
This mortgage calculation process applies only to owner-occupied
properties. Investment properties, even if originally acquired as
principal residences by the current borrowers, may only be
refinanced for the outstanding principal balance. The term of the
mortgage is the lesser of 30 years or the remaining term of the
mortgage plus 12 years.
Streamline refinances by investors or for secondary residences may only be made without an appraisal
and may be made solely in the business entity's name if previously insured in the business entity's
name. The new security instruments will contain FHA's standard provision permitting acceleration of the
mortgage upon assumption by an investor or as a secondary residence; however, FHA does not
intend to authorize the lender to exercise the acceleration provision if the investor assumptor is found to
be creditworthy.
Although a property purchased as a principal residence, under certain circumstances as described in the
security instruments, may be rented, a streamline refinance without an appraisal does not "convert" the
mortgage to one eligible for assumption by an investor.
B. Streamline Refinance WITH an Appraisal (No Credit Qualifying).
The maximum insurable mortgage is the lower of the appropriate loan-tovalue
ratio applied to the appraiser’s estimate of value or the sum of the
existing indebtedness and related closing costs and prepaid expenses for
the refinance; both are described below.
1. LTV Ratio Applied to Appraised Value: Multiply the appraised
value of the property by the appropriate factor as shown in the
chart below for the property’s value and the State where it the
property is located. (A list of states and their closing costs
averages may be found in Appendix II.)
Maximum Loan-to-Value Percentages States with Average Closings Costs At or Below 2.1 Percent of
Sales Price
• 98.75 percent: For properties with appraised values equal to or less than $50,000.
• 97.65 percent: For properties with appraised values in excess of $50,000 up to $125,000
• 97.15 percent: For properties with appraised values in excess of $125,000. States with Average
Closings Costs Above 2.1 Percent of Sales Price
• 98.75 percent: For properties with appraised values equal to or less than $50,000.
• 97.75 percent: For properties with appraised values in excess of $50,000.
2. Existing Debt: Add the sum of the existing FHA insured first lien, closing costs, reasonable discount
points and the prepaid expenses necessary to establish the escrow account, and subtract any refund of
upfront mortgage insurance premiums (UFMIP) as described below. The existing first lien may include the
interest charged by the servicing lender when the payoff is not received on the first day of the month as is
typically assessed on FHA mortgages, but may not include delinquent interest, late charges or escrow
shortages.
C. "Credit-Qualifying" Streamline Refinances. “Credit-qualifying” streamline refinances contain all the
normal features of a streamline refinance, but provide a level of assurance of continued performance on
the mortgage. The lender must provide evidence that the remaining borrowers have an acceptable credit
history and ability to make payments.
The following must be considered when processing a credit-qualifying transaction:
1. Mortgage Amount. The maximum loan amount is the same as in
A (without appraisal) or B (with appraisal) above, as appropriate.
2. Credit Documentation/Qualifying. The lender must provide a verification of income, a credit report,
compute the debt-to-income ratios and determine that the borrower will continue to make mortgage
payments.
3. Purposes. Credit-qualifying streamline refinances may be used for the following:
- When a change in the mortgage term will result in an increase in the mortgage payment. (This is
only permitted for owner-occupied principal residences, secondary residences meeting the
requirements of paragraph 1-3, and those investment properties purchased by governmental
agencies and eligible nonprofit organizations described in paragraph 1-5.) - When deletion of a borrower or borrowers will trigger the due-on-sale clause.
- Following an assumption of a mortgage that does not contain restrictions (e.g., due-on-sale clause)
limiting assumptions only to creditworthy borrowers and the assumption occurred less than six
months previously. - Following an assumption of a mortgage in which the transferability restriction (i.e., due-on-sale
clause) was not triggered, such as in a property transfer resulting from a divorce decree or by
devise or descent and the assumption occurred less than six months previously.
D. Additional Information on Streamline Refinances.
1. Appraisal, Termite Inspection, and Credit Report Fees. We do not require an appraisal, termite
inspection, or credit report on streamline refinances (except credit qualifying streamline refinances).
However, the associated fees may be paid by the borrower out-of-pocket (i.e., not financed) if law,
banking regulations, or its secondary market investors require the lender to obtain these services on a
streamline refinance made without a FHA appraisal.
2. Cash-to-Close. Borrowers are not required to provide evidence of cash-to-close.
.
3. Withdrawn Condominium Approvals. If approval of a condominium project has been withdrawn, FHA will
insure only streamline refinances without appraisals for that condominium project.
4. Underwriting. Mortgage credit underwriting is not required except for credit qualifying streamline
refinance. The loan application and form HUD 92900-WS must be submitted; however, the sections
regarding income, assets, and debts and obligations need not be completed (unless the borrowers are
credit qualified).
5. Shortening the Term of Mortgage. A mortgage on a principal residence may be refinanced to a shorter-
term mortgage, provided the new monthly principal and interest payment increases no more than $50.
(The $50 latitude is not available for mortgages on investment properties or secondary residences,
unless the borrower qualifies under the provisions described in paragraphs 1-3 and 1-4.) Since
streamline refinances are designed to reduce the borrower's principal and interest payments on a current
FHA-insured mortgage, that portion of the borrower's payment for escrowed items need not be
considered.
6. Delinquent Mortgages. Delinquent mortgages are not eligible for streamline refinancing until the loan is
brought current. However, if the mortgage is delinquent by no more than two monthly payments, the
refinancing lender may pay the borrower's mortgage to bring the payments current provided no obligation
is placed on the borrower to repay the funds used to bring the mortgage current.
7. "No-Cost" Refinances. “No-cost” refinances, in which the lender charges a premium interest rate to
defray the borrower's closing costs and/or prepaid items, are permitted. The lender may also offer an
interest-free advance of amounts equal to the present escrow balances on the existing mortgage to
establish a new escrow account.
8. Holding Period before Eligibility. A borrower who assumed or took title subject to an FHA-insured
mortgage, without being credit qualified and with the previous mortgagors receiving a release of
liability, must have owned the property for at least six months before being eligible for the streamline
refinance program without credit qualifying. This rule applies to mortgages that do not contain restrictions
limiting the assumption only to creditworthy assumptors. Typically those mortgages were made prior to
December 1989.
9. Adding or Deleting Individuals on Title. Individuals may be added to the title on a streamline refinance
without credit worthiness review and without triggering due-on-sale clauses. Individuals can be deleted
from the title on a streamline refinance only under the circumstances described in paragraph 1-12 C,
above or:
a. When an assumption of a mortgage not containing a dueon-
sale clause occurred more than six months previously
and the assumptor can document that he or she has made
the mortgage payments during this interim period; or
b. Following an assumption of a mortgage in which the
transferability restriction (due-on-sale clause) was not
triggered, such as in a property transfer resulting from a
divorce decree or by devise or descent, and the assumption
or quit-claim of interest occurred more than six months
previously and the remaining owner-occupant can
demonstrate that he or she has made the mortgage
payments during this time.
10. Seven-Unit Exemptions. An eligible investor that has a financial interest in more than seven rental
units, as described in 24 CFR 203.42, may only refinance without appraisals.
11. Subordinate Financing. Subordinate financing may remain in place, regardless of the total
indebtedness against the property on streamline refinances, with or without appraisals. The borrower is
not required to satisfy any outstanding subordinate liens, as long as they will clearly be subordinate to the
new FHA-insured refinance mortgage.
12. Proceeding as if No Appraisal was Completed. If the appraised value is such that the borrower would
be better advised to proceed as if no appraisal had been made, the appraisal may be ignored and not
used. A notation of this decision must be made in the "remarks" section of form HUD-92900-WS.
13. Geographic Areas. Lenders may solicit and process streamline refinances applications from any area
of the country, provided the lender is approved for DE by at least one HOC.
14. ARM to ARM. An ARM may be refinanced to another ARM, provided that an immediate payment
reduction occurs and that the maximum interest rate of the new mortgage does not exceed the
maximum interest rate of the old mortgage being refinanced. these refinances may be transacted with or
without an appraisal.
15. ARM to Fixed Rate. An ARM may be refinanced to a fixed rate mortgage, with or without an appraisal,
provided the interest rate on the new fixed-rate mortgage will be no greater than 2 percentage points
above the current rate of the ARM. In addition, all mortgage payments must have been made within the
month duefor the past 12 months or the period the mortgage has been in force, if shorter. If the new fixed
rate mortgage will be at a rate lower than the existing rate of the ARM thus reducing the homeowner’s
monthly mortgage payment, the “within the month due,” (i.e., not more than 30 days late), rule is not
applicable.
16. Fixed-Rate to ARM. Fixed-rate mortgages may be refinanced to a one-year ARM, with or without an
appraisal, provided the interest rate of the new mortgage is at least 2 percentage points below the
interest rate of the current mortgage. An ARM may be used for refinancing only on principal residences.
17. Graduated Payment Mortgages (GPM) to Fixed-Rate. Section 245 GPMs may be refinanced, with or
without an appraisal, to a fixed-rate mortgage provided the new mortgage payment will not exceed the
current mortgage payment. (If the streamline refinance is completed without an appraisal, the new
mortgage amount may exceed the statutory limit by the accrued negative amortization and the new
UFMIP.)
18. GPM to ARM. A GPM may be refinanced to an ARM, provided the note rate results in a reduction to
the current principal and interest payments. (If the streamline refinance is completed without an appraisal,
the new mortgage amount may exceed the statutory limit by the accrued negative amortization and the
newUFMIP.)
19. Section 203(k) to Section 203(b). Section 203(k) Rehabilitation mortgages may be refinanced into a
Section 203(b) mortgage after all work is complete. The rehabilitation work is considered complete by a
fully executed certificate of completion, the rehabilitation escrow account has been closed with a final
release, and the lender has entered the required close out information into the FHA Connection or its
functional equivalent. The new mortgage will be subject to the appropriate insurance premium applicable
to a new Section 203(b) mortgage.
20. Section 235 to Section 203(b). Lenders may refinance Section 235 mortgages to Section 203(b)
mortgages using the streamline underwriting procedures described in paragraph 1-12. Any overpaid
subsidy that has been paid by the lender to HUD and is part of the borrowers' mortgage account can be
included in the Section 203(b) mortgage amount, provided the mortgage amount does not exceed the
maximum mortgage permitted under paragraphs 1-12 A or 1-12 B as appropriate.
Furthermore, if HUD has a junior lien that was part of the original Section 235 financing, HUD will
subordinate the junior lien to the Section 203(b) mortgage that refinances the Section 235 mortgage.
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