dcsimg

Free Mortgage Quotes From Lenders

Learning Center

If you want to refinance your mortgage, but don't have enough home equity to qualify, please consider FHA refinance loans. FHA offers less stringent credit requirements and can refinance approximately 97 percent of your home's value.

FHA Refinance Loans Assist Homeowners with Low Home Equity

You're having problems finding refinance loans due to a decrease in your home's value. Whether or not your existing mortgage is insured by FHA, you may qualify for an FHA mortgage refinance. Here are some basic qualifications for FHA refinance loans:

Streamline Refinance (For borrowers with FHA mortgage loans)

  • Mortgage payments must be current.
  • The mortgage must result in lowering monthly principle and interest (P&I) payments.
  • Cash-out refinancing is not permitted under the streamline refinance program.
  • If refinancing for an amount less than or equal to the original mortgage amount, no appraisal is required.
  • It's possible to roll closing costs into your refinance loan amount, or pay a higher interest rate and have your lender pay the closing costs.

Contact your loan servicer or an FHA approved lender to learn more about streamline refinancing.

FHA Refinance Loans for Non-FHA Borrowers

You can also refinance a non-FHA mortgage loan using an FHA mortgage refinance. Here are some reasons to consider doing so:

  • Lenient credit requirements: FHA does review credit reports, but focuses more an borrowers' ability to pay than specific credit scores. FHA also provides alternative methods of assessing credit for borrowers who haven't established credit through traditional channels.
  • Past credit problems: If you've had a bankruptcy (discharged two or more years prior to date you apply for an FHA loan) or a foreclosure (three or more years prior to the date you apply for an FHA loan), you may still qualify for an FHA home loan.
  • Little home equity: FHA can finance up to 96.5% percent of your home' current value plus the up front mortgage insurance premium and closing costs. Conventional lenders typically don't refinance more than 80% of current home value. FHA's high loan-to-value financing may provide an opportunity for refinancing your current primary mortgage and home equity loan and any lines of credit into one mortgage loan.

Check the FHA loan limits in your area and start your FHA refinance today.


Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.