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Ready to refinance? Mortgage refinancing with an FHA loan can provide a great deal on your next home loan, along with the benefits of a government insured fixed rate mortgage.

Refinance Your Mortgage with an FHA Loan

In recent years, FHA mortgage loan programs took a back seat to private lending programs. With today's economic concerns and wary consumers wanting to reduce potential risks associated with "exotic" mortgage loans, FHA home loan programs offer stable loan terms at competitive mortgage rates. If you're looking for refinance terms with no surprises, an FHA loan is a great choice. Here are the general eligibility requirements for a mortgage insured under FHA's section 203 programs:

  • The home being refinanced is owner occupied.
  • The home being mortgaged consists of one to four residential units. Single family homes, fourplexes, condominiums, and manufactured homes on foundations are examples of eligible homes.
  • Homeowners meet FHA credit requirements. These are generally more lenient than comparable requirements for conventional mortgage financing.
  • Homeowners must have sufficient down payment/home equity. You may qualify for refinancing an amount equal to about 96.5 percent of your home's current value. Part of the FHA mortgage insurance premium is paid up front as part of the mortgage amount; the remainder of the annual premium is pro-rated and added to monthly mortgage payments. Homeowners are required to have at least 3.5% of their home's current value in home equity. If your home is worth $100,000, you could refinance an amount up to $96,500.

Why consider an FHA refinance mortgage?

Benefits of Mortgage Refinancing with FHA

  • Credit issues: FHA makes it easier to refinance if you've had serious credit problems including bankruptcy.
  • Down payment source: FHA is more lenient in considering the source of your down payment. You may use a cash gift from family, employer, or approved charitable organization for your down payment.

FHA Refinancing Provides Homeowner Security

The FHA provides resources for homeowners experiencing financial hardships, or difficulties caused by natural disasters or other circumstances beyond their control. FHA insures your refinance mortgage, and has a stake in assisting homeowners with keeping their homes and making their mortgage payments.

Want to learn more? Contact an FHA approved lender for more information.

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.