Net Tangible Benefit
Maximum Mortgage
Current Loan vs New Loan
New Mortgage Insurance
Eligibility
Estimated Cash to Close ,
Does It Pay Back?
Or Leave FHA Entirely
If your mortgage insurance runs for the life of the loan, refinancing into another FHA loan keeps it, a streamline at a lower rate still carries a premium that never cancels. Refinancing into a conventional loan ends it, and at 80% loan-to-value or below there is nothing to replace it with. For a borrower whose home has appreciated, that is usually the real answer. Open this to see it priced.
Compare against a conventional refinance
Next Step
Send this scenario to Taylor.
Taylor will pull your current loan's actual figures, price this against today's market, and tell you which of the three is right, or that none of them is. Sending it does not start an application and is not a credit inquiry.
The Three FHA Refinances, Side by Side
They share a name and almost nothing else. Different eligibility, different maximum mortgage formulas, different paperwork, and one of them is not capped by the county loan limit at all.
| Streamline | Rate & Term | Cash-Out | |
|---|---|---|---|
| Existing loan must be FHA | Yes | No, any loan | No, any loan |
| Appraisal | Not required | Required | Required |
| Income and asset documents | Not required (non-credit-qualifying) | Required | Required |
| Maximum loan-to-value | No LTV test, capped by the existing balance | 97.75%, or 85% under 12 months' occupancy | 80% |
| County FHA loan limit applies | No | Yes | Yes |
| Closing costs can be financed | No | Yes | Yes |
| Cash to the borrower | $500 maximum | $500 maximum | That is the point |
| Net tangible benefit test | Required | Not applicable | Not applicable |
| Seasoning | 6 payments, 6 months, 210 days | None specific | 12 months owned and occupied |
Sources: HUD Handbook 4000.1 §II.A.8; Mortgagee Letter 2019-11 for the 80% cash-out ceiling; the FDIC Affordable Mortgage Lending Guide for the confirmation that streamline refinances are not subject to FHA mortgage limits.
The streamline refinance
The fastest refinance in American mortgage lending, and the narrowest. No appraisal, no income documents, no assets verified, often no new title work. In exchange it can only do one thing: replace an existing FHA loan with a cheaper FHA loan. It cannot take cash out, cannot pay off a second lien, cannot finance closing costs, and cannot be used on a conventional loan.
Maximum base loan amount, without an appraisal, the lesser of:
(a) the outstanding principal balance as of the month before disbursement, plus interest due and the mortgage insurance premium due; or (b) the original principal balance of the existing mortgage, including any financed upfront premium.
That second cap is the one people trip over. It means the new loan can never exceed what you originally borrowed, however much the property is now worth and whatever the county limit says. A borrower who has paid down very little and wants to roll in $6,000 of closing costs will usually find there is no room.
Seasoning. Three separate clocks, all of which must have run: at least six payments made on the loan being refinanced, at least six full months since the first payment was due, and at least 210 days since that loan closed. On a loan that closed in January, the earliest a streamline can close is late the following August.
Payment history. No more than one payment 30 days late in the preceding twelve months, and every payment in the last six months made within the month due.
The net tangible benefit test
Every streamline has to demonstrate that the borrower is materially better off. HUD does not measure this on the interest rate. It measures it on the Combined Rate, the note rate plus the annual mortgage insurance rate, which is why a streamline can fail even though the interest rate falls. If the rate drops 0.375% but the mortgage insurance premium rises from 0.55% to 0.75%, the combined rate has gone up and the loan cannot be made.
| From | To | Requirement |
|---|---|---|
| Fixed rate | Fixed rate | At least 0.50 points below |
| Fixed rate | One-year ARM | At least 2.00 points below |
| Fixed rate | Hybrid ARM | At least 2.00 points below |
| ARM, under 15 months to adjustment | Fixed rate | No more than 2.00 points above |
| ARM, under 15 months to adjustment | One-year ARM | At least 1.00 point below |
| ARM, under 15 months to adjustment | Hybrid ARM | At least 1.00 point below |
| ARM, 15 months or more to adjustment | Fixed rate | No more than 2.00 points above |
| ARM, 15 months or more to adjustment | One-year ARM | At least 2.00 points below |
| ARM, 15 months or more to adjustment | Hybrid ARM | At least 1.00 point below |
The reduction-in-term alternative. A refinance that shortens the term by three years or more passes on a different basis: the combined rate must not rise, and the new combined principal, interest and mortgage insurance payment must not exceed the old one by more than $50. This is how a 30-year loan refinances into a 15-year loan at a higher rate and still qualifies.
Source: HUD Handbook 4000.1 §II.A.8.d.vi. HUD revised the reduction-in-term standard through FHA INFO #21-90, effective for case numbers assigned on or after 24 January 2022, and left the combined-rate thresholds unchanged. The thresholds above are reproduced from lender net-tangible-benefit worksheets that agree with one another cell for cell; the Handbook chapter itself could not be retrieved to quote directly. Your lender runs this test on the actual file and their calculation governs, not this one.
The rate-and-term refinance
The general-purpose refinance into FHA. It can pay off a conventional, VA or USDA loan as well as an existing FHA one, and it can pay off a purchase-money second lien and junior liens more than twelve months old. Full underwriting, full appraisal.
Maximum mortgage, the lowest of: the county FHA loan limit; the applicable percentage of the Adjusted Value; or the existing debt, the unpaid balance, interest due, mortgage insurance due, prepayment penalties, late charges, escrow shortages and borrower-paid closing costs, less any refund of the upfront premium.
The applicable percentage is 97.75% for a principal residence occupied for the previous twelve months, or occupied since acquisition if acquired within twelve months. It falls to 85% for a borrower who has occupied the property for fewer than twelve months before the case number is assigned, and for HUD-approved secondary residences.
The Simple Refinance is the narrower sibling: same 97.75% ceiling and the same appraisal, but it may only refinance an existing FHA-insured first mortgage and its existing-debt calculation excludes purchase-money junior liens. This calculator's rate-and-term mode covers it, the arithmetic is the same for a borrower whose only lien is the FHA first.
The cash-out refinance
The strictest of the three, and the one whose rules changed most recently.
Maximum loan-to-value is 80% of the Adjusted Value. It was 85% until Mortgagee Letter 2019-11 cut it, effective for case numbers assigned on or after 1 September 2019. Any source still saying 85% is describing rules that stopped applying seven years ago.
The borrower must have owned and occupied the property as their principal residence for the twelve months before the case number is assigned, with an exception for inherited property. Every mortgage payment must have been made within the month due for the previous twelve months, or since the mortgage was obtained if that is shorter, and there must be at least six months of payment history on the subject property.
There is no FHA credit score floor specific to cash-out beyond the ordinary 500 and 580 thresholds, and since cash-out stops at 80% loan-to-value, well below the 90% ceiling that applies in the 500–579 band, the general rules never bind. Lenders routinely apply their own higher minimum, commonly 620 or 640. That is an overlay, not a HUD rule.
Adjusted Value
The figure the loan-to-value is measured against on a rate-and-term or cash-out refinance, and it is not always the appraised value.
| Situation | Adjusted Value |
|---|---|
| Owned 12 months or more | The appraised property value |
| Owned under 12 months | The lesser of the appraised value, or the original purchase price plus documented improvements |
| Acquired by gift or inheritance | The appraised property value, regardless of how long it has been held |
Source: FHA Single Family Housing Policy Handbook 4000.1, Glossary.
The upfront premium refund
Refinancing one FHA loan into another entitles you to a partial refund of the upfront premium you paid on the old one, credited against the upfront premium on the new one. It is real money, on a $330,000 loan the upfront premium was $5,775, and a refinance two years in returns around $2,300 of it, and a great many calculators ignore it entirely.
The schedule runs for three years and declines two percentage points a month.
| Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year 1 | 80% | 78% | 76% | 74% | 72% | 70% | 68% | 66% | 64% | 62% | 60% | 58% |
| Year 2 | 56% | 54% | 52% | 50% | 48% | 46% | 44% | 42% | 40% | 38% | 36% | 34% |
| Year 3 | 32% | 30% | 28% | 26% | 24% | 22% | 20% | 18% | 16% | 14% | 12% | 10% |
| Year 4 onward | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
The clock runs from the endorsement date, not the closing date. 24 CFR 203.283(b) directs the Commissioner to set refund percentages “in an equitable manner” but publishes no schedule itself; the operative figures are HUD's. It measures the refund from the year the mortgage “was endorsed for insurance”. Endorsement usually follows closing by a few weeks, so using the closing date understates the refund slightly, worth knowing if you are close to a month boundary or to the three-year cliff.
Source: HUD Handbook 4000.1 Appendix 1.0 (Mortgage Insurance Premiums), which superseded Handbook 4155.2 in September 2015; the schedule itself dates from Mortgagee Letter 2005-03 for mortgages endorsed on or after 8 December 2004; the underlying regulation is 24 CFR 203.283, current as displayed on the eCFR. The refund is credited toward the new upfront premium; it is not paid to you in cash.
Mortgage insurance on the new loan
A refinance uses the same premium table as a purchase, 1.75% upfront, and an annual premium set by the loan term, the base loan amount against the fixed $726,200 threshold, and the loan-to-value. There is no separate refinance table.
| Loan term | Base loan amount | Loan-to-value | Annual MIP | How long |
|---|---|---|---|---|
| More than 15 years | $726,200 or less | 90.00% or less | 0.50% | 11 years |
| $726,200 or less | 90.01% – 95.00% | 0.50% | Loan term | |
| $726,200 or less | Above 95.00% | 0.55% | Loan term | |
| Above $726,200 | 90.00% or less | 0.70% | 11 years | |
| Above $726,200 | 90.01% – 95.00% | 0.70% | Loan term | |
| Above $726,200 | Above 95.00% | 0.75% | Loan term | |
| 15 years or less | $726,200 or less | 90.00% or less | 0.15% | 11 years |
| $726,200 or less | Above 90.00% | 0.40% | Loan term | |
| Above $726,200 | 78.00% or less | 0.15% | 11 years | |
| Above $726,200 | 78.01% – 90.00% | 0.40% | 11 years | |
| Above $726,200 | Above 90.00% | 0.65% | Loan term |
Source: HUD Mortgagee Letter 2023-05, effective for case numbers assigned on or after 20 March 2023, and still the operative table as of September 2026.
The pre-2009 exception, and why it matters more than anything else on this page
A Streamline or Simple Refinance of a mortgage that was endorsed on or before 31 May 2009 keeps the premium structure of that era: an upfront premium of 0.01%, one hundredth of one percent, effectively nothing, and an annual premium of 0.55%.
On a $250,000 loan that is a $25 upfront premium instead of $4,375. If you have an FHA loan from 2009 or earlier and have never refinanced it, this is the single most valuable fact about your mortgage, and it is the reason to check before assuming a streamline is not worth the trouble.
Source: HUD Mortgagee Letter 2023-05, which carries this exception forward alongside the current rates. It applies to Streamline and Simple Refinances of qualifying loans; the letter does not carve out credit-qualifying streamlines.
Which loan-to-value the mortgage insurance duration uses
The 11-year versus life-of-loan rule turns on the loan-to-value at origination of the new loan. On a rate-and-term or cash-out refinance that is measured against the new appraised value. On a streamline without an appraisal there is no new value, so HUD uses the original appraised value of the property from the loan being refinanced.
The consequence is counter-intuitive and catches people out. A borrower whose home has doubled in value still has the mortgage insurance duration on their streamline computed against what the house was worth years ago, so a streamline usually cannot convert a life-of-loan premium into an eleven-year one, no matter how much equity has accumulated. Getting out of a life-of-loan premium generally means an appraisal, and usually means leaving FHA.
How the APR is calculated
The annual percentage rate is the rate that discounts every payment you make back to the amount financed. Counted as prepaid finance charges: origination and discount points, lender fees, prepaid per-diem interest, and the upfront mortgage insurance premium. Excluded, as 12 CFR 1026.4(c)(7) permits when bona fide and reasonable: title examination and insurance, escrow and settlement fees, document preparation, notary, appraisal, credit report, survey, and recording fees and transfer taxes. The monthly premium sits in the payment stream for as long as it runs.
The calculation assumes you keep the loan for its full term, make every scheduled payment and never refinance or prepay. It is built from the fees entered above, not from an actual fee sheet, and it will differ from the APR on your Loan Estimate. Adjustable-rate loans are not modelled here.
Break-even, and the thing break-even hides
Dividing closing costs by the monthly saving gives a break-even in months, and it is the number everyone asks for. It is also incomplete, because it says nothing about the term. Refinancing a loan with 24 years left into a new 30-year loan lowers the payment partly because the rate fell and partly because the debt was stretched over six more years. The break-even looks excellent; the total interest can still go up.
This calculator shows both: the months to recover the costs, and the interest and mortgage insurance still to be paid under each loan. Neither figure includes principal, because repaying what you borrowed is not a cost, it is a transfer from one pocket to another.
Common FHA Refinance Questions
The rules behind the numbers above, in plain language.
What is an FHA streamline refinance?
A refinance of an existing FHA loan into a new FHA loan with no appraisal, no income documentation and no asset verification. It exists to let borrowers take advantage of lower rates quickly and cheaply, and it is deliberately limited: it cannot take cash out beyond $500, cannot finance closing costs, and cannot refinance a loan that is not already FHA-insured.
Because there is no appraisal, the loan is capped by a formula rather than by value, the lesser of your current balance plus interest and mortgage insurance due, or the original principal balance of the loan including any financed upfront premium.
How soon can I refinance an FHA loan?
For a streamline, three clocks all have to run out: at least six payments made on the loan being refinanced, at least six full months since the first payment was due, and at least 210 days since that loan closed. In practice that means about seven months from closing at the earliest.
A rate-and-term refinance has no equivalent seasoning requirement. A cash-out refinance requires that you have owned and occupied the property as your principal residence for the twelve months before the case number is assigned.
What is the net tangible benefit test?
The rule that stops a streamline refinance being done for the lender's benefit rather than the borrower's. HUD measures it on the Combined Rate, the note interest rate plus the annual mortgage insurance rate, not on the interest rate alone.
Refinancing a fixed rate into a fixed rate requires the new combined rate to be at least 0.50 percentage points below the old one. An ARM being refinanced into a fixed rate passes as long as the new combined rate is no more than 2.00 points above the old one, since fixing the rate is itself the benefit. There is also an alternative route: if the term is cut by three years or more, the combined rate does not rise and the payment goes up by no more than $50, the test is satisfied.
Can I get a refund of my FHA upfront mortgage insurance premium?
Partly, if you refinance into another FHA-insured mortgage within three years of your original loan being endorsed. The refund starts at 80% in the first month and falls two percentage points a month, reaching 10% at month 36 and nothing after that. It is credited against the upfront premium on the new loan rather than paid to you in cash.
The clock runs from the endorsement date, not the closing date, endorsement usually follows closing by a few weeks, which occasionally matters if you are near a month boundary or near the three-year cliff. Refinancing into a conventional loan forfeits the refund entirely, which is a real cost to weigh against conventional's other advantages.
How much can I cash out with an FHA refinance?
Up to 80% of the appraised value, less what you owe and less closing costs. FHA reduced the cash-out ceiling from 85% to 80% for case numbers assigned on or after 1 September 2019, so any source still quoting 85% is seven years out of date.
You also need twelve months of ownership and occupancy as your principal residence, a clean twelve-month mortgage payment history, and at least six months of payment history on this property. Cash-out is the strictest of the three FHA refinances.
Does an FHA streamline refinance get rid of mortgage insurance?
No, and this is the most common misunderstanding about it. Every FHA loan carries mortgage insurance, so a streamline replaces one FHA premium with another. It can lower the premium, particularly if your existing loan is at 0.85% and the new one prices at 0.55%, but it cannot remove it.
Worse, if your original loan-to-value was above 90%, the premium runs for the life of the loan, and a streamline generally cannot change that. Without an appraisal HUD measures the new loan-to-value against the original appraised value, so even substantial appreciation does not help. Ending a life-of-loan premium normally means refinancing out of FHA into a conventional loan.
Should I refinance my FHA loan into a conventional loan?
If your FHA mortgage insurance runs for the life of the loan and your home has appreciated enough to put you at or below 80% loan-to-value, very possibly yes. Conventional financing carries no mortgage insurance at all at 80% or below, not a cheaper premium, none, and on a typical loan that is $150 to $300 a month for the remaining life of the mortgage.
The trade is real, though. Leaving FHA means an appraisal, full income and asset documentation, a credit score that qualifies, and forfeiting any remaining upfront premium refund. If the appraisal disappoints or the income no longer documents cleanly, a streamline may be the only refinance available to you. The comparison panel above prices both.
I have an FHA loan from 2009 or earlier. Is that different?
Substantially, and in your favour. A streamline or simple refinance of a mortgage endorsed on or before 31 May 2009 keeps that era's premium structure: an upfront premium of 0.01% instead of 1.75%, and an annual premium of 0.55%. On a $250,000 loan that is a $25 upfront premium rather than $4,375.
If you have held an FHA loan since 2009 without refinancing it, check this before assuming a streamline is not worth doing. It is the single most valuable feature of an old FHA loan and it disappears the moment you refinance into anything else.
Can I roll closing costs into an FHA streamline refinance?
No. The maximum mortgage formula for a streamline without an appraisal has no line for closing costs, it is the lesser of your existing debt or your original principal balance, and neither makes room for fees. Costs are paid at closing, or covered by a lender credit in exchange for a slightly higher rate.
A rate-and-term or cash-out refinance can include borrower-paid closing costs in the existing-debt calculation, so financing them is possible there, subject to the loan-to-value ceiling.
Does the FHA loan limit apply to a refinance?
To a rate-and-term or cash-out refinance, yes, the county FHA limit is one of the figures the maximum mortgage is the lowest of. To a streamline refinance, no. Streamlines are not subject to FHA mortgage limits; the cap is the existing-balance formula instead, which is almost always the binding number anyway.
As with a purchase, the limit is measured against the base loan amount. A financed upfront premium sits on top of it and does not count.
What is the maximum LTV on an FHA rate-and-term refinance?
97.75% of the Adjusted Value for a principal residence you have occupied for the previous twelve months, or occupied since acquisition if you bought it within twelve months. It drops to 85% if you have occupied the property for fewer than twelve months before the case number is assigned, and for HUD-approved secondary residences.
Adjusted Value is the appraised value if you have owned the property twelve months or more. Under twelve months it is the lesser of the appraised value or what you paid plus documented improvements, so a quick refinance after a bargain purchase does not capture the whole gain.
Do I need an appraisal to refinance an FHA loan?
Not for a streamline, that is its defining feature, and even if the lender obtains one anyway it does not change eligibility or the maximum mortgage. A rate-and-term, simple or cash-out refinance all require one.
Skipping the appraisal cuts several hundred dollars and a week or two from the process, but it also means the loan cannot benefit from any increase in your property's value. That is the trade at the centre of choosing between a streamline and everything else.
How is my break-even on a refinance calculated?
Closing costs divided by the monthly saving. Spend $4,500 to save $180 a month and you recover it in 25 months; sell or refinance again before then and the refinance cost you money.
The figure hides something important, though. If you refinance a loan with 24 years left into a new 30-year loan, part of the lower payment is the lower rate and part is simply stretching the debt over six more years. The break-even looks excellent while the total interest goes up. This calculator shows the interest and mortgage insurance still to be paid under each loan alongside the break-even, which is the comparison that actually answers the question.
Can I refinance an FHA loan on a rental property?
Yes, under narrower rules. FHA does refinance investment properties and HUD-approved secondary residences, at lower loan-to-value ceilings than a principal residence, and a streamline on a non-owner-occupied property is restricted to a fixed rate. Cash-out is not available on an investment property.
This calculator prices a principal residence. If the property is not your home, treat the figures as indicative and have the scenario priced properly.
What credit score do I need to refinance an FHA loan?
For a non-credit-qualifying streamline, HUD sets no score requirement at all, there is no credit decision being made, only a payment history check. Lenders generally apply their own minimum anyway, commonly 580 or 620.
For a rate-and-term or cash-out refinance the ordinary FHA rules apply: 580 for maximum financing, 500 with a larger equity position. Since cash-out already stops at 80% loan-to-value, the score bands never actually bind there. Lender overlays of 620 or 640 on cash-out are common and are not HUD requirements.
Taylor Weiner, mortgage loan originator, NMLS #263090 · Lower, LLC, NMLS #1124061 · 5950 Symphony Woods Road, Suite 312, Columbia, MD 21044 · (714) 658-4912 · tweiner@twteam.com · Verify licensing at nmlsconsumeraccess.org. Licensed to originate residential mortgage loans in California.
Not a government agency. The TW Team at Lower is not affiliated with, acting on behalf of, or endorsed by HUD, the FHA, the VA, the USDA, the FHFA, Fannie Mae, Freddie Mac or any other government agency. This page is not a government publication and has not been reviewed or approved by HUD, by the FHA, by the VA, by the USDA or by any other government agency. FHA loans are insured by the Federal Housing Administration and VA loans are guaranteed by the Department of Veterans Affairs; both are originated by approved lenders, not by the agencies themselves.
This calculator is informational only. It is not a Loan Estimate, a rate lock, a pre-qualification, a pre-approval, or a commitment to lend. Every figure on it is an estimate and will differ from your actual loan. Rates and terms are not locked and may change without notice until a lock is confirmed in writing. Refinancing may increase the total cost of your loan over its life, may extend the period over which you repay it, and is not appropriate for every borrower.
The figures for your current loan are the ones you entered, not verified data. Your balance, rate, annual mortgage insurance rate, original loan amount, original property value and endorsement date all drive the results, and several are easy to approximate incorrectly, the endorsement date in particular is not the closing date and is not on most statements. A payoff quote from your servicer and your original closing documents give the accurate figures, and the answers can move materially.
Sources, assumptions and the fine print
The net tangible benefit thresholds are corroborated but not quoted from HUD's own text. The combined-rate table is reproduced from lender worksheets that agree with one another and is consistent with HUD's FHA INFO #21-90, which revised the reduction-in-term standard while leaving those thresholds unchanged; HUD Handbook 4000.1's refinance chapter could not be retrieved directly. Your lender applies this test to the actual file and their determination governs. Treat a result near the threshold as needing a real check rather than as an answer.
Where the figures come from. Mortgage insurance premiums are from HUD Mortgagee Letter 2023-05 and are applied to the base loan amount; HUD calculates the annual premium on the outstanding balance, so the monthly figure changes slightly over the life of the loan. The upfront premium refund schedule is from HUD Handbook 4000.1 Appendix 1.0 chapter 7 under Mortgagee Letter 2005-03, applied from the endorsement date per 24 CFR 203.283(b). Loan limits are the 2026 county-level figures published by HUD for one-unit properties; two- to four-unit limits are higher and are not modelled here. Published limits and formulas do not by themselves establish eligibility, and a lender may apply credit score, seasoning, payment history or property overlays stricter than HUD's rules.
The conventional comparison. It prices both loans at the single interest rate you entered. Real FHA and conventional rates differ, and conventional pricing carries loan-level price adjustments for credit score and loan-to-value that FHA does not, so it shows the structural difference between the two, not a price quote for either. Conventional mortgage insurance in it is estimated from a representative national rate card and is a planning figure, not a quote: every insurer prices through its own risk-based engine, using far more than credit score and loan-to-value.
Structural assumptions this tool makes, which your actual loan may not: your current payment is derived from the original loan amount, rate and term rather than from your note; interest due at payoff is one month's interest and the mortgage insurance due is one month's premium; the annual premium is calculated on the base loan amount and held level; closing costs for title, escrow and recording are a single percentage of the loan; prepaid interest uses a 365-day year; escrow refunds from your current servicer and the new escrow account funded at closing are excluded because they broadly offset and the timing varies; property taxes, insurance and HOA dues are carried across unchanged from what you entered; and the calculation assumes a fixed-rate loan on an owner-occupied one-unit principal residence.
⌂ Equal Housing Opportunity. Lower, LLC is an Equal Housing Lender. We do business in accordance with the Federal Fair Housing Act and the Equal Credit Opportunity Act.
Program figures, loan limits and mortgage insurance rate cards on this page are current as of September 2026. FHA loan limits change annually. Verify before relying on any figure.