This blog will cover HUD FHA streamline mortgage refinance guidelines on FHA loans. At Gustan Cho Associates, we specialize in FHA mortgages, including HUD FHA streamline mortgage refinance loans. While it is true the refinance boom is officially over that began in 2008, we are still completing many FHA streamline mortgage refinance loans.
HUD FHA streamline mortgage loans is a great program for borrowers in an FHA loan to take advantage of lower interest rates. There are very specific guidelines put in place by HUD to complete an FHA streamline. In this blog, we will discuss the qualifications for an FHA streamline, and the FHA streamline refinance mortgage process.
How Does HUD FHA Streamline Mortgage Process Work
In short, under HUD FHA Streamline Mortgage, a borrower can refinance their current FHA loan at a lower interest rate. By doing so, homeowners save money.
One of the best features of the FHA streamline is you do not need an appraisal. A great option if you are underwater on your mortgage. You can even complete an FHA streamline process without a full tri-merge credit report being pulled.
HUD FHA Streamline Mortgage Qualification Requirements
Below are a few basic qualifications:
- The FHA must already insure the mortgage
- The mortgage must be current and not delinquent
- You must pass a net tangible benefit worksheet; the loan must save you money per HUD guidelines
- You may not receive additional cash out over $500
HUD FHA Streamline Mortgage Ads By Lenders
Money lenders advertise FHA streamline mortgage loans as a “no-cost” refinance. This is partly because you do not have to pay for an appraisal to complete an FHA streamline mortgage. They are not telling you that they offer a higher interest rate to cover the closing costs and mortgage fees. You would get an even lower interest rate if you paid these out-of-pocket.
Unlike a rate and term refinance, with an FHA streamline mortgage, you may NOT roll closing costs into the total mortgage amount. Is there a catch? No, not really. It is a win-win for both sides. You save money on your mortgage each month. FHA gets paid with the mortgage insurance premiums from the new mortgage. 
Credit and Income Qualification Requirements
What are the qualifications?
- Technically there is no credit score requirement.
- Although you will receive better terms if you choose to have your credit pulled
- Homeowners must have made at least six payments on their current FHA mortgage before being eligible to complete a HUD FHA streamline mortgage.
- The company must verify that the last 12 payments have been on time if you have been in your mortgage for more than six months.
- The mortgage company can do this through a full “tri-merge” credit report or a “mortgage only” credit report.
- The “mortgage only” credit report pulls your mortgage tradeline along with your credit scores, allowing the lender to verify on-time mortgage payments.
Before you may enter into an FHA streamline, at least 210 days must have elapsed from your closing date. Besides on-time payments, you must pass a net tangible benefit worksheet.
Net Tangible Benefit Requirements on HUD FHA Streamline Mortgage
Net tangible benefit:
- Please reference the image below.
- A typical rule of thumb is you must lower the overall interest rate by at least .5%
- This includes monthly mortgage insurance premiums.
- Older FHA mortgages may no longer carry mortgage insurance, making it tough to qualify for a HUD FHA streamline mortgage refinance
- Lowering the rate by at least .5% is becoming more and more difficult as interest rates are on the rise.
- The majority of FHA borrowers are currently on a fixed-rate mortgage
If you are on an adjustable rate, please contact us directly at 630-659-7644 to go over your net tangible benefit requirements.
The credit of photo: http://www.hud.gov/sites/documents/40001HSGH.PDF
Maximum Loan Amount Per HUD FHA Streamline Mortgage Guidelines
Maximum Loan Amount Calculation. As stated above, you may not receive additional cash during a HUD FHA streamline Mortgage over $500. There is a specific worksheet that the mortgage company must fill out. Below is an example of how this calculation is completed:
The bottom figure, TOTAL New FHA Mortgage, will be the amount you owe on the new loan. It is best to let us complete these calculations for you.
Starting HUD FHA Streamline Mortgage Process With a Lender With No Overlays
How to start the HUD FHA streamline mortgage process? A HUD FHA streamline mortgage refinance is one of the easiest mortgages to close due to the minimum requirements of documentation. What do you need to send to us?
- Current FHA Mortgage Statement
- Mortgage NOTE (in your closing package)
- 60 days bank statements – if you are paying closing costs out of pocket
From that point, we will decide if it’s best to use a “credit qualifying” or “non-credit qualifying” FHA streamline. Many clients come to us to buy a home when their credit scores are not quite where they want them to be. We can still close their mortgage, and we typically complete in FHA streamline six payments down the road.
When Will Credit Scores Improve
Once you have a mortgage reporting on your credit report with on-time payments, your credit score will skyrocket. At that point, you should qualify for a lower interest rate (depending on the market climate). We have many success stories with troubled clients qualifying for FHA mortgages without lender overlays. Please read our consumer reviews! Over 80% of our borrowers at Gustan Cho Associates could not qualify at other mortgage lenders.
The team at Gustan Cho Associates has a national reputation for being able to do mortgage loans other lenders cannot do. Gustan Cho Associates are Mortgage Brokers licensed in 48 states, with over 190 wholesale lending partners. For more information on HUD FHA streamline mortgage refinance or any other mortgage-related questions, please contact Mike Gracz. You can call or text 630-659-7644 or text for a faster response. Or send an email to mgracz@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
December 11, 2022 - 5 min read