HUD Guidelines On FHA Streamline Refinance Mortgages
No Credit Score Requirements On Streamlines
- The new mortgage balance is restricted as follows:
- Principal Mortgage Balance plus Upfront FHA MIP
- Other closing costs such as pre-paid, title charges, transfer stamps, legal fees, homeowners insurance, recording charges, and other costs/fees either needs to be paid by the borrower or credited by the lender via a lender credit
- All closing costs are credited by lender credit by refinance lenders
- Borrowers can normally skip one or two mortgage payments on FHA Streamlines
Borrowers may be entitled to partial refunds on their upfront FHA mortgage insurance premium when they do a streamline refinance.
HUD Guidelines On FHA Streamline And Role Of FHA
The Federal Housing Administration is like a private mortgage insurance company. HUD is the parent of FHA.
Here is the role of FHA:
- FHA’s role is to promote homeownership to hard-working Americans
- FHA is not a lender but a government mortgage insurance agency
- It insures FHA Loans that are originated by private mortgage companies if borrowers default on their FHA insured mortgage loans
- FHA is the most popular mortgage loan program today with low credit and debt to income ratio requirements
- Homebuyers and refinance borrowers do not have to pay outstanding collections and charge off accounts to qualify for FHA Loans
- Homebuyers can qualify for FHA Loans with a 3.5% down payment
Homebuyers with credit scores under 580 and down to a 500 FICO can qualify for an FHA loan with a 10% down payment.
Qualifying For An FHA Loan With Lower Credit Scores
To qualify for a 3.5% down payment FHA mortgage, 580 FICO credit scores are required
- Homebuyers with under 580 FICO need 10% down payment and refinance borrowers need 90% Loan To Value
- HUD allows up to 46.9% front end DTI and 56.9% back end DTI on borrowers with at least 620 credit scores
- Under 620 FICO, the maximum allowable DTI is 43%
- No Waiting Period After Chapter 13 Bankruptcy Discharged Date
- Borrowers can qualify for FHA Loan one year into a Chapter 13 Bankruptcy repayment plan with Trustee Approval
- Two year waiting period after Chapter 7 Bankruptcy discharged date
- Three year waiting period after foreclosure, deed in lieu of foreclosure, and short sale
Non-QM Loans available for borrowers who do not meet the waiting period after bankruptcy and foreclosure:
- No waiting period after bankruptcy and foreclosure with non-QM loans
Qualifying For FHA Streamline Refinance
If you have a current FHA Loan and want to see how much money you can save with an FHA Streamline Refinance, contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us [email protected] Remember that homeowners can skip one to two month’s mortgage payments and save on their monthly mortgage payments with a streamline refinance. Plus, we cover all of the closing costs with a lender credit.