Cash Back, Closing Costs and FHA Streamline Loans (2024)

FHA Streamline refinancing helps lower your mortgage payments on your existing FHA loan. Streamline refinancing is one of the simplest loan applications you'll ever fill out once you understand the requirements of the FHA Streamline application process.

  • You must have a current FHA loan with no late payments or delinquency notices for at least 12 months.
  • Your refinancing should be accomplished to get lower mortgage and interest payments.
  • The refinancing process requires verification of employment, but proof of income is not required.
  • To be approved for an FHA Streamline loan, your original mortgage must be at least six months old.


There is no cash-out option with FHA Streamline loans. Some banks may advertise these loans as a way to get money to do home improvements, save for college funds or other personal projects; when you read more closely you will learn these references are about the extra money you have left over because the Streamline loan lowered your monthly bills. There's no lump sum available with a Streamline loan--the FHA's stated purpose for this program is to help homeowners with existing FHA loans lower their monthly payments.


Before you can get lower payments, you need to apply for the FHA-insured Streamline loan, get approved for the loan (with a no-credit check process), then close the deal.

As with your original FHA loan, you are required to pay closing costs. These costs will be explained by your loan officer and included in the terms of your loan. Your closing costs and how they are paid may be affected depending on whether you choose a "no appraisal" streamline loan or opt to have your home re-appraised. No appraisal loans are good for those willing to pay the closing costs up front and out-of-pocket.

You may also choose a "no cost" refinancing loan. What does "no cost" mean? The borrower is charged a higher interest rate to have closing costs included into the mortgage loan.

You can choose to have the closing costs built into your loan, but you must have the property reappraised. You can only roll the closing costs into your new FHA Streamline loan if there's enough equity in the property to cover the additional amount.

FHA Streamline loans can get into lower mortgage payment and better interest rates; your payments will drop and you'll have more money left over to save, pay off bills or invest. If you've been paying on your current FHA mortgage for at least six months, ask your loan officer how an FHA Streamline refinance loan can lower your bills.


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Cash Back, Closing Costs and FHA Streamline Loans (2024)


Do I have to pay closing costs on a FHA streamline refinance? ›

The closing costs for FHA streamline refinancing are usually between 2% and 5% of the loan amount according to the Mortgage Reports website. Learn about FHA closing costs. Take little cash from your home equity. You can't get more than $500 in cash from your home's equity with an FHA streamline refinance.

Can you get cash back at closing on an FHA loan? ›

The FHA's cash-out program allows you to cash out a portion of your equity and loan up to 85% of your home's value. You can receive less or up to $500 cashback when closing either a “no cash-out” refinance or a streamlined refinance.

Is the FHA Streamline program legit? ›

The Bottom Line: Applying For An FHA Streamline Refinance Can Be A Good Idea. If you're in good standing with your current FHA loan, you may qualify for an FHA Streamline to lower your mortgage payment.

What makes an FHA streamline credit qualifying? ›

Borrower must have made all mortgage payments within the month due for the six (6) months prior to case number assignment; AND, Have no more than one (1) 30-day late payment for the previous six (6) months for all mortgages on the subject property.

How much are closing costs on a FHA streamline? ›

FHA Streamline closing costs are typically the same as other mortgages: 2 to 5 percent of the mortgage amount, which would equal $3,000 to $7,500 on a $150,000 loan. The difference is that you don't have to pay for an appraisal on an FHA Streamline, which could save about $500 to $1,000 in closing costs.

Will an FHA loan cover closing costs? ›

Every FHA loan includes closing costs, but they can be reduced. While closing costs are generally considered to be the responsibility of the homebuyer, you may not have to pay for everything yourself. One of the biggest advantages of an FHA loan is the ability to avoid large upfront costs.

Why do buyers ask for money back at closing? ›

The cash back to you helps offset closing costs or gives you extra money in your pocket. But it's important to discuss these specifics with your lender to understand where the cash to close to buyer amount comes from.

What is the FHA 12 month rule? ›

FHA First Mortgage

Borrower must have owned property for 12 months AND if encumbered by a mortgage made payments for the last 12 months within the month due.

What is the FHA cash-out relief program? ›

The FHA cash-out refinance lets you refinance up to 80% of your home's value to leverage your equity. Like other cash-out loans, FHA cash-out refinancing works by taking out a larger loan than what you currently owe on the home. You use this to pay off the existing loan, then pocket the difference as cash at closing.

What is the waiting period for FHA streamline? ›

Six months is the very minimum and that six month wait time generally applies to those who have owned their homes less than one year. Those who have owned their property for a year or more must have made on-time payments for the previous 12 months leading up to the mortgage loan application.

Can you get cash out on FHA streamline? ›

Cash in excess of $500 may not be taken out on mortgages refinanced using the streamline refinance process. Investment Properties are only eligible for FHA insurance if the borrower is a HUD-approved Nonprofit Borrower, or a state and local government agency, or an Instrumentality of Government.

What is the disadvantage of streamline refinance? ›

One of the biggest drawbacks of a streamline refinance are having to pay the mortgage insurance premiums and closing costs. Further, this type of refinancing is only available if you have an FHA loan.

How many times can you do an FHA streamline? ›

How many times can you do an FHA streamline refinance? You may be able to use an FHA streamline more than once if you meet the qualifications and follow the required waiting period from the last closing date of the FHA-insured mortgage being refinanced.

How to calculate FHA Streamline Max loan amount? ›

For owner-occupied Principal Residences the “maximum Base Loan Amount” for Streamline Refinances is the lesser of the outstanding principal balance of the existing Mortgage as of the month prior to mortgage Disbursem*nt; or the original principal balance of the existing Mortgage.

What is a FHA streamline without credit score? ›

A non-credit qualifying FHA streamline loan is one where the borrower doesn't have to submit a brand new application with job and credit verification. The current loan acts as a sort of template for the new application and the entire process is much faster than the original FHA home loan, hence the term "streamline".

Is there a way to avoid closing costs when refinancing? ›

You can choose between two different options with a no-closing-cost refinance: either an increased interest percentage or a higher loan balance. Not every lender offers both types of no-closing-cost refinances, so make sure your lender can offer you the option you want.

How does FHA streamline refinance work? ›

The Streamline Refinance program allows FHA- approved lenders to refinance current FHA-insured loans to a lower interest rate or to a different type of mortgage (fixed- or adjustable-rate mortgage).

Do you have to pay closing costs when you refinance? ›

When you refinance, you are required to pay closing costs like those you paid when you initially purchased your home. The average closing costs on a refinance are approximately $5,000, but the size of your loan and the state and county where you live will play big roles in how much you pay.

Can you include closing costs in a refinance? ›

Yes. Rolling closing costs into your new loan is known as a no-cost refinance and may be a good strategy if your short-term priority is to keep more cash in your pocket. There are two key ways to bake upfront costs into your new loan: The first is by taking lender credits.


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