What credit score do you need for a FHA streamline?
However, if you don't have at least 20% equity and a minimum 620 credit score, or you can't qualify based on your income, an FHA streamline refinance is a solid choice.
Minimum credit score
The FHA does not require a credit report as part of the streamline refinance loan application. Most lenders will require one, though. A standard minimum credit score for the FHA streamline refinance program is 640. However, some lenders may allow a score between 600-620.
You must have made at least six payments on your FHA mortgage. At least 6 full months must have passed since the first payment was due on the mortgage. At least 210 days must have passed from the closing date of the mortgage you'd like to refinance.
To qualify for an FHA-insured loan, you need a minimum credit score of 580 for a loan with a 3.5% down payment, and a minimum score of 500 with 10% down. However, many FHA lenders require credit scores of at least 620.
You can qualify for an FHA loan with a FICO® Score as low as 500, but your score will affect your minimum down payment. If your credit score is between 500 and 579, you're required to put 10% down. FHA home loans require a down payment of 3.5% of the purchase price for home buyers with a credit score of 580 or above.
| Credit score range | Average APR | Average loan amount |
|---|---|---|
| 640-659 | 44.50% | $10,010.65 |
| 620-639 | 62.90% | $6,881.93 |
| 580-619 | 89.86% | $4,811.89 |
| 560-579 | 125.18% | $3,147.46 |
4. YOUR CURRENT MORTGAGE WAITING PERIOD MUST BE OVER. At least 210 days need to have passed since your original FHA mortgage was closed, and you'll also need to have made at least six payments, before you can move ahead with a streamline refinance.
- Only FHA borrowers are eligible. ...
- You have to pay MIP. ...
- There's a limit on how much cash you can take out. ...
- If you're struggling to make payments, you may not qualify.
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.
Benefits of a FHA Streamline Refinance
Not only does this save you the cost and hassle of getting an appraisal and worrying about whether it will be high enough, it also allows eligibility even if your loan is currently under water (i.e. your loan payoff amount is higher than your home's market value).
What will disqualify you from an FHA loan?
The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.
Technically, you can get approved for an FHA loan with a median FICO® Score of as low as 500, but an FHA loan with a score that low has some serious drawbacks. The first drawback is that you'll need a down payment of at least 10%. Secondly, when qualifying with a score that low, it's considered a subprime loan.
In case of a $300,000 home, that translates to a down payment of $9,000, which is the lowest possible unless you qualify for a zero-down-payment VA or USDA loan. A 620 credit score is typically required, but lenders might have different rules.
Government-backed loan options, such as FHA, USDA and VA loans, are typically the easiest type of mortgage to get because they may have lower down payment and credit score requirements compared to conventional mortgage loans.
While there aren't any income requirements, and a low minimum down payment is allowed, FHA loans do indeed have loan limit. These are subject to change each year.
The FHA usually requires two lines of credit for qualifying applicants. If you don't have a sufficient credit history, you can try to qualify through a substitute form.
For instance, going from a poor credit score of around 500 to a fair credit score (in the 580-669 range) takes around 12 to 18 months of responsible credit use. Once you've made it to the good credit zone (670-739), don't expect your credit to continue rising as steadily.
The easiest types of loans to get approved for don't require a credit check and include payday loans, car title loans and pawnshop loans — but they're also highly predatory in nature due to outrageously high interest rates and fees.
If you make $70K a year, you can likely afford a home between $290,000 and $310,000*. Depending on your personal finances, that's a monthly house payment between $2,000 and $2,500. Keep in mind that figure will include your monthly mortgage payment, taxes, and insurance.
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.
How much are closing costs on a FHA refinance?
How Much Should I Expect To Pay? In general, the rule of thumb is that closing costs amount to between 3% – 6% of the home's purchase price. The upfront MIP payment of 1.75% of the purchase price often makes FHA loans slightly more expensive upfront.
Credit qualifying procedures must be fol- lowed in cases where the refinance removes a borrower. In both cases, the lender must verify that the mortgage payment history meets FHA guidelines. Lenders may also impose overlays and require some form of credit and/or income review beyond those required by FHA.
The FHA's three requirements are that a property must be safe, secure, and structurally sound to qualify for one of their loans. Properties cannot have adverse conditions that might imperil the homeowner, and must meet proper building codes. As a buyer, these standards protect you from buying an unsafe property.
The overall structure of the property must be in good enough condition to keep its occupants safe. This means severe structural damage, leakage, dampness, decay or termite damage can cause the property to fail inspection. In such a case, repairs must be made in order for the FHA loan to move forward.
Some reasons a seller might refuse an FHA loan include misconceptions about longer closing times, stricter property requirements, or the belief that FHA borrowers are riskier.
