What is an FHA refinance?

An FHA refinance is the process of replacing your current mortgage with a new loan. This might mean swapping an existing FHA loan for another FHA loan or other type of mortgage, or switching a non-FHA loan to an FHA loan. Ideally, the refinance gets you a lower interest rate, shorter loan term or both. You can also refinance to take cash out from your equity.

Who qualifies for an FHA refinance?

FHA refinance loans can be a flexible option for those with poor credit, including borrowers with a FICO score as low as 580. An FHA streamline refinance, specifically, might be an option for a borrower who needs to bypass an appraisal, credit check or income verification.

How much does an FHA refinance cost?

The cost of an FHA refinance depends on a variety of factors, including any lender or third-party fees you'll need to pay, such as loan origination fees or appraisal fees. You'll also have to pay closing costs on your new loan, as well as an upfront mortgage insurance premium unique to FHA loans. Closing costs vary based on factors like your credit score, DTI ratio and interest rate. Generally, refinancing is worth doing if you can get a lower interest rate and plan to stay in your home long enough to recoup the closing costs. At this point, you’ll begin saving money on your mortgage. If you refinance to a shorter loan term along with a lower rate, you’ll save on interest overall, as well. With an FHA refinance, however, the mortgage insurance premiums eat into your savings. It’s important to do the math carefully to determine whether you’d save as much as you’re hoping to.

Will refinancing an FHA loan hurt my credit score?

Refinancing an FHA loan can temporarily hurt your credit score for a few reasons. For one, any credit pull lowers your score a bit. When you shop around for an FHA refinance loan, get rate quotes within a 45-day window to minimize the hit to your score. Secondly, a refinance is a new loan that pays off the old one. That means it’ll go on your credit report and impact the length of your credit history, which factors into your score. If the new loan is bigger because you took cash out, that also increases your debt load and affects your score.

Do FHA loans require mortgage insurance?

All FHA loans, including FHA refinances, require the borrower to pay mortgage insurance premiums. For an FHA simple or streamline refinance, this includes an upfront premium of 1.75 percent of the loan amount plus an annual premium of 0.55 percent. Depending on your loan-to-value (LTV) ratio, you’ll pay this annual premium for the entire loan term or 11 years.

Can you refinance to get rid of FHA mortgage insurance?

FHA loans are a great product for first-time buyers, but the mortgage insurance premium on an FHA loan is steep. For that reason, borrowers often look to refinance out of their FHA loans and into conventional loans. Here’s a complete guide to removing FHA mortgage insurance.

Compare today’s FHA refinance rates

Weekly national mortgage interest rate trends

Current refinance rates

30 year fixed FHA refinance

7.04%

FHA refinance rates today

Rates on FHA loans have moved around a lot in recent years — from less than 3 percent during the pandemic to 8 percent in October 2023. For most of early 2024, FHA mortgage rates have been near 7 percent. The table below brings together a comprehensive national survey of mortgage lenders to help you know what are the most competitive FHA refinance rates. This interest rate table is updated daily to give you the most current rates when choosing an FHA refinance home loan.

Product	Interest Rate	APR
30-Year FHA Rate	7.15%	7.19%
30-Year Fixed Rate	6.92%	6.97%
20-Year Fixed Rate	6.73%	6.79%
15-Year Fixed Rate	6.18%	6.26%
10/1 ARM Rate	6.57%	7.28%
5/1 ARM Rate	6.24%	6.99%
30-Year VA Rate	7.19%	7.23%

Rates as of Thursday, November 21, 2024 at 6:30 AM

Product	Interest Rate	APR
30-Year FHA Rate	7.22%	7.26%
30-Year Fixed Rate	6.93%	6.98%
20-Year Fixed Rate	6.78%	6.83%
15-Year Fixed Rate	6.22%	6.29%
10/1 ARM Rate	6.54%	7.30%
5/1 ARM Rate	6.16%	6.98%
30-Year VA Rate	8.28%	8.30%

Rates as of Thursday, November 21, 2024 at 6:30 AM

Bankrate has been the authority in personal finance since it was founded in 1976 as the “Bank Rate Monitor,” a print publication for the banking industry. Bankrate has been surveying and collecting mortgage rate information from the nation’s largest lenders for more than 30 years. Hundreds of top publications, such as The New York Times, Wall Street Journal, CNBC and others, depend on Bankrate as a trusted source of financial information, so you know you’re getting information you can trust.

Types of FHA refinance loans

There are a few ways to refinance an FHA loan:

Rate-and-term or simple FHA refinance: Refinancing an FHA loan to adjust the interest rate or term or both with no cash out
FHA cash-out refinance: Refinancing an FHA loan to adjust the interest rate or term or both with cash out
FHA streamline refinance: Refinancing an FHA loan to adjust the interest rate or term or both without an appraisal, credit check or income verification
203(k) loan or rehabilitation mortgage: Financing up to $35,000 into your mortgage to repair, upgrade or improve a single-family home

Should you refinance your FHA loan?

A key consideration when deciding whether to refinance a mortgage is when you’ll break even on your costs. The break-even point is calculated by adding up all refinancing closing costs and figuring out how many years it will take you to make up those costs with the savings from your new mortgage payment compared to your previous one. Refinancing makes more sense if you plan to stay in your home longer than the break-even point, otherwise, you could potentially lose money.

Another important factor is how long you plan to stay in your home. Refinancing if you expect to move in a few years doesn’t always make financial sense even if you get a lower interest rate, because you may not have enough time to break even on closing costs. Most experts say you’ll want to be in your house at least two to five years after refinancing, but you should do your own break-even calculation to figure out what makes the most sense for you.

Pros of FHA refinancing

Potential to lower your interest rate and reduce your monthly loan payment
Open to those with credit scores as low as 580
Streamline refinances available with no credit check or income verification
Cash-out refinance can provide you with funds needed for expenses like renovations

Cons of FHA refinancing

Can’t take out more than FHA loan limits
Mortgage insurance requirements
Closing costs

Lender compare

Compare mortgage lenders side by side

Mortgage rates and fees can vary widely across lenders. To help you find the right one for your needs, use this tool to compare lenders based on a variety of factors. Bankrate has reviewed and partners with these lenders, and the two lenders shown first have the highest combined Bankrate Score and customer ratings. You can use the drop downs to explore beyond these lenders and find the best option for you.

Lender

Garden State Home Loans

NMLS: 409701

|

3.6

Bankrate Score

Bankrate scores are objectively determined by our editorial team. Our scoring formula weighs several factors consumers should consider when choosing financial products and services.

Bankrate's take

Garden State Home Loans doesn’t solely work with borrowers in New Jersey; it also lends in a handful of other states, including Florida, New York, Pennsylvania and Texas. While that limits who can work with this lender, if you’re in one of its operating states, Garden State can be a smart choice if you’re looking for dedicated service — including a loan officer available nights and weekends — and swift closings.

Loans offered

Conventional, jumbo, FHA, VA, USDA, refinancing and more

Min. credit score required

Nationwide availability

Connecticut, Delaware, Florida, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee, Texas and Virginia

Min. down payment

3% for conventional loans, 3.5% for FHA loans, none for VA loans or USDA loans

Recent Customer Reviews

Star ranking and total number reflects the lifetime customer reviews received while this lender has been an advertiser on Bankrate. To help serve you with relevant information, the customer reviews shown are limited to only those that this advertiser has received during the past 12 months.

5.0

565 reviews

Read full lender review

Lender

Homefinity

NMLS: 2289

|

State License: 4965

4.5

Bankrate Score

Bankrate scores are objectively determined by our editorial team. Our scoring formula weighs several factors consumers should consider when choosing financial products and services.

Bankrate's take

Homefinity is an imprint of Fairway Independent Mortgage, one of the top five mortgage lenders in the U.S. It offers many of the perks of an online lender, including up-to-the-minute rates and calculators to help you estimate your homebuying budget, refinance savings and more. If you’re looking for a lender with a fast, convenient process, Homefinity could be a good choice for you. Also, if you’re a medical professional, Homefinity can help you get financing for your unique financial situation.

Loans offered

Conventional, FHA, VA, refinancing and more

Min. credit score required

Nationwide availability

All U.S. states except New York

Min. down payment

3% for conventional loans, 3.5% for FHA loans, none for VA loans or USDA loans

Recent Customer Reviews

Star ranking and total number reflects the lifetime customer reviews received while this lender has been an advertiser on Bankrate. To help serve you with relevant information, the customer reviews shown are limited to only those that this advertiser has received during the past 12 months.

4.9

1064 reviews

Read full lender review

How to get the best FHA refinance rate

Work on your credit score. For the most competitive FHA refinance rate, you’ll need good to excellent credit, though you can still qualify with a score as low as 580.
Improve your debt-to-income (DTI) ratio. Generally, the lower your DTI ratio, the better your rate.
Shop around and compare multiple offers. This step can save you thousands of dollars over the life of the loan. Consider the interest rate as well as the annual percentage rate (APR). The latter accounts for the lender’s fees. When you’re refinancing, lower fees help you break-even sooner.

Learn more: How to get the best refinance rate

FHA mortgage refinance FAQ

An FHA refinance is the process of replacing your current mortgage with a new loan. This might mean swapping an existing FHA loan for another FHA loan or other type of mortgage, or switching a non-FHA loan to an FHA loan. Ideally, the refinance gets you a lower interest rate, shorter loan term or both. You can also refinance to take cash out from your equity.
FHA refinance loans can be a flexible option for those with poor credit, including borrowers with a FICO score as low as 580. An FHA streamline refinance, specifically, might be an option for a borrower who needs to bypass an appraisal, credit check or income verification.
The cost of an FHA refinance depends on a variety of factors, including any lender or third-party fees you'll need to pay, such as loan origination fees or appraisal fees. You'll also have to pay closing costs on your new loan, as well as an upfront mortgage insurance premium unique to FHA loans. Closing costs vary based on factors like your credit score, DTI ratio and interest rate.

Generally, refinancing is worth doing if you can get a lower interest rate and plan to stay in your home long enough to recoup the closing costs. At this point, you’ll begin saving money on your mortgage. If you refinance to a shorter loan term along with a lower rate, you’ll save on interest overall, as well.

With an FHA refinance, however, the mortgage insurance premiums eat into your savings. It’s important to do the math carefully to determine whether you’d save as much as you’re hoping to.
Refinancing an FHA loan can temporarily hurt your credit score for a few reasons. For one, any credit pull lowers your score a bit. When you shop around for an FHA refinance loan, get rate quotes within a 45-day window to minimize the hit to your score. Secondly, a refinance is a new loan that pays off the old one. That means it’ll go on your credit report and impact the length of your credit history, which factors into your score. If the new loan is bigger because you took cash out, that also increases your debt load and affects your score.
All FHA loans, including FHA refinances, require the borrower to pay mortgage insurance premiums. For an FHA simple or streamline refinance, this includes an upfront premium of 1.75 percent of the loan amount plus an annual premium of 0.55 percent. Depending on your loan-to-value (LTV) ratio, you’ll pay this annual premium for the entire loan term or 11 years.
FHA loans are a great product for first-time buyers, but the mortgage insurance premium on an FHA loan is steep. For that reason, borrowers often look to refinance out of their FHA loans and into conventional loans. Here’s a complete guide to removing FHA mortgage insurance.

Additional FHA resources

Meet our Bankrate experts

Written by: Jeff Ostrowski, Principal Reporter, Mortgages

I cover mortgages and the housing market. Before joining Bankrate in 2020, I spent more than 20 years writing about real estate and the economy for the Palm Beach Post and the South Florida Business Journal. I’ve had a front-row seat for two housing booms and a housing bust. I’ve twice won gold awards from the National Association of Real Estate Editors, and since 2017 I’ve served on the nonprofit’s board of directors.

FHA refinance rates