An existing FHA or VA loan can be refinanced through a streamline program with less documentation and no program-required appraisal. This guide covers the FHA Streamline and VA IRRRL requirements, fees, and who each one fits.
How a streamline refinance works
A streamline refinance skips parts of the full refinance process:
- Less documentation: Fewer documents than a full refinance
- No appraisal may be required: The lender may skip the home appraisal
- Faster processing: No appraisal to wait for
- No appraisal fee when no appraisal is ordered
Streamline programs are rate-and-term only: you can lower your rate or change your loan term, and you cannot take cash out.
FHA Streamline Refinance
The FHA Streamline refinances an existing FHA loan.
FHA Streamline requirements
- Current FHA loan: Your existing mortgage must be FHA-insured
- Net tangible benefit: FHA's test is a drop of at least 0.5 points in your combined rate (note rate plus annual MIP) for fixed-to-fixed, with separate rules for ARM-to-fixed and term reductions; a lower payment alone does not qualify
- Payment history: At least 6 monthly payments made, with no late payments in the last 6 months and no more than one late payment in the last 12 months
- Seasoning: At least 210 days since the closing date of the loan being refinanced, six payments made, and six months since the first payment due date
FHA Streamline features
- No income verification on a non-credit-qualifying streamline
- No appraisal required (though your lender may order one)
- No minimum credit score from FHA (though lenders may have their own minimums)
- Lower MIP rates if your original FHA loan was endorsed before June 2009
FHA loans with 20% equity: conventional refinance
An FHA Streamline keeps FHA mortgage insurance, which runs for the life of the loan. If your home has appreciated enough to give you 20% equity, a refinance into a conventional loan removes the mortgage insurance entirely.
VA Interest Rate Reduction Refinance Loan (IRRRL)
The VA IRRRL (the "VA Streamline") refinances an existing VA loan.
VA IRRRL requirements
- Current VA loan: Your existing mortgage must be VA-guaranteed
- Net tangible benefit: At least a 0.5-point rate drop fixed-to-fixed (2 points if moving to an ARM), or a move from ARM to fixed, and closing costs recouped from the payment saving within 36 months
- Payment history: Current on payments with no more than one 30-day late payment in the last 12 months
- Seasoning: Six payments made and 210 days past the first payment due date
VA IRRRL features
- No appraisal required by VA (a lender may order one for its own purposes)
- No income or employment verification
- No minimum credit score from the VA
- Funding fee can be rolled into the loan: The 0.5% funding fee doesn't require cash out of pocket, and it is waived if you are exempt (for example, receiving VA disability compensation)
- Faster than a standard refinance: no appraisal and limited underwriting
VA IRRRL in DC
If you bought near Fort McNair or Joint Base Anacostia-Bolling and rates have dropped since your purchase, the benefit depends on the difference between your rate and current rates and on your balance; run it through the refinance calculator.
FHA Streamline and VA IRRRL compared
| Feature | FHA Streamline | VA IRRRL |
|---|---|---|
| Appraisal needed | Not required by FHA | Not required by VA |
| Income verification | Not on a non-credit-qualifying streamline | No |
| Credit check | Lender may require | Lender may require |
| Cash out available | No | No (up to $6,000 for energy improvements) |
| Funding/MIP fee | Yes: 1.75% UFMIP, partly offset by a refund of your original UFMIP if within 3 years | Yes (0.5%) |
| Timeline | Faster than a full refinance (no appraisal) | Faster than a full refinance (no appraisal) |
Who a streamline refinance fits
Consider a streamline refinance if:
- Current rates are enough below your existing rate to pass the program's net tangible benefit test
- You want a fast process with less documentation
- You don't need cash out: streamline programs are rate-and-term only
- Your home value has decreased: neither program requires an appraisal, so a drop in value does not disqualify you
Steps to start a streamline refinance
- Confirm your current loan type (FHA or VA)
- Check current rates against your existing rate
- Ask your loan officer whether your loan passes the net tangible benefit test
- Provide the documents the streamline requires
- Close on your new loan
See the refinance overview or get pre-qualified: two minutes, no credit pull.