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 vs. save?

The cost of and how much you stand to save with an FHA refinance depends on a variety of factors, including current refinance rates and your timeline. 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. Likewise, if you take cash out, you’ll be adding to your balance, which costs more than a lower loan amount.

Will refinancing hurt my credit score?

Refinancing 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.

Should you refinance your FHA loan?

If interest rates are now lower than what you currently pay on your FHA loan, it might be time to consider refinancing. A good gauge is if you can lower your rate by at least half a percentage point. An FHA refinance can also be a good idea if you want to get out of paying mortgage insurance premiums. You can do this by refinancing your FHA loan to a conventional loan. You'll need to meet the requirements for a conventional loan, however. Learn more about the right time to refinance.

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FHA refinance rates

Written by

Andrew Dehan

Edited by

Suzanne De Vita

Edited by

Suzanne De Vita

On Sunday, December 10, 2023, the national average 30-year FHA refinance APR is 7.45%. The average 30-year fixed FHA mortgage APR is 7.37%, according to ... Bankrate's latest survey of the nation's largest mortgage lenders.

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Weekly national mortgage interest rate trends

Current refinance rates

	15 year fixed refinance	6.74%
	30 year fixed refinance	7.54%

FHA refinance rates today

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	6.46%	7.37%
30-Year Fixed Rate	7.45%	7.47%
20-Year Fixed Rate	7.21%	7.23%
15-Year Fixed Rate	6.78%	6.81%
10/1 ARM Rate	7.62%	7.85%
5/1 ARM Rate	6.70%	7.85%
30-Year VA Rate	6.56%	6.68%

Rates as of Sunday, December 10, 2023 at 6:30 AM

Product	Interest Rate	APR
30-Year FHA Rate	6.52%	7.45%
30-Year Fixed Rate	7.57%	7.59%
20-Year Fixed Rate	7.40%	7.42%
15-Year Fixed Rate	6.80%	6.83%
10/1 ARM Rate	7.66%	7.85%
5/1 ARM Rate	6.62%	7.68%
30-Year VA Rate	6.60%	6.80%

Rates as of Sunday, December 10, 2023 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.

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.

Types of FHA refinance loans

There are a few types of ways to refinance an FHA loan:

Rate-and-term or simple FHA refinance: Refinancing an FHA loan to adjust the interest rate and/or term with no cash out
FHA cash-out refinance: Refinancing an FHA loan to adjust the interest rate and/or term with cash out
FHA streamline refinance: Refinancing an FHA loan to adjust the interest rate and/or term without an appraisal, credit check or income verification

Pros and cons of an FHA refinance

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

How to get the best FHA refinance rate

Among many factors, your credit score determines your mortgage rate. 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.

Another factor is your debt-to-income (DTI) ratio. Generally, the lower your DTI, the better your rate.

Whenever you’re looking for a mortgage, shop around and compare multiple offers. 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.

FHA mortgage refinance FAQ

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 and how much you stand to save with an FHA refinance depends on a variety of factors, including current refinance rates and your timeline.

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.

Likewise, if you take cash out, you’ll be adding to your balance, which costs more than a lower loan amount.
Refinancing 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.
If interest rates are now lower than what you currently pay on your FHA loan, it might be time to consider refinancing. A good gauge is if you can lower your rate by at least half a percentage point.

An FHA refinance can also be a good idea if you want to get out of paying mortgage insurance premiums. You can do this by refinancing your FHA loan to a conventional loan. You'll need to meet the requirements for a conventional loan, however.

Learn more about the right time to refinance.