An FHA loan is a mortgage issued by FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, which require a lower minimum down payments and credit scores.

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FHA Loan Refinance Programs in Colorado

You probably know FHA loans as purchase loans. Many people think of them as first-time homebuyer’s loans, but you can refinance your mortgage with the FHA program too.

The FHA offers a few choices, all of which have flexible guidelines like the FHA purchase loan.

FHA Streamline Refinance

The most notable FHA refinance program is the FHA streamline refinance. You must have an FHA loan currently to use this program and you must have closed at least 210 days ago. If you meet these requirements, and you refinance for the rate or term (no cash out), the streamline refinance offers many benefits.

The FHA streamline refinance doesn’t require verification of your income, employment, credit score, or home value. The lender focuses on your FHA loan payment history. If you made your last 12 payments on time and you have a net tangible benefit for refinancing, you are a good candidate.

A net tangible benefit means you benefit from the refinance or it makes sense to refinance. The most common net tangible benefits are:

  • Lower interest rate (lower mortgage payment)
  • Better term (whether a shorter term (30-year to 15-year or adjustable rate loan to fixed-rate loan)
FHA Cash-Out Refinance

If you have an FHA loan but want to tap into your home’s equity with it, the FHA cash-out refinance is an option. Unlike the streamline refinance loan, you must verify your income, employment, credit score, and home value.

Lenders must make sure you can afford the higher loan payment and that you have enough equity in the home. Unlike when you bought the home, FHA lenders require you to have at least 20 percent equity in your home with a cash-out refinance.

For example, if you have an outstanding mortgage of $150,000 and your home is worth $300,000, you may borrow up to $240,000. You’d access $90,000 of your home’s equity, leaving $60,000 of the equity untouched.

I have many years of experience helping borrowers just like you refinance with the FHA loan refinance programs in Colorado. I’d be happy to help you choose the program that’s right for you.

Purchase Qualifier Refinance Rate Checker

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