HUD Guidelines on FHA Streamline Refinance Mortgages

• No appraisal required
• No income verification is required so debt-to-income ratios do not matter
• No credit requirement nor credit scores
• All that is required is that the borrower be timely on just their current FHA Loan monthly payments for the past 12 months
• Borrowers can have derogatory credit and late payments on all other credit tradelines with the exception of their current FHA home loan
• HUD Guidelines on FHA streamline refinances require very little paperwork

Most banks and lenders have overlays but Gustan Cho Associates specializes in no overlays on government and conventional loans so we just follow HUD Guidelines on FHA streamline.

Qualify For an FHA Streamline Refinance Mortgage

No Credit Score Requirements On Streamlines

Seasoning Requirements Between Refinancing FHA Loans

Mortgage interest rates are determined by credit scores. Homebuyers with 580 credit scores will get higher mortgage rates than borrowers with 700 FICO credit scores. Homebuyers who purchase a home with 580 credit scores will get higher mortgage rates. Once their credit scores improve, they will want to do an FHA Streamline Refinance with a lower credit score. FHA Lenders under FHA Guidelines require that borrowers make six payments from the closing of their home purchase in order to qualify for a Streamline Refinance Mortgage.

Reasons To Refinance With Streamline

Here are the seasoning requirements on streamline refinances

• 1. Six months of payments from the time of their home closing.
  2. 210 days have passed from the borrower’s most recent home closing date.
  3. Timely payments on all of their mortgage payments for the past 12 months. Or six months if it was a recent home purchase.
  4. Borrowers can apply and get approved for a streamline refinance FHA Loan: However, they cannot close the mortgage until after the 210th day.

What Are The Net Tangible Benefit Requirements On HUD Guidelines On FHA Streamline?

• The new mortgage balance is restricted as follows:
• Principal Mortgage Balance plus Upfront FHA MIP
• Other closing costs such as pre-paid, title charges, transfer stamps, legal fees, homeowners insurance, recording charges, and other costs/fees either need to be paid by the borrower or credited by the lender via a lender credit
• All closing costs are credited by lender credit by refinance lenders
• Borrowers can normally skip one or two mortgage payments on FHA Streamlines

Borrowers may be entitled to partial refunds on their upfront FHA mortgage insurance premium when they do a streamline refinance.

HUD Guidelines On FHA Streamline And Role Of FHA

The Federal Housing Administration is like a private mortgage insurance company. HUD is the parent of FHA. Here is the role of FHA:

• FHA’s role is to promote homeownership to hard-working Americans
• FHA is not a lender but a government mortgage insurance agency
• It insures FHA Loans that are originated by private mortgage companies if borrowers default on their FHA-insured mortgage loans
• FHA is the most popular mortgage loan program today with low credit and debt-to-income ratio requirements
• Homebuyers and refinance borrowers do not have to pay outstanding collections and charge off accounts to qualify for FHA Loans
• Homebuyers can qualify for FHA Loans with a 3.5% down payment

Homebuyers with credit scores under 580 and down to a 500 FICO can qualify for an FHA loan with a 10% down payment.

Qualifying For An FHA Loan With Lower Credit Scores

To qualify for a 3.5% down payment FHA mortgage, 580 FICO credit scores are required. Homebuyers with under 580 FICO need a 10% down payment and refinance borrowers need a 90% Loan To Value. HUD allows up to 46.9% front-end DTI and 56.9% back-end DTI on borrowers with at least 620 credit scores. Under 620 FICO, the maximum allowable DTI is 43%. No Waiting Period After Chapter 13 Bankruptcy Discharged Date. Borrowers can qualify for FHA Loan one year into a Chapter 13 Bankruptcy repayment plan with Trustee Approval. The two-year waiting period after Chapter 7 Bankruptcy discharge date. The three-year waiting period after foreclosure, deed in lieu of foreclosure, and short sale

Non-QM Loans are available for borrowers who do not meet the waiting period after bankruptcy and foreclosure. No waiting period after bankruptcy and foreclosure with non-QM loans.