FHA Streamline Refinance Calculator
Use this calculator to estimate your potential monthly savings and break-even point when refinancing your existing FHA loan with an FHA Streamline Refinance.
Current FHA Loan Details
(e.g., 0.85% for many FHA loans)New FHA Streamline Loan Details
(Typically 0.55% for FHA Streamline) (Typically 1.75% for FHA Streamline) (Costs like title, escrow, etc., not including UFMIP if financed)Refinance Comparison
Current Total Monthly Payment: $0.00
New Loan Amount (incl. Financed UFMIP): $0.00
New Total Monthly Payment: $0.00
Estimated Monthly Savings: $0.00
Estimated Break-Even Point: 0 months
Understanding the FHA Streamline Refinance
An FHA Streamline Refinance is a special type of refinance program offered by the Federal Housing Administration (FHA) designed to make it easier for homeowners with existing FHA mortgages to refinance into a new FHA loan with a lower interest rate or a shorter term. The "streamline" aspect refers to the reduced documentation and underwriting requirements compared to a traditional refinance.
Key Benefits of an FHA Streamline Refinance:
- No Appraisal Required: In most cases, an appraisal is not needed, saving you time and money.
- Less Paperwork: The process typically involves less documentation, making it quicker and simpler.
- Lower Interest Rate: The primary goal is often to secure a lower interest rate, leading to reduced monthly payments.
- Reduced Mortgage Insurance Premium (MIP): For many borrowers, especially those with older FHA loans, a streamline refinance can result in a lower annual MIP rate.
- No Income Verification: Lenders typically do not require income or employment verification.
Eligibility Requirements:
To qualify for an FHA Streamline Refinance, you generally need to meet the following criteria:
- Existing FHA Loan: You must currently have an FHA-insured mortgage.
- On-Time Payments: You must have a good payment history, typically with no more than one 30-day late payment in the last 12 months, and all mortgage payments current at the time of application.
- Net Tangible Benefit: The refinance must provide a "net tangible benefit" to the borrower. This usually means a reduction in the principal and interest payment, a reduction in the loan term, or a move from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. Our calculator focuses on payment reduction.
- Seasoning Period: A certain amount of time must have passed since your current FHA loan was originated (typically at least 210 days and six full monthly payments).
- No Cash-Out: FHA Streamline Refinances do not allow for cash-out. The new loan amount is generally limited to the outstanding principal balance of the existing loan plus the Upfront Mortgage Insurance Premium (UFMIP).
Costs Involved:
While an FHA Streamline Refinance is simpler, it still involves some costs:
- Upfront Mortgage Insurance Premium (UFMIP): A one-time premium, typically 1.75% of the new loan amount, which can be financed into the loan.
- Annual Mortgage Insurance Premium (MIP): An ongoing monthly premium, calculated annually as a percentage of the loan balance. The rate for streamline refinances is often 0.55% for most loan-to-value (LTV) ratios.
- Closing Costs: These include lender fees, title insurance, escrow fees, and other third-party charges. These can sometimes be covered by lender credits or paid out-of-pocket. Our calculator allows you to input out-of-pocket closing costs to determine your break-even point.
How This Calculator Works:
This calculator helps you compare your current FHA loan payment with a potential new FHA Streamline Refinance payment. It takes into account:
- Your current loan balance, interest rate, and annual MIP rate.
- The remaining term of your current loan.
- Proposed new interest rate, new annual MIP rate, and the upfront MIP rate for the streamline.
- The new loan term you anticipate (e.g., 30 years).
- Any additional closing costs you might pay out-of-pocket.
It then calculates your current and new total monthly payments (Principal & Interest + Monthly MIP), the new loan amount including financed UFMIP, your estimated monthly savings, and how long it will take to recoup your out-of-pocket closing costs (your break-even point).
Example Scenario:
Let's say you have an FHA loan with a current balance of $250,000, an interest rate of 4.75%, and an annual MIP rate of 0.85%. You have 28 years remaining on your loan. A lender offers you an FHA Streamline Refinance at 3.50% with the standard 0.55% annual MIP and 1.75% UFMIP, for a new 30-year term. You estimate $1,500 in other out-of-pocket closing costs.
- Current Monthly P&I: ~$1,400
- Current Monthly MIP: ~$177
- Current Total Monthly Payment: ~$1,577
- New Loan Amount (incl. UFMIP): $250,000 + ($250,000 * 0.0175) = $254,375
- New Monthly P&I: ~$1,142 (on $254,375 at 3.50% for 30 years)
- New Monthly MIP: ~$116 (on $254,375 at 0.55%)
- New Total Monthly Payment: ~$1,258
- Monthly Savings: $1,577 – $1,258 = $319
- Break-Even Point: $1,500 / $319 = ~4.7 months
This example demonstrates how a streamline refinance can significantly reduce your monthly housing costs and how quickly you can recoup any upfront expenses.