FHA Rate and Term Refinance
Replace your current first mortgage with a new FHA loan. The loan you pay off does not have to be an FHA loan, and there is no minimum age requirement on the mortgage being replaced.
One Refinance, Two Jobs
Restructure the loan without pulling equity out
- The mortgage being refinanced can be an FHA loan or a conventional loan
- No minimum age is required on the first mortgage being paid off
- Junior liens taken out to buy the home may be paid off with the new loan
- Junior liens seasoned at least twelve months may also be paid off
- A previously modified loan must show at least six payments made under the modified terms
- Cash back to the borrower is capped, so this is not an equity access product
- Financing to 97.75% of value at a 580 credit score or above, and 90% below it*
Cash back to you at closing is capped at $500
Any First Mortgage Qualifies
Junior Liens Can Be Included
Partial Claims Are Handled Separately
Modified Loans Need Seasoning
Occupancy Is Verified
What Gets Paid Off, and What Does Not
The payoff rules are specific, and they are where most of the surprises live.
A rate and term refinance replaces your existing first mortgage with a new FHA-insured first mortgage. The loan being retired does not have to be FHA, and it does not have to have been in place for any particular length of time. That makes this a broader tool than borrowers usually expect.
Two things decide whether a rate and term refinance is the right call. The first is what you are trying to accomplish, because this product restructures debt rather than converting equity into cash. The second is what is sitting behind your first mortgage. Seasoned junior liens and partial claim balances follow different rules, and knowing which one applies before you start saves a great deal of time later.
Junior liens are where the rules tighten. A second mortgage or home equity line can be paid off through the new loan if it was taken out to purchase the home, or if it has been seasoned at least twelve months. Anything more recent than that generally has to stay in place or be paid from your own funds.
Where a Rate and Term Refinance Fits
Six situations where this is usually the product being described.
You Have an FHA Loan Now
Your current loan is FHA and you want to restructure the term or move between a fixed and an adjustable structure without taking equity out.
You Have a Conventional Loan
FHA rate and term is not limited to FHA payoffs. A conventional first mortgage can be replaced with an FHA loan when the FHA file underwrites more favorably for your situation.
You Are Carrying a Seasoned Second
A second lien that has been in place at least twelve months, or that was used to buy the home, can be folded into the new first mortgage.
You Came Out of a Modification
A previously modified loan can be refinanced once at least six payments have been made under the modified terms.
You Want a Different Term
Rate and term refinancing is the mechanism for changing the length of the loan. The new term is set by what you qualify for, not by what is left on the old note.
You Do Not Need Cash
This is the right product when the goal is the structure of the loan itself. Cash back at closing is capped, so equity access belongs in a different conversation.
Hear From Homeowners Like You
Frequently Asked Questions
The questions borrowers actually ask before starting a rate and term refinance.
No. An FHA rate and term refinance can pay off an existing FHA first mortgage or a conventional first mortgage. What matters is that the loan being replaced is a first lien on the property and that you meet FHA credit, income, and occupancy requirements on the new loan.
There is no minimum age requirement on the first mortgage being paid off under the rate and term rules. Seasoning does come into play in two places: a loan that has been modified, and junior liens that were not used to purchase the home.
Sometimes. A junior lien can be included in the payoff if it was taken out to purchase the home, or if it has been seasoned for at least twelve months. A recently opened second lien that was not part of the purchase generally cannot be rolled in.
Not with rate and term proceeds. A partial claim balance cannot be paid off using funds from a rate and term refinance. If you want it cleared at closing, it has to come from your own funds. A partial claim is only payable from loan proceeds on a cash-out refinance.
You can be, but the modified loan has to be seasoned first. At least six payments must have been made under the modified terms before the loan is eligible to be refinanced.
Very little, by design. Cash back to the borrower on an FHA rate and term refinance is capped at $500. If your goal is to access equity, an FHA cash-out refinance is the product to look at instead.
FHA financing is built around owner-occupied housing, and occupancy is verified as part of the file. If the property is not your primary residence, we would look at other programs with you.
Find out what you qualify for
Whether you are replacing an FHA loan or a conventional one, the fastest way to know where you stand is to run the numbers against your actual file. Start a pre-qualification today.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
*Loan amounts, rates, terms, and down payment requirements are subject to credit approval, income and asset verification, and program eligibility. FHA financing is governed by HUD Handbook 4000.1 and is subject to FHA credit, income, occupancy, and property requirements. Cash back to the borrower on a rate and term refinance is capped. Junior lien payoff, partial claim treatment, and modified loan seasoning are determined by the rules in effect at the time of application. This is not a commitment to lend. All loans are subject to credit approval, underwriting, and property qualification. Saxton Mortgage, LLC, NMLS #1717191. Equal Housing Lender.