Who is Eligible for FHA Streamline Loan?

If you are currently a homeowner on an FHA loan, it may be advantageous for you to enter into an FHA streamline loan. This streamline loan will assist you in refinancing your current FHA loan into a low fixed-rate loan while incurring minimal underwriting hassle or paperwork. This is where the term “streamline” comes from. It does not, however, come without cost. The cost of refinancing your current FHA loan into a streamline FHA loan varies depending on which of the loans are right for your situation, whether it a streamline loan without appraisal or one that includes appraisal of the property the loan pertains to. 

Requirements for Eligibility

Before you can refinance your current FHA loan into either of the streamline formats, there are a number of requirements you must meet in order to be eligible. Though the requirements of each individual lender vary, there are some basic guidelines you should be aware of before considering your loan refinancing.  

• FHA Approval of Lender – The financial institution you choose to refinance your loan with must be FHA approved in order to handle your refinancing.
• Property Ownership – You must also own the property you are refinancing against for a period of at least 6 months before you are eligible.
• Payment on Existing Loan – In order to qualify for refinancing you must be up to date on all of your current loans, with all of your mortgage payments being made by their due dates for a period of at least 1 year prior to loan application.
• Closing Costs – The closing costs for your FHA streamline loan are to be paid by you at the time of refinancing, unless you have arranged for them to be paid through a “no cost” FHA streamline loan by your creditor. In order to have these “no cost” conditions entered into your refinancing agreement, you must first have attained enough equity in the original property to pay the extra amount of the closing costs.

You should also note that in most cases an FHA loan does not require an appraisal of the original property. However, a “no appraisal” based loan is not allowed to exceed the amount of your current property loan. Loans on multiple family dwellings or “mixed use” (residential properties with attached storefronts, etc.) are not eligible under the FHA program. You are also not eligible for an FHA property loan if you are an investor or property investment company.

Getting Help

If you are interested in an FHA streamline loan, you may wish to consult with an experienced loan modification or foreclosure attorney. Your attorney can help you to negotiate with the bank as well as to evaluate your options so you can best determine how to handle your home loan.