An FHA loan is a home mortgage that allows for a purchase or refinance with a low down payment and is insured by the Federal Housing Administration. Some of the benefits include:
- Down payment requirements are low.
- Borrowers can make the down payment with a gift.
- Borrowers can use down payment assistance programs for the down payment.
FHA has permitted streamline refinances on insured mortgages since the early 1980s. “Streamline” refers only to the amount of documentation and underwriting that needs to be performed by the mortgage company and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:
- The mortgage to be refinanced must already be FHA-insured.
- The mortgage to be refinanced should be current (not delinquent).
- The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
- No cash may be taken out on mortgages refinanced using the streamline refinance process.