Do Lenders Offer a Conventional Streamline Refinance?
A streamline refinance can simplify the process of refinancing your home. Government programs like FHA, VA and USDA offer a nearly no-doc refinances without even an appraisal.
But what about if you have a conventional mortgage? Do lenders offer a conventional streamline refinance? Technically, no, but there are some conventional streamline alternatives you should consider.
What Is a Streamline Refinance?
Streamline refinance refers to loan programs that allow you to reduce your interest rate or change your mortgage terms without:
Reverifying your income
Undergoing a comprehensive credit check
Ordering a home appraisal
Streamline refinances are popular because they simplify the refinancing process, making it faster and cheaper to close on your new loan.
Plus, the fact that streamline refinances don’t require an in-depth credit check can help homeowners refinance with bad credit, while waving the appraisal means that borrowers with little or no home equity can still qualify.
Can I Get a Conventional Streamline Refinance?
Currently, conventional lenders do not offer any authentic streamline refinance programs. If you're applying for a conventional refinance, you can expect to go through the entire qualification and underwriting process.
There are, however, some situations where you may not need an appraisal. Certain lower-income borrowers may even qualify for a conventional refinance with no minimum credit score and an allowable debt-to-income ratio as high as 65% (we’ll cover this option a little further down).
Conventional Refinance Appraisal Waivers
Even though there are no conventional streamline refinance programs, you still may be able to refinance a conventional loan with no appraisal needed.
Unfortunately, receiving an appraisal waiver is dictated by Fannie Mae and Freddie Mac's computerized underwriting systems. Lenders have no control over whether you'll qualify for an appraisal waiver.
However, waivers are most likely to go to low-risk applicants with:
Sizable equity
Excellent credit
Considerable income or assets
You may also qualify for a conventional refinance appraisal waiver if you’ve had an appraisal completed within the past few years. This could have been when purchasing your home or from a previous refinance.
Ultimately, not all applicants will qualify for a conventional appraisal waiver, and those who do will still need to go through the standard credit underwriting process.
Conventional Streamline Refinance Alternatives
Even though there is no true conventional streamline refinance, homeowners still have a few alternatives worth considering.
Conventional 97% LTV Refinance
With a 97% LTV refinance, you can reduce your interest rate or change the terms of your loan with as little as 3% equity in your home.
To be eligible for the 97% LTV refinance, Fannie Mae or Freddie Mac must own or securitize your current mortgage. Otherwise, you can refinance up to 95% of your home’s value.
Conventional guidelines apply, meaning you'll need a credit score that's at least 620 and a debt-to-income ratio no higher than 45%.
And unlike streamline loans, you’ll need to go through the underwriting and appraisal process. However, borrowers with very good or excellent credit will likely get lower rates and cheaper monthly payments than with non-conventional refinance options.
Conventional Cash-Out Refinance
With a conventional cash-out refinance, you can lower your interest rate, adjust the terms of your loan, and withdraw a portion of your home’s equity as cash at closing.
You can qualify for a conventional cash-out refinance with a credit score of 620 and a debt-to-income ratio of 45% or less. Most lenders will allow you to refinance up to 80% of your built-up equity with a conventional cash-out. However, that figure could be lower for second homes, investment properties, and multi-unit residences.
You may still qualify for an appraisal waiver, but only if your lender offers loans from Fannie Mae – Freddie Mac does not issue appraisal waivers on cash-out refinances.
RefiNow & Refi Possible Programs
Low-income homeowners with a mortgage owned or securitized by Fannie Mae or Freddie Mac may be eligible for the RefiNow and Refi Possible programs.
If you earn no more than your area’s median income, Fannie Mae's RefiNow and Freddie Mac's Refi Possible loans let you refinance up to 97% of your home's value. Plus, you can qualify with no required minimum credit score and a debt-to-income ratio as high as 65%.
Only single-unit primary residences are eligible for RefiNow and Refi Possible – you can't use these programs for second homes or investment properties.
Additionally, you must have:
Had your current loan for a minimum of one year
Made no late mortgage payments within the past six months
Made no more than one late mortgage payment within the past 12 months
Even though these programs require you to obtain a home appraisal, they both offer a $500 appraisal credit to help offset your closing costs.
Streamline Refinance Options
You may not be able to get a conventional streamline loan, but if you currently have a government-backed mortgage, you could still qualify for a streamline refinance.
FHA Streamline Refinance
The FHA streamline refinance program allows homeowners with an FHA loan to refinance without requiring a full credit check or appraisal. You need to wait at least 210 days after taking out your loan and have made at least six consecutive on-time payments to qualify for a streamline refinance.
If you’re refinancing your fixed-rate mortgage into another, you'll need to reduce your interest rate by 0.5% in most cases to be eligible for an FHA streamline. Plus, you'll need to pay another upfront mortgage insurance premium (UFMIP) of 1.75%. However, some homeowners may be eligible for a partial UFMIP refund.
Check your FHA streamline eligibility.
VA Streamline Refinance
Eligible VA loan holders can qualify for a VA streamline refinance, referred to as an interest rate reduction refinance loan (IRRRL), as soon as they’ve made six monthly payments and a minimum of 210 days have passed since the first payment date. VA refinances come with a 0.5% funding fee, and you’ll need to cut your interest rate by at least 0.5% if you’re refinancing from one fixed-rate mortgage to another.
USDA Streamlined-Assist Refinance
Homeowners with a USDA mortgage are eligible for a USDA streamlined-assist refinance once they have 12 months of consecutive on-time loan payments. Refinancing must cut your monthly costs by at least $50 to be eligible for a streamlined-assist, but most borrowers won’t need a credit review or new appraisal to close.
Past Conventional Streamline Refinance Programs
In the past, there were conventional refinance programs that did not require in-depth underwriting or an appraisal in most situations.
HARP
The federal government introduced the Home Affordability Refinance Program (HARP) as a response to the 2008 financial crisis. Eligible homeowners could use HARP to refinance through their existing lender without needing to go through requalification in most cases. Appraisals weren't typically required, as there were no maximum loan-to-value restrictions on fixed-rate loans.
HARP ran from 2009 until 2018 when it was replaced by the HIRO and FMERR loan programs.
HIRO & FMERR
Beginning in late 2018, Fannie Mae's High LTV Refinance Option (HIRO) and Freddie Mac's Enhanced Relief Refinance (FMERR) programs allowed borrowers to adjust their mortgage without meeting a minimum credit score or reverifying their income.
You’d still need an appraisal with HIRO and FMERR, unless you qualified for an appraisal waiver. But with no maximum LTV limit for fixed-rate loans, even underwater mortgages were eligible.
Both programs were paused in mid-2021 because of a lack of demand due to rising home values. However, if market conditions change and more homeowners find themselves unable to refinance, these conventional streamline options could likely return.
Qualifying for a Conventional Refinance or Streamline Alternative
There aren’t currently any conventional streamline refinance programs. Still, low-risk borrowers or those with an appraisal completed within the past few years may qualify for a conventional refinance appraisal waiver.
If you currently have a government-backed mortgage, you might be eligible for a streamline refinance, albeit not conventional. To find out what low-doc or no-appraisal refinance options are available, consult an experienced lending professional who can help you review your best options.
