How Often and How Many Times Can You Refinance Your Home?

Interest rates are falling and you may be able to save some money by refinancing your mortgage. But if you’ve refinanced in the past, are you allowed to do so again?

In most cases, yes. There is no limit to how many times you can refinance, though there are some compelling reasons why you don't want to be a "serial refinancer."

Many loan programs, however, require a waiting period between refinances. If you've refinanced recently, you may need to wait up to a year to get approved for some mortgages.

How Often Can You Refinance Your Home?

Most homeowners have no problem refinancing their mortgage as often as needed. If you've refinanced in the past, but it's been over a year, you should be eligible for most loan types.

However, some loan program impose waiting periods.

Following is a list of waiting periods for the most common types of conventional, FHA, and VA refinance loans.

Rate-and-Term vs. Cash-Out Refinances

Before we dive into individual program guidelines, it's essential to go over the two primary types of refinance loans: rate-and-term and cash-out.

• A rate-and-term refinance allows you to change your mortgage's interest rate and the length of the loan. You’re less likely to encounter a waiting period for a rate-and-term refinance.

• With a cash-out refinance, you can tap into your home’s equity to withdraw a set amount of cash as part of the closing process. Lenders often have longer waiting periods for cash-out refinances.

Conventional Refinance Waiting Period

Conventional loans are the most popular type of residential mortgage. These refinances follow lending guidelines established by Fannie Mae and Freddie Mac.

• Rate-and-Term Refinances: There’s no waiting period for a conventional rate-and-term refinance. Your current mortgage company may want you to make a certain number of payments before you refinance through them, but you can always apply with a different lender.

• Cash-Out Refinances: Your existing mortgage must be at least 12 months old to qualify for a conventional cash-out refinance. If you’ve refinanced (or taken out a loan to purchase your home) within the past year, you probably aren’t eligible unless:

  • You are buying out an owner’s equity

  • You are paying off a second mortgage that’s less than a year old but the primary mortgage meets the 12-month requirement.

FHA Refinance Waiting Period

Government-backed FHA loans are an excellent option for borrowers with credit troubles. You can qualify for an FHA refinance with a score as low as 500. All FHA refinances require mortgage insurance, although the cost is often offset by lower interest rates for homeowners with less-than-stellar credit.

• Rates-and-Term Refinances: There’s no waiting period for a standard FHA rate-and-term refinance. However, if you’re refinancing a non-FHA loan and haven’t lived in your home for at least 12 months, you’ll need a minimum of 15% equity to qualify. This doesn’t apply when you currently have an FHA mortgage, in which case you can refinance loans up to 97.75% of the property’s value.

• Streamline Refinances: FHA’s streamline refinance is a rate-and-term option for homeowners with an existing FHA mortgage. Streamline refinances require less documentation and close faster than standard rate-and-term loans. For a streamline refinance, you must have made a minimum of six payments on your current loan, and at least 210 days must have passed since closing.

• Cash-Out Refinances: You can qualify for an FHA cash-out refinance once you've made six monthly payments on your current mortgage. However, FHA guidelines also require the home to have been your primary residence for the past 12 months.

Note: If you’re refinancing an FHA loan that you’ve had for less than three years, you may qualify for a refund of a portion of your upfront mortgage insurance premium.

VA Refinance Waiting Period

VA loans are secured by the Department of Veterans Affairs and provide low-interest mortgages to past and present members of the US military, as well as certain spouses and dependents. You'll pay an upfront funding fee with a VA refinance, but the interest rates can be hard to beat for qualified homeowners.

• Interest Rate Reduction Refinance Loans (IRRRLs): The VA refers to their rate-and-term refinances as Interest Rate Reduction Refinance Loans. You must currently have a VA loan to qualify for an IRRRL, and wait at least 210 days after the first payment. You must also have made a minimum of six monthly payments.

• Cash-Out Refinances: To qualify for cash-out refinance with an existing VA loan, you’ll need to wait at least 210 days from your first mortgage payment. You must also have made a minimum of six payments.

How Many Times Can You Refinance Your Home?

There's no limit to how many times you can refinance your home. But it's usually not a good idea to do so too frequently. Some negative aspects to refinancing can compound each time you remortgage your property.

Downsides of Refinancing Too Many Times

It may not always make sense to refinance just because you can lower your interest rate or drop your monthly payment. There are costs to refinancing – and not just closing costs – that could really add up for "serial refinancers."

You’ll Be Paying Off Your Home Longer

When you refinance, you're starting the loan back on day one. If you have a 30-year mortgage you've been paying for ten years, your home could be paid off in another two decades. With a 30-year refinance, you will make an extra ten years' worth of payments.

Refinancing multiple times, especially when you have years of repayment under your belt, could lead to having a mortgage for decades longer than you originally planned.

You’ll Pay More Interest Over the Life of the Loan

By resetting the loan, you're likely to pay more in interest over the life of your mortgage. This can even be true when refinancing to a lower interest rate with lower monthly payments.

For example, say you have a $300,000 mortgage at a rate of 7%. Over the 30-year life of the loan, you would pay around $418,500 in interest.

After five years, however, you refinance into another 30-year mortgage at 6.5%. At this point, your principal balance would be around $282,500, and you would have already made more than $102,000 in interest payments.

With the refinance, you'll only incur around $360,000 in interest over the new loan. But when combined with what you've already paid, you'll wind up spending more than $40,000 in extra interest by the time your home is finally paid off.

Wrapping In Closing Costs Strips Equity

Refinancing comes with closing costs, generally ranging from 2% to 4% of your total mortgage. When refinancing a $300,000 loan, you can expect to pay between $6,000 and $12,000 in fees and taxes.

If you wrap these costs into your loan balance, it can take years before you’ve paid off the additional principal. If you had a $300,000 refinance at 6.5% interest and wrapped in closing costs of $9,000 (3%), it would take two-and-a-half years (30 monthly payments) until your principal balance was below the initial $300,000.

Refinancing too frequently can compound these closing costs, stripping away the equity you've built in your home.

When Should You Refinance Your Home?

That said, there are some situations where it probably makes sense to refinance, even if you've already done so multiple times.

1. You Can Significantly Lower Your Interest Rate

It might take a while to break even on closing costs if you only reduce your rate by a quarter of a percent. But if you can refinance and lower your interest rate by one percent or more, expect significant monthly – and maybe even long-term – savings.

2. You Want to Shorten Your Loan’s Term

Have your finances improved since you first took out your mortgage? If you can afford the monthly payments, it might make sense to refinance and shorten your loan's term. Shedding a decade of mortgage payments with a 15-year cash-out or rate-term refinance could save you big over the long run.

3. You Need Cash, and Your Home's Equity is the Most Practical Option

Mortgage rates are lower than alternatives like personal loans and credit cards. Even home equity loans and lines of credit can be costly when taking out a substantial amount of equity. Making major home improvements, consolidating high-interest debt, and purchasing investment properties are just a few of the savvy ways to use a cash-out refinance.

4. You Can Eliminate Mortgage Insurance

One of the best reasons to refinance is to eliminate mortgage insurance. Conventional lenders require private mortgage insurance on loans with less than 20% equity. Once you’ve reached that 20% mark, you can refinance and remove the mortgage insurance payments.

Similarly, the FHA requires monthly mortgage insurance premiums on all FHA-backed loans, regardless of equity. If you have an FHA loan and at least 20% equity in your home, applying for a conventional refinance could eliminate those premiums.

Are You Eligible to Refinance Your Mortgage?

You can refinance your home as many times as you would like, although doing so too frequently may have some unwanted consequences. But as long as you meet lender guidelines, including loan seasoning, there's no limit to how often you can refinance.

To find out which refinance options are currently available to you, apply with a reputable mortgage lender.