USDA “Streamline” Refinance

USDA does allow for the refinance of current USDA Guaranteed or USDA Direct Mortgages.

The USDA Refinance is designed to lower the interest rate on a current USDA mortgage and is only avaiable in a fixed rate. A USDA Refinance Loan can be performed quickly and easily. USDA Refinance Loans require no property inspection.

If you do not currently have a USDA Mortgage on your home, you are not eligible for a USDA Refinance and you may want to consider an FHA Refinance, Conventional Refinance or VA Refinance.

What are the basic requirements for an USDA Refinance?

• The mortgage to be refinanced must already be a USDA Loan (Guaranteed or Direct).
• 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 USDA loan refinance process.

How much can I refinance?

The maximum amount for a USDA Refinance is determined by:

Maximum Loan Amount

There is no set maximum loan amount allowed for a USDA Loan. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.

Maximum financing

Non-streamlined refinance.

The non-streamlined refinance option requires an appraisal. Lenders offering the non-streamlined refinance option may include in the loan the principal and interest of the existing loan, closing costs, lender fees and the guarantee fee of 0.5 percent of the loan amount to the extent sufficient equity in the property exists, as determined by an appraisal. The appraised value may be exceeded only to the amount financing represents the 0.5 percent guarantee fee.

Streamlined refinance.

Lenders may offer a streamlined refinance without obtaining a new appraisal. All other costs, documentation and underwriting requirements remain consistent with a purchase guarantee, unless otherwise noted in this AN. With this option, the lender will refinance the principal balance of the existing Section 502 Guaranteed loan. This option is not available for Section 502 Direct loans. The loan amount cannot exceed the principal amount of the existing loan refinanced plus the one time guarantee fee of 0.5 percent of the loan amount. Accrued interest, closing costs or lender fees cannot be financed with this option.

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