Refinancing requirements for mortgages

What you need to do to refinance your home

You need to get a new mortgage to refinance your home. You’ll pay off your current loan and replace it with a new loan that has better rates or terms.

This is true even when you are a Freedom Mortgage customer and you are refinancing your home with us. We can’t modify the interest rate or terms of your current mortgage. We need to approve you for a new mortgage to help you enjoy the benefits of refinancing.

The good news is it’s often easy to refinance VA and FHA loans using the streamline program. And our experienced Loan Advisors will work with you to help you refinance your home, no matter what type of loan you have. Keep in mind by refinancing, the total finance charges may be higher over the life of the loan.

What are the requirements to refinance a VA loan?

When you want to refinance a VA loan with a new VA loan, you can typically use the streamline program. We can offer you competitive interest rates and easy credit score qualifications. The streamline program lets you refinance with less paperwork and faster closings. Our Loan Advisors can often take your application right on the phone.

There are no mortgage insurance payments but most veterans will need to pay a one-time funding fee. Learn more about VA streamline refinancing.

What are the requirements to refinance an FHA loan?

When you want to refinance an FHA loan with a new FHA loan, you can typically use the streamline program. We can offer you competitive rates, easy credit score qualifications, less paperwork, and faster closings. Our Loan Advisors can often take your application right on the phone.

FHA refinances have upfront mortgage insurance premiums you can often roll into your loan amount. You will also have to pay monthly mortgage insurance premiums. Learn more about FHA streamline refinancing.

What are the requirements to refinance a Conventional loan?

When you want to refinance your home with a Conventional loan, you have to complete a new mortgage application and provide a new set of documents. Conventional refinances are sometimes called “full document” refinances because they require more paperwork than streamline refinances.

However, there are advantages to refinancing your home with a Conventional loan. Lenders often offer you competitive rates and better terms when you have good credit and finances. And it’s possible to avoid paying mortgage insurance fees or premiums when you have at least 20% equity in your home. Requirements for refinancing a Conventional loan include:

• Application. You need to fill out a new application to refinance a Conventional loan. Learn more about how to apply for a mortgage.
• Documents. We’ll ask you to provide documents like W2s, bank statements, and tax returns as part of your refinance application.
• Minimum credit score. You need to meet a minimum credit score requirement to get approved for refinancing. Keep in mind that having a higher credit score might help you earn a lower interest rate or make it easier to get your refinancing approved.
• Debt-to-income ratio (DTI). Conventional refinances typically have limits on the maximum amount of debt you can have relative to your income. The maximum DTI for conventional refinances is often between 36% and 41%. Learn more about DTI for mortgages.
• Home appraisal. We’ll probably ask for a new home appraisal when we are reviewing your refinance application. This appraisal will estimate the current fair market value of your home.
• Home equity loans and liens. It’s more difficult to get approved for refinancing if you have a home equity loan or lien on your house. You’ll probably need to pay these off before you can get approved.
• Closing costs. You might pay between 2% and 6% of the loan amount in closing costs when you refinance according to Forbes.com. Learn more about the costs of refinancing.

Loan disclosures and closing your loan

You will need to review and sign the loan disclosures we send you to get your home refinancing approved. You’ll also need to attend the loan closing and sign new mortgage documents.

At Freedom Mortgage, you can often review your loan disclosures and documents online using our secure platform. Many times, we can help you choose a convenient place to close your new mortgage, including at your home. Our experienced Loan Advisors will work with you to make your home refinance as easy as possible.

Last reviewed and updated June 2023 by Freedom Mortgage Corporation.