FHA 15-Year Refinance Rates: What to Expect and How They Differ

Published April 24, 2022

FHA 15-year refinance rates include some of the most favorable mortgage interest terms available to U.S. homeowners. When the FHA insures a home loan, lenders like American Financing can offer terms that are more advantageous to the borrower. With the help of lower FHA 15-year refinance rates, you can significantly improve your financial standing. 

What is an FHA refinance?

An FHA refinance is a method for replacing your existing mortgage with a new one, which the Federal Housing Administration insures. You can apply for an FHA refinance regardless of whether the FHA backs your current mortgage. Refinancing your mortgage in this manner could help you lower your monthly payments, decrease your interest rates, and consolidate debt.

There are several types of FHA refinance options:

• FHA streamline refinance for people who already have an FHA-insured loan

• FHA simple refinance for existing FHA borrowers who want to pay for the closing costs within the loan itself

• FHA rate-and-term refinance, where all proceeds help pay off liens on the current mortgage

• FHA cash-out refinance, where the existing equity on the property allows you to receive cash

Ultimately, your unique financial circumstances will determine the best option for you. For example, if you already have an FHA-backed mortgage and want to obtain a 15-year refinance quickly, then the FHA Streamline option is worth considering. On the other hand, if you're eager for an influx of cash to improve your financial health or invest in home improvement projects, then an FHA Cash-Out Refinance is probably the best route to take. Whichever option you choose, you're bound to benefit from FHA 15-year refinance rates.

How does an FHA refinance differ from other types of refinances?

The main difference between an FHA refinance and a conventional or jumbo refinance is that an FHA refinance is backed by the federal government. This allows lenders to offer more favorable terms. This means FHA refinances come with a variety of secondary advantages.

Some borrowers can get a new FHA loan with a lower credit score than what is required for most conventional loans. This opens the refinancing door to countless homeowners who would otherwise be left out. Some lenders might reject an application for poor credit or a lack of steady employment. With the FHA on your side, you'll have an easier time getting the refinancing you need. 

FHA 15-year refinance rates are usually much lower than their conventional counterparts. That means you'll be paying less per month over the course of your mortgage. 

In addition to the lower FHA 15-year refinance rates, you can get a cash-out refinance more easily when working with the FHA. With a conventional refinance, you need a relatively high credit score and considerable equity in your home to qualify for a cash-out option. The FHA can lower this barrier to entry, helping you secure necessary funds more quickly. You can then use this upfront cash to invest in home improvement projects that will ultimately increase the value of your property. 

FHA refinances are similar to another type of refinancing, VA refinances, in that they're both supported by the government. The main difference is that FHA refinances are available to people with no ties to the military. If you've never served and you're eager for favorable terms, then an FHA refinance is among your best options. 

What counts as a low interest rate?

Securing a lower interest rate is one of the primary motivations for homeowners considering a refinance. FHA 15-year refinance rates can help borrowers significantly lower their monthly payments, often producing a vast improvement in overall financial standing. However, many homeowners don't know what counts as a low interest rate, making it difficult to know when to begin a refinance.

Unfortunately, there's no definitive answer for what interest rates can be considered low. The market is constantly changing, and what counts as a high-interest rate one year could be regarded as low the next. Each borrower is also likely to receive a different rate depending on their circumstances. That's why it's always best to compare the rates associated with varying refinancing options instead of looking for a specific rate. The FHA 15-year refinance rates will be among the best options available in most cases. 

Who qualifies for an FHA refinance?

Eligibility requirements for an FHA refinance depend on the specific type of refinance you're after. But, in general, FHA refinances are easier to obtain than conventional refinances. That's good news for homeowners eager to access advantageous FHA 15-year refinance rates.

To qualify for an FHA streamline refinance, you'll need to meet the following criteria: 

• You currently have an FHA loan

• The property in question is your primary residence

• Six months have passed since the first due date on your loan

• 210 days have passed since your current loan closed

• The refinance brings you a net tangible benefit

The FHA simple refinance doesn't have the same requirements related to the age of your current mortgage, but it does require a few extra steps. To land the deal, you'll need:

• Credit qualification

• Proof of employment and income

• A home appraisal

The FHA rate-and-term refinance is an excellent option for anyone who needs to pay off liens on their existing mortgage. The only serious consideration is that you can only use the deal to pay off liens that are at least 12 months old. 

An FHA cash-out refinance is a great option for many homeowners, but there are more requirements involved:

• You must have lived in your home for at least 12 months

• You must have made all mortgage payments on time for the past 12 months

• Your debt-to-income ratio can't exceed 43%

• You need a home appraisal

How to qualify for an FHA refinance

If you're eager to start a mortgage refinance with favorable FHA 15-year refinance rates, the first step is to make sure you'll qualify. If you're not eligible for the loan you want, do what you can to improve your financial health and meet the requirements. Then, reach out for the professional assistance you need to apply for a new loan. Finally, schedule an appointment if you're unsure how to start. We're happy to review your options and help you make an informed decision. Before you know it, you'll be reaping the rewards of favorable FHA 15-year refinance rates.