Are you a borrower looking to refinance your FHA loan? Good news! Even if you have owned and lived in the subject property or made less than 6 months of mortgage payments, FHA still allows a Rate/Term only refinance to happen. However, there are some important guidelines to keep in mind.
Firstly, the loan must be manually underwritten, which means reserves will be required. The maximum Loan-to-Value (LTV) ratio is 85% if you have owned or lived in the property for less than 12 months. Additionally, a clean mortgage history is a must.
When it comes to reserves, borrowers of 1-2 unit properties must have 3 months of reserves, while borrowers of 3-4 unit properties must have 6 months of reserves.
FHA offers flexibility for borrowers looking to refinance, even in unique situations. Make sure to meet the guidelines and have the necessary reserves in place to make the process smooth and successful.
Don’t let past circumstances hold you back from exploring your refinancing options with FHA. Take advantage of these guidelines and make the most of your homeownership journey. Contact us to get pre-approved for a mortgage loan.
