USDA Streamlined Refinance Loan
If you already have a USDA loan, refinancing does not have to mean starting from scratch. A USDA streamlined refinance may help you lower your monthly payment with a simpler path forward.
This page focuses on two USDA refinance options built to make the process easier: the USDA streamlined refinance and the USDA streamlined-assist refinance. Both can reduce extra steps, and neither requires a property inspection.
These loans are for rate-and-term refinancing only, which means they can help adjust your loan terms or lower your payment, but they do not let you take cash out of your home’s equity.
If your goal is to use home equity, a conventional or FHA cash-out refinance may be a better fit.
USDA Streamlined Refinance vs. USDA Streamlined-Assist
Both USDA streamlined refinance options are built to help current USDA homeowners lower their monthly payments with a simpler refinance process. The right fit depends on your goals, payment history and what kind of documentation is needed.
The USDA streamlined-assist refinance is usually the simpler option. It does not require a new credit review or debt-to-income review, and it is often a good fit if your main goal is to lower your monthly payment with less paperwork.
The standard USDA streamlined refinance may offer more flexibility in some situations, such as adding or removing a borrower from the loan. However, it does require income, credit and debt-to-income review.
Here's a simple look at how the two options compare:
| Streamlined Refinance | Streamlined-Assist Refinance | |
|---|---|---|
| Amount That You Can Refinance | 100% | 100% |
| Lets You Add Borrowers | Yes | Yes |
| Lets You Remove Borrowers | Yes | Only if a borrower is deceased |
| Requires Income & Credit Verification | Yes | No |
| Requires Appraisal | No | No |
| Eligibility Requirement | Consecutive on-time payments for the last 180 days | Consecutive on-time payments for the last 180 days $50 or greater reduction of the monthly payment |
| Existing Loan Age Requirement | 180 day minimum | 180 day minimum |
| Underwriting Process | Automated | Manual |
| Lets You Finance Closing Costs | Yes | Yes |
USDA Streamlined Refinance Guidelines
To qualify for a USDA streamlined refinance, you must already have a USDA loan. These refinance options are not available for conventional, FHA or VA loans.
Basic USDA streamline refinance guidelines include:
- You must currently have a USDA loan.
- The home must be your primary residence.
- Your existing USDA loan must meet USDA seasoning requirements before the refinance can move forward.
- Your recent mortgage payment history must meet USDA and lender guidelines.
- The new loan must be a fixed-rate loan.
- The refinance cannot be used for cash out.
- The new interest rate must be at or below your current rate.
- You must still meet USDA income eligibility guidelines.
For the USDA streamlined-assist refinance, the new loan must also lower your monthly payment by at least $50.
Because lender requirements can vary, your lender will review your full situation before confirming which refinance option you may qualify for.
USDA Streamlined Refinance Eligibility
USDA streamlined refinances are available to homeowners who already have an eligible USDA loan and meet USDA refinance guidelines. Your current loan must have enough payment history, and your recent payments must show that the loan has been managed responsibly.
For a standard USDA streamlined refinance, your lender will review your credit, income and debt-to-income ratio. These requirements can vary by lender.
Neighbors Bank typically looks for a minimum credit score of 620 and a debt-to-income ratio of 44% or lower for USDA loans. Some exceptions may be possible with strong compensating factors.
The USDA streamlined-assist refinance is different because it does not require a full credit or debt-to-income review. That can make it a helpful option if you want a simpler refinance and your main goal is to reduce your monthly payment.
USDA Streamlined Refinance Closing Costs
USDA streamlined refinance loans include a USDA upfront guarantee fee and an annual guarantee fee.
The upfront guarantee fee is 1% of the loan amount. For example, on a $200,000 loan, the upfront guarantee fee would be $2,000. USDA loans also include a 0.35% annual fee, which is spread across your monthly mortgage payments.
You may also have other closing costs, such as lender fees, title fees, recording fees, credit report fees or discount points. Your lender will give you a full breakdown of your expected costs before you move forward.
In many cases, eligible closing costs and the upfront guarantee fee can be included in the new loan amount. This may help reduce the amount you need to pay out of pocket at closing, but it can also increase your loan balance.
Which USDA Refinance Option Is Best?
Both USDA refinance options can help lower your monthly payment, but they serve slightly different needs.
A USDA streamlined-assist refinance may be a better fit if you want a simpler process, less documentation and a lower monthly payment.
A standard USDA streamlined refinance may be a better fit if you need more flexibility, such as adding or removing a borrower from the loan, and you are comfortable completing a credit, income and debt-to-income review.
The best next step is to compare your options based on your current loan, your payment history and your goals.
Note: Refinancing can result in higher finance charges over the life of the loan.
