Editor’s note: The USDA streamline refinance pilot program has been rolled out nationwide. It is now available in all 50 states and is called the USDA streamlined-assist refinance.

The USDA home loan is one of today’s most popular ways to buy a home. And now, there is an easy way to use the program to refinance.

Since 1949, The United States Department of Agriculture Rural Development (RD) program has helped people in suburban and rural areas to buy homes with low rates, no money down and relaxed credit guidelines. In 2012, USDA rolled out a powerful refinance loan that requires no appraisal or income qualification.

This popular refinance type is called the USDA streamlined-assist refinance.

It requires no appraisal and no proof of income. Some lenders may even forego a credit check.

This program provides the easiest way to refinance a loan if you have a USDA mortgage currently.

USDA Streamline Refinance pilot program

The USDA initiated a pilot refinance program to help current USDA homeowners reduce their monthly mortgage payments quickly and easily. And they wanted to make it available even to those who owed more on their home than it was worth.

Now, this is no longer a pilot program. It has been rolled out nationwide.

At the end of the 2000s, home prices plummeted, leaving millions of homeowners underwater on their mortgages. Those who purchased with the popular USDA loan were no exception.

In fact, these home buyers were hit the hardest.

Home values in rural and suburban areas fell harder than in cities. Some areas saw declines of 50% or more. Most USDA home buyers purchased with zero down. As values fell, they had no equity cushion to absorb the blow. As rates fell, a refinance was impossible with negative equity.

Then in 2012, the USDA announced a bold program that disregarded negative equity. The program removed the requirement for a new appraisal, income documentation, and even bank statements assuming the borrower did not need cash to close the loan. Just about the only requirement was that the current USDA loan was paid on time over the last 12 months.

To date, the program has helped thousands of homeowners take advantage of historically low mortgage rates and lower their mortgage payments without the hassle of a traditional refinance.

Considering the great leniency of the program, it is reserved for homeowners with a USDA loan currently on their home.

Another benefit is that closing costs for the new loan may be rolled into the new loan, eliminating out-of-pocket expenses. No credit report or minimum credit score is required, although the mortgage lender may pull your credit to verify mortgage payment history. Like all USDA loans, this loan is subject to a 1% upfront fee and a 0.35% annual fee.

USDA Streamline Refinance program chart of eligible states

The USDA streamline refinance program was only available in 34 states. Now, this refinance option is available to USDA homeowners in all states. See the below chart.

USDA Streamline refinance guidelines

USDA to USDA.  The USDA streamline pilot program is available for those currently with a USDA home loan. Homeowners with other loan types such as VA, FHA or conventional are not eligible.

30-year loan term.  The only loan program eligible for the USDA streamline refinance is the 30 year fixed-rate mortgage.

Income verification. No income documentation is required for the USDA streamlined-assist program.

Payment reduction requirement. The homeowner must reduce their payment by $50 per month, including principal, interest, and the guarantee fee.

Occupancy.  All USDA loans are for owner-occupants only and cannot be used to finance rental properties or second homes.

Borrowers. Additional borrowers can be added to the loan with the refinance. However, loan borrowers cannot be removed.

Property location. If the property was originally in an eligible area determined by the USDA but is no longer, the loan is still eligible for any USDA refinance.

Payment history.  The existing USDA loan must have been paid on time for the previous 12 months for the pilot program. For the standard streamline and non-streamline programs, some adverse credit can be acceptable if the reasons for it were temporary in nature and now passed (i.e. was laid off, but now back to work).

No cash out. None of the USDA streamline refinance loans allow the borrower to pull out any cash from your home equity.

USDA Streamline loan program FAQ

I bought my property with a USDA loan but now rent it out to relatives, can I still refinance?  No. All borrowers on the original loan must occupy the property when applying for the USDA streamline refinance.

My home was in a USDA-eligible area when I purchased it, but now it’s not. Am I eligible for the USDA streamline? Yes. As long as your home’s location met eligibility requirements at the time of purchase, you can use the program.

I want to make some improvements to the home, can I borrow more money for a new addition?  No. Additional funds may not be received from the refinance for any reason.

My lender wants to run a credit report but I don’t want them to. I thought the USDA pilot program didn’t require a credit report.  You can opt not to have your credit report pulled but if the lender requires it, your application may not be approved. In some cases, lenders can impose additional restrictions above USDA’s requirements. Lenders can order a credit report to verify you have made your previous 12 mortgage payments on time. Ask your lender if copies of your canceled checks or cashier’s checks to your mortgage company will work in lieu of a credit report.

Why do I need to pay for a new title insurance policy?  A lot can change from the time you first purchased the property until the time you apply for the USDA streamline including additional liens on the property that would interfere with the new loan. Title reports reveal liens and other issues with the property. All loans, regardless of the loan type, require an updated title report before a loan can be approved.

My state isn’t eligible. When will the program be available to the rest of the country? The USDA streamline pilot program was first opened to 19 states that were deemed “hardest hit” by the housing crisis. Then, the pilot program included 34 states. Now, it’s available in all 50 states. If your lender tells you they can’t help you with a USDA streamline, it’s probably because they are not a USDA-approved lender, or they don’t lend in your state at all.

My annual fee is 0.40% because I bought my home before the increase. Will my new annual fee be lowered to 0.35%? Yes. Since the refinance is considered a new USDA loan, all current guidelines are applicable.

I make more money now than I did when I bought my home. Should I be concerned?  To be eligible for any USDA refinance, the combined household income must be at or below the maximum limits set by the USDA. All members of the household will be required to verify their current income, including any working children. If a child or another household member recently got a job, this may also disqualify you from a USDA refinance.

My lender is asking for a bank statement. I thought I didn’t need to prove my income. The borrower does not have to document income to prove he or she can make the payments. However, income documentation will be collected to make sure the borrower is at or below current USDA income limits. In other words, the lender will use income documentation for eligibility purposes, not for qualification purposes.

When does the USDA streamline program expire? The pilot program expired on January 31, 2017 but has since been rolled out nationwide. There is no set expiration date for the new streamline refinance program.

Other USDA refinance options

The USDA streamline pilot program is the easiest option to lower your rate and payment. However, those not in an eligible state still have options to use another type of USDA refinance.

Standard USDA streamline refinance

This USDA refinance is available in every state. There are three main differences between this program and the streamlined-assist program.

1. The borrower is required to document all household income, just like with a USDA purchase.

2. Closing costs may not be rolled into the new loan. Therefore, you may have to pay out-of-pocket expenses. It’s possible that your lender can give you a credit to help pay for all or part of the closing costs.

3. Proof of income is required.

Similar to the streamlined-assist refinance, no appraisal is required. If the homeowner owes more than the home is worth, he or she can still qualify for the refinance.

The upfront fee of 1.00% is required for this loan, and may be rolled into the new loan amount. The borrower must pay the annual fee of 0.35%, just like with a purchase loan. The fee is paid monthly with the mortgage payment and equals $29 per month for every $100,000 borrowed.

Non-streamline USDA refinance

This program is essentially the same as the streamlined refinance, except that it allows closing costs to be rolled into the new loan, potentially eliminating out-of-pocket expenses.

However, an appraisal is required for this option, as is a credit check and verification of your current income. The homeowner can request a new loan balance up to 100% of the home’s appraised value as long as no cash back is received.

The 1% upfront fee is required on this refinance and can be rolled into the new loan amount, even if it pushes the final loan amount above the current appraised value.

How do I apply for a USDA Streamline Refinance?

To apply now, simply complete this one-minute form and select “Conventional Refinance” in the drop-down selector. You will receive a live USDA refinance rate quote and eligibility check.