Conventional Refinance | Rates, 2026 Loan Limits & Guidelines

A conventional refinance is one of the most versatile loans in today’s market.

Conventional refinances can convert any type of mortgage loan into a conventional loan. Simultaneously, a conventional refi could also cash out equity.

In many areas, home prices increased over the past few years. As a result, many homeowners are eligible for a conventional refinance and could even cancel PMI to further lower their costs.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

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In this article:

What is a conventional refinance?
What can a conventional refinance be used for?
Conventional refinance requirements 2026
Refinancing an FHA loan into a conventional loan
Getting rid of mortgage insurance with a conventional refi
Conventional refinance rates
Conventional loan limits
Conventional refinance loan lengths
Are adjustable-rate refinances available?
Do conventional refinances require closing costs?
Conventional refinance FAQ
Our recommended refinance lenders

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What is a conventional refinance?

Conventional refinances are conventional loans that replace an existing mortgage loan. The refinance replaces the old loan by paying it off. Then, the homeowner starts making payments on the refinance loan instead of the original loan.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

The new loan should benefit the borrower in some way: a lower interest rate, a shorter loan term, a fixed-rate loan, or cash back from equity, for example.

Like conventional loans, a conventional refinance is not insured by a federal agency. So borrowers rely more on their credit score and debt-to-income ratio to qualify.

The most qualified borrowers get the best deal on conventional refinance loans.

What can a conventional refinance be used for?

Conventional refinances can help you meet a variety of goals:

• Refinancing a primary residence, second home, or investment property
• Turning home equity into cash at closing
• Eliminating private mortgage insurance (PMI)
• Canceling FHA mortgage insurance
• Refinancing out of any other loan type
• Reimbursing a cash home purchase
• Shortening the home loan term

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

Ideally, a conventional mortgage refinance will achieve two or more of these goals at once.

For example, a conventional refi could replace an existing FHA loan, eliminating the FHA’s mortgage insurance premium, while also generating cash back at closing and shortening the loan term.

But meeting at least one goal is good enough for most borrowers.

Conventional refinance requirements 2026

Qualifying for a rate-and-term conventional refinance will resemble qualifying for a conventional purchase loan. Rate-and-term loans simply replace an existing mortgage with a new loan.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

To be eligible for a conventional refinance, you’ll need enough equity, which lenders measure as loan-to-value (LTV). On a one-unit home you live in, many conventional programs will allow you to refinance with at least 5% equity (an LTV of 95%). If you have 20% or more equity (an LTV of 80% or lower), refinancing could also enable you to eliminate any private mortgage insurance (PMI) you might be paying.

Along with meeting LTV, you’ll need a credit score and debt-to-income ratio (DTI) that your lender accepts. Fannie Mae’s Desktop Underwriter does not require a minimum credit score, and it can approve a DTI of up to 50%. Many lenders set stricter limits of their own. Fannie Mae and Freddie Mac now accept VantageScore 4.0 as well as classic FICO scores. You’ll also need to document your income by sharing a W2, pay stub, or tax returns.

Conventional cash-out refinance requirements

A conventional cash-out refinance allows you to borrow against your home equity, generating “cash back” which you could use for debt consolidation, home improvements, or any other purpose.

A cash-out refi can’t access all of a home’s equity. Borrowers have to follow the 80% LTV rule which requires leaving 20% of the equity untouched.

Check your eligibility for a conventional cash-out refinance. Start here (Nov 7th, 2026)

So if you owned a home worth $250,000, your maximum loan size would be $200,000.

If you’ve paid down your existing mortgage to a balance of $150,000, a $200,000 loan would be large enough to pay off your existing loan while also paying you up to $50,000 at closing.

But if your current loan balance was $200,000, you wouldn’t have enough equity to get cash back, even though you have $50,000, or 20%, in equity. That 20% equity has to stay in the home.

Many lenders require higher credit scores for cash-out refinance options. Some look for 660 or 640 scores instead of only 620. Interest rates also tend to be a little higher for cash-out refinances compared to rate-and-term refinances.

Refinancing an FHA loan into a conventional loan

First-time home buyers — and other buyers with lower down payments and average credit scores — might need an FHA loan to buy a home.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

But FHA borrowers pay FHA insurance. This FHA mortgage insurance premium (MIP) adds 1.75% of the loan amount upfront. Then, most borrowers pay another 0.50% to 0.55% of the loan’s amount each year in MIP. (Loans with FHA case numbers assigned before March 20, 2023, usually pay a higher rate.)

Refinancing to a conventional loan can enable FHA borrowers to eliminate mortgage insurance premiums.

Conventional refinances eliminate FHA MIP

For most current FHA loan holders, the best way to stop paying MIP is to refinance their FHA loan into a conventional loan, exiting the FHA loan program altogether.

Check your eligibility to eliminate FHA MIP. Start here (Nov 7th, 2026)

As long as the FHA homeowner has at least 20% equity — and can meet a conventional lender’s credit and debt-to-income ratio rules — the new conventional refi won’t need any mortgage insurance.

Of course, the homeowner should make sure the new loan will actually save money compared to the existing FHA loan. A borrower who barely qualifies for a conventional loan may not see much, if any, savings. In fact, a refinance might cost more.

To find out for sure, get a mortgage preapproval from a few different lenders. Preapprovals show your monthly mortgage payments and long-term costs.

Getting rid of mortgage insurance with a conventional refi

Conventional loans charge monthly mortgage insurance, too. When home buyers make down payments less than 20%, lenders require private mortgage insurance, or PMI.

Verify your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

PMI rates vary by borrower. They usually range from 0.5% to 1.5% of the loan amount per year. For a $250,000 loan, a 1% PMI rate would cost $2,500 a year, or about $208 a month.

The good news is that you won’t have to refinance out of this extra cost. Once your loan balance reaches 80% of your home’s original value, you can ask your servicer to cancel PMI and stop paying for it. Original value is generally the lower of the purchase price or the appraised value when you bought.

Federal law requires your lender to end PMI automatically once your scheduled loan balance reaches 78% of the home’s original value, as long as you are current on payments. If your home has gained value and you think you have already reached 80% of its current value, ask your servicer whether it will accept a new home appraisal.

Can I refinance out of PMI?

Conventional borrowers who want to get rid of PMI sooner by refinancing have a couple of loan options:

• Refinancing into loans that don’t require PMI: Some lenders offer private, in-house loan programs that don’t charge PMI. But these loans usually charge higher interest rates. So the savings might be minimal or nonexistent.
• Cash-in refinancing: Bringing cash to closing could drop a home’s LTV low enough to eliminate PMI. But there are closing costs to pay, and they cut into the savings. Plus, you might have to part with a lot of cash.

Most conventional loan holders will find it’s best to wait. When they’ve paid their loan down to 80% LTV, they can cancel PMI without paying closing costs or higher rates.

Conventional loan refinance rates

Almost every refinance shopper will get a different rate based on their financial situation.

For instance, a customer refinancing a rental property will get a rate that’s up to 0.5% higher than someone who is refinancing a single-family primary residence.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

Likewise, someone with a 660 score will pay about 0.25% more than a customer with a 700 score.

In short, conventional loan refinance rates are based on risk to the lender.

Unlike federally insured loans, which insulate borrowers from the effects of this risk, you’ll get the best conventional refinance rate by being a low-risk borrower.

Lower-risk borrowers can refinance into rates that are below today’s average mortgage rates. And since a refi with 80% LTV requires no private mortgage insurance, a conventional refi’s APR will be lower, too.

Connect with a lender to start your conventional refinance application (Nov 7th, 2026)

2026 conventional loan limits

The standard conventional loan limit is $832,750. A qualifying refinance applicant can open a loan for at least this amount anywhere in the country.

But Fannie Mae and Freddie Mac allow higher limits in some areas where real estate costs more.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

For instance, San Francisco has a conventional loan limit of $1,249,125. Refinance consumers in Seattle and Queens, New York, can also be approved for a higher conventional loan.

The highest limits in the country are in Hawaii. Right now, Maui County and Kalawao County have the top one-unit limit, a little higher than the limit in San Francisco.

Homeowners in areas with high housing costs should check their conventional loan limit before they assume they need a jumbo loan.

Homeowners who refinance multi-unit homes have access to higher loan limits:

• The conventional loan limit for a 1-unit home: $832,750
• For a 2-unit home, the conventional loan limit is $1,066,250
• The conventional loan limit for a 3-unit home: $1,288,800
• For a 4-unit home, the conventional loan limit is $1,601,750

Homeowners with multi-unit homes that are also in high-cost areas can receive conventional loans of over $1.2 million.

Keep in mind that these are loan limits, not home price limits. Someone refinancing a $2 million home could receive a conventional loan of $832,750 in any area of the country.

What conventional refinance loan lengths are available?

The most popular conventional refinance loan terms are 15 and 30 years.

A 15-year fixed-rate mortgage will require higher monthly mortgage payments compared to a 30-year fixed loan. But long-term interest charges will be lower with a 15-year term.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

Borrowers can also find 10- and 20-year mortgages, though they are less common. Some lenders will customize a conventional refinance’s term.

In general, longer terms make for lower payments but more interest.

Check your mortgage rates. Get started here

Are adjustable-rate mortgages available?

Yes, borrowers can refinance into an adjustable-rate mortgage (ARM). These loans have fixed rates for the first three, five, seven, or 10 years.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

During this initial fixed period, the rate is typically lower than the rate you could get on a 30-year fixed-rate loan. After the intro rate expires, rates and payments can change each year.

ARMs are great for homeowners who plan to move, refinance again, or pay off their mortgage in a few years.

Do conventional refinances require closing costs?

Just like home purchase loans, refinance loans charge closing costs. These costs include loan origination fees and legal fees. Closing costs could also include a home appraisal fee and prorated property taxes and homeowners insurance premiums.

Check your eligibility for a conventional refinance. Start here (Nov 7th, 2026)

Closing costs usually range from 2% to 5% of the loan amount. That’s $2,000 to $5,000 for every $100,000 borrowed.

Some lenders advertise no-closing-cost loans. These loans normally charge higher interest rates which reimburse the lender for your closing costs.

How do I get a conventional cash-out refinance?

A cash-out refinance pays the borrower cash at closing. The cash out is borrowed from the home’s equity and must be repaid as part of the new loan’s monthly mortgage payments.

Here’s how it works: If a homeowner owes $100,000 on a home that’s worth $200,000, the homeowner can apply for a loan amount bigger than what they owe. The difference between the two loans goes to the homeowner.

Most lenders can approve a cash-out loan up to 80% loan-to-value ratio. So a homeowner who has 30% equity can take up to 10% of the home’s value in cash with a cash-out refinance.

Cash-out refinance rates are slightly higher than no-cash-out loans. The difference is usually about 0.125% — or about $10 more per month in interest for every $100,000 borrowed.

Considering the relatively low cost, a cash-out loan can be a great way to consolidate high-interest debt and get monthly expenses under control. For many households with a lot of debt from student loans, credit cards, and car loans, a cash-out loan may reduce payments by many hundreds of dollars per month.

Conventional refinance FAQ

Do I need to have a conventional loan to do a conventional refinance?

No. You can refinance any type of loan with a conventional loan. You can refinance FHA loans, USDA mortgages, Alt-A loans, subprime loans, option ARMs, and adjustable-rate mortgages.

My appraisal shows a lower value than expected. Can I still refinance with a conventional loan?

Possibly, but the refinance may require monthly mortgage insurance. It’s best to have 20% equity in your home before refinancing with a conventional loan.

I’m not sure about my credit. Should I apply for an FHA loan first?

You don’t have to pick one loan program when applying for a new loan. Your loan officer will look at your entire situation and try for the lowest-cost option. If a conventional loan doesn’t work out, the lender may switch you to an FHA loan. Don’t automatically rule out a conventional loan just because of your credit standing.

Can I refinance from an FHA to a conventional loan?

Yes. If you have sufficient equity and a credit score of 620 or higher, you can likely refinance to a conventional loan.

Why get a conventional loan? Why not refinance with FHA?

FHA can be used to refinance, but it’s typically for homeowners who can’t qualify for a conventional refinance due to past credit issues. Because of its flexibility, an FHA refinance is more expensive. Homeowners who don’t need the FHA’s flexibility can save money with conventional refinancing.

How do I apply for a conventional loan refinance?

Applying for a conventional refinance is just like applying for any other refinance.

Start by checking rates here. The lender will guide you through the rest of the process.

What is a conventional refinance?

A conventional refinance is a new conventional loan that replaces an existing mortgage on a house you’ve already bought. Unlike an FHA Streamline Refinance, which can be used only if you already have an FHA loan, a conventional refinance can replace any other mortgage type.

Can you refinance a conventional loan?

Yes, homeowners can refinance their conventional loans. Refinance loans are worth the time and money when they achieve a goal such as lowering your mortgage rate or monthly payments.

How soon can I refinance an FHA loan to a conventional loan?

FHA borrowers can refinance into conventional loans as soon as they have 20% equity in their home and a credit score of at least 620. Conventional lenders set their own debt-to-income limits. Fannie Mae’s Desktop Underwriter can approve a DTI of up to 50%. These standards are stricter than FHA loan requirements.

How soon can you refinance a conventional loan?

There’s generally no waiting period for a rate-and-term refinance of a conventional loan. A cash-out refinance does have waiting periods. Fannie Mae requires that the loan you are paying off is at least 12 months old and that you have been on the title for at least six months. It’s also often best to wait until you have 20% equity in the home. If you made a 20% down payment, you should already have 20% equity.

Can you refinance an FHA loan to a conventional loan?

Yes, conventional refinances can replace loans of any type, including FHA, USDA, and VA loans.

Is a conventional refinance better than an FHA Streamline Refinance?

Not necessarily. But FHA Streamline Refinances work only for current FHA loan holders. They’re a great way to save money without going through the full credit underwriting process. Unless you have an FHA loan now, you couldn’t get an FHA Streamline Refi.

Can I get a conventional adjustable-rate refinance?

Yes. Many ARMs start out with a lower rate than a comparable fixed-rate loan, which can make them attractive when fixed rates are high. Later, the rate will fluctuate with the market.

How much equity do I need to refinance to a conventional loan?

It’s possible to refinance a conventional loan with as little as 3% home equity in limited cases. For example, Fannie Mae allows an LTV of up to 97% on a limited cash-out refinance of a fixed-rate loan on a one-unit home you live in, when Fannie Mae owns or securitized your current loan and the loan is run through Desktop Underwriter. However, it may be best to aim for 20% equity before a conventional refinance. This would help you qualify for a lower mortgage interest rate and cancel private mortgage insurance, further reducing your monthly payments.

How do you qualify for a conventional refinance?

Lenders set their own credit score and debt-to-income limits. Fannie Mae’s Desktop Underwriter does not require a minimum credit score, and it can approve a debt-to-income ratio (DTI) of up to 50%. Many lenders set stricter limits. You’ll usually need at least 5% equity, and with 20% equity you can avoid private mortgage insurance. If you meet these requirements, shop around with at least three mortgage lenders so you can compare rates.

What does ‘conventional’ mean?

Conventional mortgages are home loans that no federal agency insures or guarantees. That sets them apart from FHA, VA, and USDA loans. Most conventional loans are conforming loans, which follow the rules of Fannie Mae and Freddie Mac and stay within the conforming loan limit. These two companies buy most conventional loans from lenders. A conventional loan above the limit is called a jumbo loan.

Get started on your conventional refinance now

Not sure where to start with your conventional refinance?

A mortgage preapproval is a great place to begin. A preapproval usually involves a credit check, which can affect your score. But within a 45-day window, multiple credit checks from mortgage lenders are recorded on your credit report as a single inquiry, so you can compare lenders.

It’ll show what rates you qualify for and how much you could save.

Connect with a lender to start your conventional refinance application (Nov 7th, 2026)