On this page
- FHA streamline refinance closing costs: the quick answer
- What FHA streamline costs include and who sets each fee
- Upfront MIP, the refund and annual MIP
- How to pay less: no-closing-cost FHA streamline and other options
- Is an FHA streamline refinance worth the closing costs?
- FHA streamline vs. conventional refinance closing costs
- FHA streamline refinance closing costs FAQ
- Your next step
FHA streamline refinance closing costs include lender fees, third-party charges such as title and recording, and prepaid interest and escrow. However, FHA does not let you add them to the new loan amount. So you usually pay them in cash, with a gift, or through a lender credit in exchange for a higher rate.
Before you apply, check our FHA streamline refinance guide for eligibility and program rules.
FHA streamline refinance closing costs: the quick answer
HUD caps the new loan by formula: the lesser of your current balance (plus interest, late charges, escrow shortages and MIP due) or the old loan’s original amount, minus any upfront MIP refund. Specifically, that rule is in HUD Handbook 4000.1, section II.A.8.d.vi(C)(4)(i). Because new fees are not part of the formula, they cannot ride along in the FHA loan. That leaves three main ways to pay:
- Your own cash. If the funds you need to close exceed one month’s new total payment, the lender must verify the full amount (II.A.8.d.vi(C)(4)(g)).
- A lender credit. HUD calls this premium pricing: you accept a higher rate, and the lender credits money toward closing costs and prepaid items (II.A.5.c.i(B)(2)(h)).
- Gift funds. For example, from a family member, employer, charity or government program (II.A.5.c.iii(F)).
A separate second loan is the one other route. HUD allows new subordinate financing on a streamline to cover closing costs, prepaid items and discount points (II.A.8.d.vi(C)(4)(j)), but availability varies.
In addition, on the date the lender assigns your FHA case number, you must have made at least six payments. At least six full months must have passed since the first payment due date, and at least 210 days since closing on the loan you are refinancing (II.A.8.d.vi(C)(4)(a)). Our FHA streamline guidelines FAQ covers the other rules.
What FHA streamline costs include and who sets each fee
HUD lets the lender charge a reasonable origination fee plus customary and reasonable closing costs, and charges may not exceed the actual costs (II.A.5.c.i(B)(2)(a)). Beyond that, FHA sets no fee schedule, so FHA streamline refinance closing costs vary by lender and county. Similarly, the CFPB’s list of common closing fees covers the same categories.
| Cost | Who sets it | Can you shop or negotiate it? |
|---|---|---|
| Origination, processing and underwriting fees | Lender | Yes. Compare Loan Estimates and ask for waivers. |
| Discount points (optional) | Lender | Yes. Points buy a lower rate. |
| Credit report | Lender and credit bureau | Not required on a non-credit-qualifying streamline, although a lender may pull one anyway. |
| Appraisal | Not required by FHA | FHA does not require one, so there is nothing to shop unless the lender orders one anyway. |
| Title insurance and settlement fees | Title company or closing agent | Often. Services in section C of the Loan Estimate are shoppable. |
| Attorney fee | Attorney, in states where one handles closings | Sometimes |
| Flood certification and tax service | Third parties | Depends on whether the lender lets you choose the provider |
| Recording fees and government taxes | State or county | No |
| Upfront MIP | FHA: 1.75% of the base loan amount | No, but you can finance it. |
| Prepaid interest | Daily interest from closing to month-end | Partly, through your closing date |
| Escrow deposit for taxes and insurance | Your tax bill and insurance premium | No, but the old escrow balance comes back to you. |
The credit-qualifying streamline adds a required credit report and a credit and capacity review (II.A.8.d.vi(C)(4)(f), (6)(b)), so ask each lender whether its fees differ. Also, some lenders order an appraisal anyway; here is why that can happen on a streamline.
Upfront MIP, the refund and annual MIP
Nearly every FHA streamline carries a new upfront mortgage insurance premium (UFMIP) of 1.75% of the base loan amount, per Appendix 1.0 of the handbook. You can finance it, but HUD requires it to be either entirely financed or entirely paid in cash (II.A.5.c.i(B)(2)(e)). However, if your current loan was endorsed on or before May 31, 2009, the upfront premium is 0.01% instead.
How the upfront MIP refund works
If you refinance an FHA loan into a new FHA loan within three years, HUD credits part of the old UFMIP against the new one (II.A.8.d.iv). The credit starts at 80% in the first month and then drops 2 percentage points a month, to 10% in the last month of year 3. Instead of paying it out as cash, HUD subtracts it from the new loan’s maximum base amount. Here is a hypothetical example:
| Step | Amount |
|---|---|
| Old loan’s base amount | $240,000 |
| UFMIP paid on the old loan (1.75%) | $4,200 |
| Refund percentage (year 2, month 8 on HUD’s schedule) | 42% |
| Refund credit ($4,200 × 42%) | $1,764 |
| Current balance plus interest due (lower than the original amount, so it sets the cap) | $235,000 |
| New maximum base loan ($235,000 − $1,764) | $233,236 |
| New UFMIP (1.75% of $233,236) | $4,081.63 |
| New loan with UFMIP financed | $237,317.63 |
Without the refund, the new loan would be $239,112.50, so the refund trims it by $1,794.87.
Annual MIP on the new loan
Under Mortgagee Letter 2023-05, a 30-year FHA loan with a base amount of $726,200 or less pays annual MIP of 0.55% if the loan-to-value ratio (LTV) is more than 95%, and 0.50% if the LTV is 95% or less. On a streamline, though, FHA measures LTV against the home’s original value (II.A.8.d.vi(C)(4)(l)). MIP lasts 11 years if that LTV is 90% or less, and otherwise for the full term.
These rates apply to loans endorsed on or after March 20, 2023. So if your loan is older, a streamline can move you to the lower current rate, which counts toward HUD’s required combined-rate drop. Our FHA MIP chart lists every rate.
How to pay less: no-closing-cost FHA streamline and other options
Take a lender credit for a no-closing-cost FHA streamline
With a no-closing-cost FHA streamline, the lender prices your loan at a higher rate and pays your costs with a credit. As the CFPB explains, you pay less up front and more over time. HUD also lets the credit cover actual closing costs and prepaid items. However, any excess must reduce your principal. Our no-closing-cost refinance guide explains how lenders price these offers.
Time your closing date
Your new lender collects daily interest from closing through month-end. Consequently, a late-month closing means less cash to close. Your total interest barely changes, though, because the old loan charges interest until payoff. For FHA loans closed before January 21, 2015, the servicer may charge interest through the next due date if it disclosed that to you (24 CFR 203.558(b)), so a payoff near month-end avoids paying for unused days.
Meanwhile, your old servicer must refund leftover escrow within 20 days of payoff, excluding weekends and legal holidays (12 CFR 1024.34(b)). HUD also lets the lender lend you the new escrow deposit interest-free, up to the old escrow balance (II.A.8.d.vi(C)(4)(g)).
Shop lenders and ask for fee waivers
HUD sets the same minimum rules for every FHA streamline, so quotes differ mostly in lender fees, rate pricing and any lender overlays. Therefore, get Loan Estimates from two or more lenders on the same day, at the same points or credit. Then ask the higher-priced lender to drop a processing or underwriting fee, or to match the lower offer. Also ask the title company whether it offers a discounted rate on a refinance; where it does, the rate varies by state. In contrast, recording fees and government taxes are fixed.
Is an FHA streamline refinance worth the closing costs?
Divide your out-of-pocket costs by your monthly savings. Then the result is the number of months before the refinance pays you back.
HUD’s net tangible benefit rule sets the floor. For a fixed-to-fixed streamline with no term cut of three years or more, the new combined rate (interest plus annual MIP) must be at least 0.5 percentage points lower (II.A.8.d.vi(C)(4)(c)).
Break-even example
The rates below are examples only. Say a homeowner owes $250,000 at 7.50% with 324 payments left on a 30-year fixed FHA loan, past the refund window. Both new options are 30-year fixed loans of $254,375, which includes $4,375 of financed UFMIP. Annual MIP is estimated at 0.55% of the starting balance, divided by 12. Taxes and insurance are left out because they do not change. Also, the $4,000 of closing costs excludes prepaid interest and escrow.
| Current loan | Option A: pay $4,000 in cash | Option B: lender credit covers $4,000 | |
|---|---|---|---|
| Interest rate (example) | 7.50% | 6.75% | 7.00% |
| Principal and interest | $1,801.83 | $1,649.87 | $1,692.36 |
| Annual MIP, monthly estimate | $114.58 | $116.59 | $116.59 |
| Monthly total | $1,916.41 | $1,766.46 | $1,808.95 |
| Monthly savings | None | $149.95 | $107.46 |
| Cash for closing costs | None | $4,000 | $0 |
| Break-even | None | 27 months | No cash needed at closing; savings start with the first payment |
What the example shows
Option A recovers its $4,000 in about 27 months of lower payments ($4,000 ÷ $149.95 = 26.7). That counts payments only, not the $4,375 of financed UFMIP. Option B saves less each month but needs no cash at closing. Because Option B’s payment runs $42.49 higher, Option A’s lower payment takes about 94 months to repay its $4,000 ($4,000 ÷ $42.49). If you expect to sell or refinance before then, the credit likely costs less.
Both options pass HUD’s test: the combined rate falls from 8.05% to 7.30% or 7.55%. However, Option B sits exactly at the 0.5-point minimum, so a slightly higher rate would fail. Finally, a new 30-year term adds three years of payments, which the monthly figures do not show.
FHA streamline vs. conventional refinance closing costs
The fee categories are mostly the same. Instead, the differences lie in financing and qualifying.
- Financing costs: Fannie Mae lets a limited cash-out refinance finance closing costs, points and prepaid items, within its LTV limits (Selling Guide B2-1.3-02). The FHA streamline loan amount cannot include them.
- Underwriting: A conventional refinance generally reviews your credit, income and home value, while a non-credit-qualifying streamline skips most of that.
- Mortgage insurance: Conventional loans have no upfront FHA premium, but they may require private mortgage insurance below 20% equity.
Which costs less depends on your equity, credit and quotes, so price both on the same day.
FHA streamline refinance closing costs FAQ
Can you get an FHA streamline refinance with no closing costs?
Yes, if a lender covers the costs with a credit in exchange for a higher rate. Even so, the higher rate must still pass HUD’s net tangible benefit test.
Can I roll closing costs into an FHA streamline refinance?
Not into the FHA loan itself. Only the new upfront MIP can be added to the streamline loan amount, because HUD’s loan formula (II.A.8.d.vi(C)(4)(i)) leaves no room for fees. HUD does allow a new subordinate loan to pay closing costs, prepaid items and discount points (II.A.8.d.vi(C)(4)(j)). However, that is a separate loan, and whether any lender or program offers one varies. In contrast, FHA’s rate-and-term and simple refinances can include “costs associated with the transaction” (II.A.8.d.i(B)(2)), with standard underwriting.
What are FHA streamline refinance rates today?
Rates change daily, since they depend on the lender, your loan and any points or credits. See our FHA streamline refinance rates page, then compare same-day Loan Estimates.
Is an FHA streamline refinance a good idea?
It can be when the loan passes HUD’s test and you will keep it past your break-even point. For example, in the scenario above, paying $4,000 in cash took about 27 months to recover.
How do I calculate my FHA streamline break-even point?
Add the closing costs you pay out of pocket, but leave out the escrow deposit, since the old servicer refunds that balance. Then divide by the monthly drop in principal, interest and MIP.
Your next step
To keep FHA streamline refinance closing costs down, get two Loan Estimates on the same day, one at zero points and one with a full lender credit, and run the break-even math on each. If the cash option takes longer to pay back than you expect to keep the loan, the credit is likely the better fit.
