On this page
- What the USDA streamline refinance is and who can use it
- USDA streamline refinance requirements
- The three USDA refinance options compared
- What a USDA refinance costs
- Refinance USDA to conventional: when switching makes sense
- How to refinance a USDA loan, step by step
- USDA streamline refinance FAQ
- Your next step
Yes, you can refinance a USDA loan, as long as USDA guaranteed or made the loan you have now. USDA offers three refinance options, and the USDA streamline refinance (USDA calls it the streamlined-assist refinance) is the simplest: no new appraisal and no debt-to-income calculation, but your monthly payment must drop by at least $50. However, a conventional, FHA or VA loan cannot move into a USDA loan through any of these options.
Below are the streamline rules, the other two options, the fees, and when a conventional loan makes more sense. If you are buying instead, see our guide to USDA home loans.
What the USDA streamline refinance is and who can use it
The USDA streamline refinance replaces your current USDA loan with a new 30-year fixed USDA guaranteed loan. Its handbook name is “streamlined-assist,” and the rule sits in 7 CFR 3555.101(d). It is a permanent nationwide option with no set end date, which USDA adopted in 2016 to replace the Rural Refinance Pilot it launched in 2012.
Only current USDA borrowers qualify. HB-1-3555, chapter 6 limits all three refinance options to existing Section 502 guaranteed or direct loans. In the handbook’s words, the program “cannot refinance mortgage debt that is not financed or guaranteed by USDA.” Also, homes in areas that USDA now considers non-rural remain eligible for a refinance.
USDA streamline refinance requirements
These rules come from HB-1-3555 chapter 6 (revised May 5, 2025) and USDA’s refinance matrix:
- An existing USDA loan, either Section 502 guaranteed or direct.
- 180 days since closing. The current loan must have closed at least 180 days before the lender submits the refinance to USDA.
- A $50 payment drop. Your new principal, interest and USDA annual fee must total at least $50 a month less than those items on your current loan. Taxes and insurance do not count.
- A 30-year fixed rate at or below your current rate.
- Same home, still your primary residence.
- On-time mortgage payments, covered below.
- Current borrowers stay on. You can add a borrower, but no one comes off unless they have died.
- Manual underwriting. USDA’s Guaranteed Underwriting System (GUS) cannot process streamlined-assist loans, so the lender underwrites the file by hand.
USDA does not require a new appraisal, a debt-to-income ratio calculation or a full credit review for this option. Still, your lender must document household income to show it is within USDA’s limit; see USDA income limits. Direct loan borrowers who received payment subsidy are the exception on appraisals, since USDA needs one to figure the subsidy it may take back (recapture).
Payment history: the 180-day and 12-month rules
USDA’s sources state this test two ways. The handbook and refinance matrix allow no delinquency of more than 30 days in the 180 days before the lender submits the loan. However, the regulation refers to the past 12 months, both in its definition and in 3555.101(d). Because your lender may apply the stricter rule, plan on 12 months of on-time payments. The lender checks only your mortgage account, through your servicer or a credit report.
The three USDA refinance options compared
All three options require an existing USDA loan, a 30-year fixed rate at or below your current rate, owner occupancy, household income within the limit and the 180-day wait. None allows cash out. Here is where they differ:
| Feature | Non-streamlined | Streamlined | Streamlined-assist (USDA streamline refinance) |
|---|---|---|---|
| New appraisal | Required | Not for guaranteed loans | Not for guaranteed loans |
| Credit rules | Full chapter 10 review | Full chapter 10 review | Mortgage payment history only |
| Debt-to-income ratios | Calculated under chapter 11 | Calculated under chapter 11 | None calculated |
| $50 payment test | No | No | Yes |
| Maximum loan | Up to the new appraised value, plus the financed upfront fee | Current balance, closing costs and upfront fee | Current balance, closing costs and upfront fee |
| Remove a borrower | Yes, if one original borrower stays | Yes, if one original borrower stays | Only a deceased borrower |
| Underwriting | GUS or manual | GUS or manual | Manual only |
| Fits | Direct-loan borrowers financing subsidy recapture | Removing a co-borrower without an appraisal | A clean payment record and a $50 drop |
Only the non-streamlined option always needs an appraisal, so its loan cannot exceed the appraised value plus the financed upfront fee. Direct loan borrowers can include subsidy recapture in it or defer recapture as a second lien (HB-1-3555 Attachment 6-A).
How it differs from FHA and VA streamlines
FHA and VA run their own streamline programs with their own benefit tests; see the FHA streamline refinance and the VA IRRRL. The USDA streamline refinance uses the flat $50 test.
What a USDA refinance costs
For fiscal year 2027 (October 1, 2026, through September 30, 2027), USDA’s September 16, 2026 lender notice set the same fees for purchase and refinance loans:
- Upfront guarantee fee: 1% of the new loan amount, paid at closing or financed into the loan.
- Annual fee: 0.35% of the average scheduled unpaid balance, paid monthly for the life of the loan (7 CFR 3555.107(h)).
- Lender closing costs, which must match what the lender charges other applicants for similar loans. The handbook also bars closing costs above 3% of the loan amount, lender fees included, unless the CFPB’s qualified mortgage rules allow more.
With the two streamline options, the new loan can include your balance, reasonable and customary closing costs and the upfront fee. So you can refinance with little cash, although a larger balance shrinks the savings. Unpaid fees, past-due interest, late charges and lender-required repair costs cannot go into the loan. Our guides to refinance costs and no-closing-cost refinancing explain lender pricing.
Cash out is not allowed on any USDA refinance. At closing, you can only get back eligible closing costs you paid yourself, prepaid interest or escrow overage.
How the $50 test is counted
Say a homeowner borrowed $210,000 two years ago at 7.50% for 30 years, and the balance after 24 payments is about $205,978. They refinance into a 30-year fixed USDA loan and finance $4,000 of closing costs plus the full 1% fee. Under HB-1-3555 chapter 16, the new loan is ($205,978 + $4,000) ÷ 0.99 = $212,099, including a $2,121 fee. All figures are hypothetical and exclude taxes and insurance. For the annual fee, this example uses 0.35% of the starting balance ÷ 12, while USDA’s average-balance method runs slightly lower.
| Monthly amount | Current loan at 7.50% | New loan at 6.75% | New loan at 7.25% |
|---|---|---|---|
| Loan balance | $205,978 | $212,099 | $212,099 |
| Principal and interest | $1,468.35 | $1,375.67 | $1,446.89 |
| Annual fee (estimate) | $60.08 | $61.86 | $61.86 |
| Total for the $50 test | $1,528.43 | $1,437.53 | $1,508.75 |
| Monthly reduction | Not applicable | $90.90, passes | $19.68, fails |
At 6.75%, the payment falls $90.90 and passes. At 7.25%, the financed costs and fee leave only a $19.68 drop, so that loan fails. Ask your lender for this comparison in writing.
Rates and your break-even point
USDA does not publish refinance rates; lenders set them, and the new rate must be fixed and no higher than your current one. As a benchmark, Freddie Mac’s survey put the average 30-year fixed rate at 7.11% on November 12, 2026, up from 6.24% a year earlier. That is a conventional average, so a USDA quote can differ; see today’s mortgage rates.
Then divide your costs by your monthly savings. In the 6.75% example, $6,121 in closing costs and fees ÷ $90.90 means about 67 months to break even. Our guide on whether refinancing is worth it walks through the math.
Refinance USDA to conventional: when switching makes sense
Leaving USDA for a conventional loan is a separate decision. A conventional refinance is a new loan under the lender’s own credit and income rules and Fannie Mae or Freddie Mac standards, with a new appraisal or another valuation the lender accepts. In exchange, the USDA annual fee ends.
A switch can make sense when:
- You have at least 20% equity. Fannie Mae requires mortgage insurance above 80% loan-to-value (LTV), so at 80% or less you pay neither PMI nor the USDA fee.
- Your income now exceeds the USDA limit. In that case, no USDA refinance option is open to you.
- You want cash out. Fannie Mae allows a cash-out refinance up to 80% LTV on a one-unit primary residence as of October 2026.
You give up the streamline shortcuts, though. Also, below 20% equity, private mortgage insurance (PMI) replaces the USDA fee; see how much PMI costs and how to remove PMI. For example, the 0.35% USDA fee on a $200,000 balance is about $58 a month ($200,000 × 0.0035 ÷ 12), so weigh that against the conventional rate, any PMI and closing costs. Our conventional refinance guide covers the rules.
How to refinance a USDA loan, step by step
- Check timing and record. Your loan should be at least 180 days old, with no late payments in the past 12 months.
- Call your servicer first. Ask whether it offers the USDA streamline refinance and what rate it quotes. Not every lender does USDA refinances.
- Compare another USDA lender. USDA’s state-searchable active lender list shows lenders that recently made USDA guaranteed loans, though USDA endorses none. Ask whether each lender is USDA-approved and handles streamlined-assist loans.
- Gather documents, including your latest mortgage statement and income records for the adults in your household.
- Let the lender submit. It checks your history, income and the $50 test, then sends the file to USDA for a conditional commitment.
- Close. You sign a new note, and USDA reviews the closing before it issues its loan note guarantee.
You will not need an appraisal on a guaranteed loan.
USDA streamline refinance FAQ
Can you refinance a USDA loan?
Yes, if USDA guaranteed or made your current loan. Of the three options, the USDA streamline refinance (streamlined-assist) has the lightest paperwork.
Can you refinance a conventional, FHA or VA loan into a USDA loan?
No. USDA refinances only loans it financed or guaranteed, except interim construction or lot financing for building a home, which it treats as a purchase.
How soon can you refinance a USDA loan?
Your loan must have closed at least 180 days before the lender submits the refinance to USDA. Your payment history also counts; see how soon you can refinance.
Is there a credit score minimum for a USDA streamline refinance?
USDA sets no score for the streamlined-assist option; the lender checks your mortgage payment history instead. However, a lender can set its own minimum, so ask first.
Can you take cash out on a USDA loan?
No. USDA allows only reimbursement of eligible closing costs you paid, prepaid interest or escrow overage. For cash, consider a conventional cash-out refinance.
Can you remove a borrower from a USDA loan when you refinance?
With the USDA streamline refinance, only a deceased borrower can come off, though you can add borrowers. The other two options let you remove a borrower if one original borrower stays, but they require full credit and ratio underwriting.
Your next step
If you want a lower payment, test the USDA streamline refinance first, since it skips the appraisal and the DTI calculation. Ask your servicer and one other USDA lender to run the $50 comparison with your real balance and rate.
If you have 20% equity or your income now exceeds the USDA limit, get a conventional quote too.
