FHA Streamline
All standard FHA Refer/Eligible requirements must be met unless otherwise noted in the topic below. If the client is on a FHA Streamline loan and standard guidelines differ from the guidance outlined on the FHA Streamline topic, the guidelines outlined on the FHA Streamline topic will always take precedent.
Product Eligibility
How to Determine Daily or Monthly Interest
Paying off a loan that closed on or after 1/21/15: A daily interest calculation must be used and there are no target closing dates. See the max loan amount calculation row below for guidance.
Paying off a loan that closed on or before 1/20/15: A monthly interest calculation must be used.
To prevent an additional month’s interest being added to the payoff, below are the target closing dates as of February 2020:
* Must be in HUD Review Complete by 2/20, with Closing Disclosure acknowledged
* Must be in HUD Review Complete by 2/19 with Closing Disclosure acknowledged
When to Credit Qualify
Required when removing a client for reasons other than death, divorce or assumption
Credit Qualifying
Non-Credit Qualifying
Transaction Details
Existing lien must be FHA
At least one client on the existing loan must be on the new loan, see the Streamline Type row below for additional guidance.
We cannot proceed with a streamline until a new case number can be issued. See the FHA Case Numbers topic for details.
Cash out transaction are not allowed.
Benefits of Streamlines
The benefits of a streamline refinance are reduced documentation requirements and potentially lower MIP. A client may qualify for reduced income and credit documentation, reduced appraisal requirements or both.
Seasoning
Must meet all of the following:
* New applications should not be taken until at least six payments have been made on the previous loan.
Adding a Client
A client may be added to the loan and title, unless they are a non-occupant co-client
Alimony as Debt
Follow standard FHA guidance.
Alimony does not need to be entered as a debt into the liabilities screen.
Non-Occupant Co-Client
Not Allowed
Allowed as long as NOCCs income is not being used for qualifying purposes
Streamline Type
Must meet the standard FHA Refer/Eligible requirements.
A mortgage statement must be obtained.
A non-credit qualifying streamline is not allowed if any client is being removed from the loan unless one of the following applies:
In all the above cases, the client must provide most recent 6 month's cancelled checks evidencing they have made the payments.
Loan Terms & Payments
Maximum term of new loan without an appraisal is the lesser of 30 years or the remaining term plus 12 years.
Net Tangible Benefit
The most recent mortgage statement must be obtained showing a breakdown of the current monthly payment.
If the new loan results in a Term Reduction, all of the following must occur:
* Fixed to Fixed: New Combined Rate must be lower than the prior Combined Rate.
* ARM to Fixed: New Combined Rate can be a maximum 2% increase from the prior Combined Rate.
If the new loan does not result in a Term Reduction, one of the following must occur:
State Restrictions
Ability to Repay States: DC, Illinois, Massachusetts, Nevada, and Ohio
Must follow standard Credit Qualifying Streamline guidelines.
Income must be listed on the 1003
Max 50% DTI
Income must be reasonable.
Wage Earner (Non-Passive) Income:
* If a paystub cannot be obtained, a work number can be used in lieu to verify the client's income.
Self-employed income must be fully documented.
Passive Income Requirements:
Nevada & Massachusetts only: Repayment Ability Acknowledgment form MUST be signed by the client(s).
West Virginia
See the State Requirements topic for guidance on West Virginia.
Idaho, Montana and South Dakota
Must meet state specific requirements for maximum acreage, see the Maximum Acreage topic for guidance.
Kansas
Property value can be obtained from the state of Kansas. If the state value doesn't work (no value given or the LTV is too high/expensive), the following applies:
Client-Provided Appraisal:
No Appraisal Provided:
Credit
Mortgage History
Max 0x30 allowed in the six months prior to application and through disbursement.
Max 1x30 allowed in the 7-12 months prior to application and through disbursement.
Payment history requirements apply to any mortgage in the client’s name.
Credit Report Requirements
Tri-merged report is required
A tri-merged report is required.
A credit report is not required for a non-borrowing spouse in a community property state.
Credit History
Must meet the standard FHA Refer/Eligible requirements.
Not Applicable
Credit Inquiry Letters
An inquiry letter is needed for all inquiries within 60 days.
Not Required
CAIVRS
Required
Not Applicable
LDP/GSA
Required
Adverse Credit
Disputed Accounts
Must meet the standard FHA dispute requirements. See the Disputed Account topic for guidance.
Disputed accounts on the credit report do not need to be addressed.
Foreclosure / Deed-in-Lieu / Short Sale
Must meet the standard FHA Refer/Eligible requirements.
Seasoning requirements do not have to be met.
Bankruptcy
Must meet the standard FHA Refer/Eligible requirements.
Bankruptcy seasoning requirements do not need to be met.
Collections, Charge-offs, and Judgments
Must meet the standard FHA Refer/Eligible requirements.
Collections and Charge-offs do not need to be addressed.
For judgments appearing on the credit report, if title is clear and our lien position is not impacted, the judgments can remain open. All liens and judgments on title must be subordinated or paid in full to ensure first lien placement.
Income & Assets
Employment Income
Full income verification is required. Follow FHA Refer/Eligible guidelines.
See the Gap in Employment topic for additional requirements.
Primary employer must listed on the application
2 year work history is not required
No income should be stated on the 1003
Standard Salary/Hourly: Verbal VOE required for a minimum of one client on the loan. It can be for any client on the loan.
Salary/Hourly plus Commission, Bonus or Overtime: Verbal VOE is required for minimum of 1 client on the loan to confirm employment status. Can be any client on the loan.
Self-Employment: QL will attempt to verify the existence of the business from a third party source within 120 days of close. Verify the client's business using ONE of the following methods, attempting to verify in the following order:
* Verify the business name, telephone number, and address.
If the information above is verbally verified, the name and title of the team member who obtained this information must be documented along with the source of the information.
Employed by Relatives:
* Documentation from separate HR department
* Letter from accountant validating client is on payroll
Passive Income
Full income verification is required. Follow FHA Refer/Eligible guidelines.
See the Gap in Employment topic for additional requirements.
Passive Income/Non-Employment:
Assets
Follow standard FHA asset requirements.
If funds to close are less than the new PITIA payment, proof of funds for closing is not required
If funds needed for closing exceed the new PITIA payment, the amount that exceeds the PITIA needs to be confirmed.
To verify funds held in an account, obtain ONE of the following:
If the client is named on a bank statement with someone not on the loan, the joint account holder must provide a written statement acknowledging the client has full access to funds in the account. Provide the Access to Funds document to the client to complete.
Reserves
One month PITIA
Not Required
1003
Fully completed 1003 is required.
Large Deposits
Any single deposit that exceeds 1% of the original appraised value.
Large deposits are not required to be sourced for non-credit qualifying loans.
Property & Insurance
Occupancy
For occupancy guidelines see the Primary Residence topic.
Condos
For Streamlines without an appraisal, condos do not need to be on the FHA Approved Condo list, and a review is not required.
Property coverage is the only coverage required for FHA streamlines.
If approval of a condominium project has been withdrawn by HUD, Streamline refinances are only allowed without an appraisal.
Mortgage Insurance Premium
MIP is based off prior endorsement date, not the prior closing date found on the credit report.
If the prior closing date is between January 1, 2009 and June 1, 2009, then the date the previous FHA loan was insured MUST be verified.
See the Mortgage Insurance (11.01 Mortgage Insurance, VA Funding Fee, and USDA Guarantee Fee - QLMS, 11.0 Mortgage Insurance & VA Funding Fee Menu) topic for partial UFMIP refund requirements and more information on this topic.
Loan Amount
Max Loan Amount Calculation
Add together current principal balance, interest, and MIP due through payoff (maximum of 2 months MIP).
When paying off a loan that closed on or before 1/20/2015: Monthly interest and the number of months MIP is measured up to the disbursement date on the new loan.
The interest from date is 1/1/18 and the disbursement date is 2/23/18, therefore there are 2 months (January and February) of interest and MIP on this loan.
When paying off a loan that closed on or after 1/21/2015: Daily interest and the number of months MIP is measured up to the disbursement date of the new loan.
The interest from date is 2/1/18 and the disbursement date is 2/21/18, therefore there is 1 month (February) of interest and MIP on this loan.
Subtract UFMIP refund
If MIP is financed, UFMIP is then added to the base to get the new total loan amount.
Prepayment penalties cannot be financed.
GURU Calculation QLMS Use the FHA Max Loan Amount Calculator to estimate the maximum loan amount based on monthly and daily interest.
Non-Credit Qualifying: The base loan amount cannot exceed the original loan amount of the previous FHA loan as found on the FHA Refinance Authorization Form or include any late fees or delinquent interest.