USDA Streamline Refinance

Lower Your Rate & Save

Have a question about the USDA streamline refinance loan? Call 855-971-1050 to speak with a loan officer.

Another great refinance mortgage option is the USDA streamline refinance loan. Did you know that USDA home loans have been instrumental in helping millions of individuals throughout the US achieve their dreams of home ownership? Did you buy your home with a Section 502 Direct or Guaranteed Loan? If yes, you might be able to refinance via the US Department of Agriculture (USDA).

You will be happy to know that the USDA streamline refinance initiative is admirable as it lets you refinance at a considerably lower interest rate. This allows you to lower your monthly mortgage payments to manageable levels and enjoy peace of mind.

USDA streamline refinance program mirrors other government-backed mortgage programs and offers current USDA mortgage holders an excellent opportunity to refinance. So, we can say that the USDA Streamline Refinance program

offers new opportunities for borrowers to easily refinance their home loans with better USDA loan rates.

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What is a USDA Streamline Refinance Loan?

There is no doubt that the USDA home loan initiative has helped individuals in rural as well as suburban areas across the US become homeowners by providing them with flexible terms, low rates, and relaxed credit requirements.

Did you know that the USDA Streamline Refinancing option doesn’t require a property appraisal? However, the option is available only for guaranteed loans. It is worth noting that the amount of the new loan cannot be higher than the principal on your current loan and a guarantee fee of 0.5% of the loan amount. Also, note that you cannot fold the

closing costs, accrued interest, and lender fees into your new loan.

Did you know that the refinance USDA loans work in almost the same way as other refinance loans? They offer existing homeowners great opportunities to refinance their home loans with better loan terms and interest rates. Also, note that the USDA Streamline Refinance is an excellent option for you if you already have a USDA home loan. Did you know that this refinance program emulates the successful VA IRRRL (Interest Rate Reduction Refinance Loan), and many other popular streamline refinance loans?

You will be happy to know that the main goal of offering USDA refinance opportunities to borrowers in rural and suburban areas is to support and help local economies in the small communities, which is excellent.Also, it is worth noting that most credit scores are easily accepted into this streamline refinance program, and your home’s loan-to-value (LTV) isn’t a consideration. This is why underwater homeowners in the US can use the program as easily and conveniently as homeowners with 20 percent equity.

Understanding USDA Streamlined Refinancing

We can define the USDA loan as a mortgage option. The option is available to some suburban and rural homebuyers. Note that qualified lenders issue USDA Home Loans and the US Department of Agriculture guarantees them.Also, keep in mind that USDA refinancing is quite similar to many other streamlined refinancing options. Some of them are the VA streamline refinancing from the US Department of Veterans Affairs and FHA’s streamline refinancing,

Can you Refinance a USDA Home Loan?

Do you currently have a USDA loan? If yes, you can easily apply for a USDA Streamline Refinance in order to reduce your rate or streamline your loan term. The best thing is that the USDA Streamline Refinance program has less paperwork. Also, note that there are almost no requirements for home appraisal, credit review, or home inspection, which is convenient.

Note that with a USDA streamlined refinance, your current loan can be a guaranteed loan or USDA direct loan. However, it is worth noting that the USDA doesn’t offer any cash-out refinances. It is worth noting that you will have to replace your current USDA mortgage with a new one in order to be eligible for this streamline refinance.

Also, note that the house must be your primary residence, and you have to be current on your repayments. Note that your current loan must be at least twelve months old. Your lender can help you determine if you are eligible for a USDA streamline refinance so that you may start saving some money on the USDA loan.

Did you know that the USDA streamline refinance program started as a pilot program just available in some select states? Its goal, like other refinance programs, was to help existing USDA home loan holders lower their payments without the hassle of red tape. You will be glad to know that the program is now available in all 50 US states, which is excellent.

Benefits of USDA Streamline Refinance

It is no secret that there are many benefits of USDA Streamline Refinance. However, note that only those who meet all the eligibility requirements and conditions can benefit by obtaining USDA streamline refinancing.

Note that, as a borrower, the key to all home loans as well as refinance mortgage options is to weigh all the pros and cons in order to find the best loan options on the market.

Have you been asking yourself whether you should refinance? If yes, note that there are several reasons you may consider a USDA refinance. These reasons are as follows:

Easier and Simpler Qualifying Process

You should know that sticking with a USDA home loan will give you an opportunity at the streamlined loan process, and the process doesn’t require a home appraisal.Note that if you choose another government-backed home loan program, you won’t be eligible for USDA streamlined offering.

Lower Annual Fee

Did you know that on Oct 2016, the USDA lowered its annual fee from 0.5 percent of the loan amount to 0.35 percent? So, if you bought your house before the change was made, note that refinancing will certainly help you benefit from the savings.

Competitive Interest Rates

As the US government guarantees the USDA loans, most lenders in the country tend to offer you competitive interest rates. It is worth noting that rates usually vary by lender. Also, the interest rate you are offered is often affected by your personal credit score and finances, among other factors.

Flexible Credit Scores

Did you know that there isn’t any minimum credit score for USDA streamline refinance loans? However, note that different lenders and banks may have different requirements and conditions regarding credit scores.

You can be Underwater

One of the best things about USDA refinance is that it allows people who are underwater on their mortgages — or people who owe a higher amount than their property is currently worth — to refinance. Note that as there is no home appraisal requirement on USDA streamlined refinance, you just have to prove that you will be able to make your mortgage payments in the future.

Guidelines for USDA Streamline Refinance

Note that understanding the guidelines for USDA streamline refinance will help you determine if you will qualify for this kind of home loan and whether the USDA streamline refinance option is the most suitable choice for your current situation.

There is no doubt that current borrowers with either a USDA guaranteed loan or direct loan without a subsidy might want to consider a streamlined refinance. This is because it allows them to easily refinance without the requirement for a new home appraisal.

Note that these are some important guidelines that you have to meet in order to qualify for USDA refinancing loans.

Your existing home loan has to be a USDA home loan. Keep in mind that other types of loans, including FHA, VA, and conventional loans, are not eligible.
The USDA streamline program is only available for thirty-year mortgage loans (fixed rate).
You cannot use the loan to finance second homes and rental properties.
You can add additional borrowers to your refinance loan, but you are not allowed to remove borrowers from your loan.
The payment history of your existing USDA loan should consist of timely payments for at least twelve months.
A cash-out option is not available on these loans

While no income documentation is needed for the USDA streamline refinance program, note that USDA streamline lenders or banks may need

bank statements in order to ensure that you don’t exceed the income limits of this program.

It is no secret that compared to FHA, conventional, and VA loans, considerably little paperwork, and other documentation is involved in securing a USDA refinance loan. Note that this makes it an attractive option for you if you are reluctant or hesitant to jump through many hoops in order to obtain a refinance loan.

USDA Streamlined Refinance – Who is Eligible

As a borrower, you have to meet minimum qualifications in order to secure this form of refinancing.

You must already have a current USDA mortgage in order to qualify for a USDA streamlined refinance.

Total household income for your family must meet specific USDA income eligibility requirements. Keep in mind that USDA mortgage financing is intended to help low or moderate-income homeowners.

Only thirty-year fixed loan terms are available. Fifteen-year or 20-year loan terms aren’t available.

Here are a few other requirements of this program:

Note that flood insurance is needed for all USDA-backed homes that are currently located in any flood zone.

The rate on the new mortgage must be 1% (at least) below your current mortgage rate

You will be happy to know that properties or homes no longer located in eligible rural areas remain eligible for this refinance transaction.

Note that the refinance can include the accrued interest, principal loan balance, any upfront guarantee fee, as well as other eligible closing costs on the loan.


Refinance Restrictions and Limitations on USDA Refinance Loan.

Keep in mind that the home you are refinancing must be your primary residence. Also, you must have a record of twelve consecutive and on-time mortgage repayments.

All Homes are not Eligible

Your home must be located in a rural area defined by the USDA. While the USDA defines rural quite broadly, note that there are some restrictions you should know. For example, homes with additional units that you use for any commercial purpose would likely be ineligible.

Also, it is worth noting that investment and vacation homes aren’t eligible. And if your house has a swimming pool (in-ground), the value of that pool will be deducted from your home's price. This makes ineligible for 100% financing. While manufactured homes are allowed, they have to be new and permanently installed. So, it is important to research these restrictions before starting the process to make the best decision.

Fewer Lenders

Did you know that the USDA limits the kinds of lenders approved to provide loans? You will have to use a USDA lender map in order to find a USDA lender or bank in your area.

Primary Residence Only

You should know that you may only use a USDA loan for your primary residence. Your primary residence is the house that you live in on a regular basis. Keep in mind that farms, vacation homes, and other homes that don’t meet this definition are not eligible for this loan.

Cost of the USDA Streamline Refinance

Bear in mind that because refinancing will replace your current mortgage with a new one, you’ll still have to pay some closing costs, such as a new USDA guarantee fee as well as an annual fee.

While it might be possible for you to roll these USDA fees or costs into the total amount of your new loan, you will likely have to pay other closing costs upfront. Are you ready to get started? It is best to start by finding a USDA-approved lender in your area. Keep in mind that you do

not need to refinance via your current lender.

In most cases, it is a good idea to get quotes from three lenders (at least) so that you can easily compare your monthly as well as total costs to find the most suitable deal.

Final Thoughts

There is no doubt that today’s mortgage rates are quite low. There are many opportunities to refinance your loan and save some money in the process. Also, with the USDA streamline refinance, it is simple and quick to check your eligibility and get closed on a new and low-rate mortgage.