FHA streamline vs refinance to conventional.
If you have an FHA loan today, here's how to decide between a fast streamline and a full refi to conventional.
Pick FHA Streamline if…
- You don't yet have 20% equity in the home
- You want the fastest, cheapest possible refi
- You only want to lower your rate and payment
- You can't document income easily right now
Pick Refi to Conventional if…
- You have 20%+ equity (or close to it)
- You want to permanently remove mortgage insurance
- Your credit has improved to 680+ since you got the FHA loan
- You want to take cash out at the same time
Full feature comparison
| Feature | FHA Streamline | Refi to Conventional |
|---|---|---|
| Appraisal required | No | Yes |
| Income/employment verification | Minimal | Full underwriting |
| Equity required | None — current loan balance | 20% minimum to drop MI |
| Mortgage insurance | Keeps FHA MIP for life of loan | PMI removable at 80% LTV — often none required |
| Closing time | 2–3 weeks | 3–5 weeks |
| Closing costs | Low — typically $1,500–$3,000 | $3,500–$7,000 |
| Rate available | FHA rates only | Full conventional rate sheet |
| Cash-out allowed | No | Yes if you want it |
| Best when | You don't have 20% equity yet | You have 20%+ equity and want to drop MI permanently |
Bottom line
If you have 20% equity, refinancing to conventional almost always wins long-term — removing FHA MIP can save $150–$400 per month for the life of the loan. If you don't have 20% equity yet, the FHA streamline is the cheap, fast option to lower your rate today.
Real numbers: $350,000 FHA loan
You currently have an FHA loan at 7.25% with 12% equity. Today's FHA rate is 6.50%, today's conventional rate is 6.625%.
FHA Streamline (6.50%)
- Closing costs: ~$2,500 (rolled in)
- New P&I: ~$2,212
- Monthly MIP (0.55%): $160
- Total P&I + MI: $2,372
- MI removal: Never — life of loan
Refi to Conventional (6.625%) — wait for 20% equity
- Closing costs: ~$5,500
- New P&I: ~$2,241
- Monthly PMI: $0 (at 80% LTV)
- Total P&I + MI: $2,241
- MI removal: Already gone
Takeaway: Going conventional saves $131/month forever once you hit 80% LTV — pays back the extra closing costs in about 23 months. If you're 6+ months away from 20% equity, streamline now and refi to conventional later.
FAQs
Can I remove MIP by refinancing to conventional?+
Yes — this is the single most common reason borrowers refi out of FHA. Once you have 20% equity (80% LTV based on a new appraisal), refinancing to conventional eliminates FHA's permanent MIP entirely.
Do I need an appraisal to refinance from FHA to conventional?+
Yes. A full appraisal is required because the conventional loan needs to confirm the home is worth enough for you to be at 80% LTV (to drop MI) or to set the PMI tier.
How much equity do I need?+
To drop mortgage insurance entirely, you need 20% equity (80% LTV). You can refinance to conventional with less equity — typically as low as 5% — but you'll have monthly PMI until you reach 80%.
Get a real side-by-side quote
We'll price both options for your scenario and walk you through the math.