How quickly you can refinance your mortgage depends on the type of mortgage you have and the type of refinance you want.
Some mortgages allow you to refinance immediately after you take out the original loan. Others require a period of time to pass, known in the mortgage industry as “seasoning,” before you can refinance.
In this article, we'll explain the seasoning rules for conventional loans, FHA loans, VA loans, USDA loans, and jumbo loans.
If you're not sure what type of loan you have, if your loan isn't insured by the Federal Housing Administration, the U.S. Department of Veterans Affairs, or the U.S. Department of Agriculture (USDA) and it's not a jumbo loan, you're probably getting a conventional mortgage.
Jumbo loans exceed the conforming loan limit and do not meet the qualification standards set by the Federal Housing Finance Agency. Most conventional mortgages fall within these guidelines, making them conforming loans, and are usually purchased by Fannie Mae and Freddie Mac.
If you have a conventional loan, you can visit Fannie Mae and Freddie Mac's loan search websites to see if your loan is owned by one of the government-sponsored companies.
If you have an FHA, VA or USDA loan, it should be listed on your mortgage statement, but you can also double-check by contacting your loan servicing company.
Rules for refinancing conventional loans
In most cases, conventional loans can be refinanced immediately if you want to. In some cases, you may have to wait six months before you can refinance with the same lender. But that doesn't prevent you from refinancing with a different lender.
The exception is a cash-out refinance, where you borrow an amount that is greater than the remaining balance of your mortgage and receive the excess amount in cash. To qualify for a cash-out refinance on a regular mortgage, you must have owned the home for at least 12 months, unless you inherited the property or received it as part of a divorce, separation, or dissolution of a domestic partnership.
Home loan from partner
Best Mortgage Lenders First Time Buyers Refinance HELOC Home Equity Loans
Home loan from partner
Best Mortgage Lenders First Time Buyers Refinance HELOC Home Equity Loans
FHA Loan Refinancing Rules
An FHA loan is a mortgage guaranteed by the Federal Housing Administration. There are several types of FHA refinances, each with their own rules.
Cash Out. Like a traditional cash-out refinance, with an FHA cash-out refinance, your new loan amount is greater than your current mortgage balance, so you receive the difference in cash. To qualify, you must own the home and have lived in it as your primary residence for at least 12 months before applying for a cash-out refinance. A cash-out refinance can be made on a home that you own outright. If you have a mortgage, you must have owned it for at least six months. Any mortgage payments due in the past 12 months must have been made on time.
Rate and Term, and Simple Refinances. If you refinance your FHA loan into another loan without taking out any cash, the FHA calls it a simple refinance. If you refinance from another loan type into an FHA loan without taking out any cash, it's a rate and term refinance. In either case, you don't have to wait to refinance unless your lender has seasoning requirements. As far as the FHA is concerned, you can qualify with less than six months of payments, as long as all payments are made on time. If you have a longer term loan, all mortgage payments due within the past six months must be made on time and you must not have had more than one late payment (30 days or more late) in the six months prior to that.
FHA Simplified Loan. An FHA Simplified Loan Refinance is a faster way to refinance from one FHA loan to another with less paperwork because it doesn't require an appraisal. You must have held the mortgage for at least 210 days and have made at least 6 months of payments. Your last 6 months of payments must be on time and you can have a maximum of one late payment (more than 30 days late) for the prior 6 months.
Rules for refinancing VA loans
To refinance into a VA loan (a mortgage guaranteed by the Department of Veterans Affairs), you must wait at least 210 days after making your first monthly payment or until you've made six payments, whichever is longer. This requirement applies whether you get a VA cash-out refinance or a VA interest rate reduction refinance loan, known as an IRRRL.
USDA Loan Refinancing Rules
The United States Department of Agriculture offers two USDA mortgage programs for rural homebuyers: Guaranteed Loans and Direct Loans. For both types, the USDA offers three options for refinancing into another USDA loan: If you receive a simplified or non-simplified refinance, you must have made all payments on time for the past 180 days. For the simplified assisted refinance program, which allows borrowers to refinance with significantly less paperwork, you must have made all current mortgage payments for the past 12 months.
Rules for refinancing jumbo loans
Like a regular loan, in most cases, a jumbo mortgage can be refinanced at any time. Lenders may have their own requirements, but there are no agency rules to follow. Because jumbo loans are for amounts that exceed the conforming loan limits used by Fannie Mae and Freddie Mac, lenders will record jumbo loans on their own books, which means they may be subject to stricter underwriting requirements than regular loans.
Reasons for refinancing
Now that you know how quickly you can refinance, make sure you do it for positive reasons. Many people refinance to get a lower interest rate on their mortgage and lower their monthly payments. But that's not all there is to the benefits of refinancing. Some of the benefits of refinancing include:
Shorten the term of your loan, for example from 30 years to 15 years. Even if you lower your interest rate, your monthly payments on your new loan may be higher because your repayment term is shorter. However, shortening the term of your loan could save you thousands of dollars because you'll be paying interest over a shorter period of time.
You can switch from an adjustable rate mortgage to a fixed rate loan or vice versa.
Resolve divorce, separation, or cohabitation dissolution.
Borrow from the equity in your home to pay for home improvements and other costs.