According to the U.S. Department of Housing and Urban Development (HUD), the basic requirements for a streamlined refinance are as follows:

• The mortgage loan to be refinanced must be an FHA loan.
• The FHA mortgage loan being refinanced must be current.
• The refinance must provide a net tangible benefit to the borrower. The definition of net tangible benefit varies depending on the type of loan being refinanced and the interest rate and/or term of the new loan.
• If borrowers use a streamlined refinance, they cannot take out more than $500 in cash on the refinanced mortgage.

Streamline refinances can be offered in several ways. For example, lenders may offer “no-cost” refinances, where borrowers pay no out-of-pocket expenses. Instead, the lender might charge a higher interest rate on the new loan if the borrower opts not to pay the closing costs in cash. In such cases, the lender covers any closing costs incurred during the transaction. According to FHA guidelines, lenders are not allowed to include closing costs in the new mortgage amount of a streamlined refinance. Simply put, an FHA streamlined refinance allows current FHA loan borrowers to lower the interest rate on their mortgage without having to meet an extensive list of criteria.