The FHA streamline refinance worksheet is the side-by-side calculation your lender runs to prove the new loan actually saves you money before HUD will insure it. It compares your current combined rate (interest plus annual mortgage insurance premium) against the proposed combined rate, and for a fixed-rate-to-fixed-rate refinance the new figure has to be at least half a percentage point lower. The worksheet also factors in the new upfront MIP, any refund credit from your existing loan, and the maximum allowable loan amount. Getting each input right matters, because a single wrong figure can flip the result from passing to failing.
What You Need Before You Start
Almost every input comes from documents you already have. Pull your most recent mortgage statement for the unpaid principal balance, which sits near the top under the account summary. You also need your current interest rate and the principal-and-interest portion of the monthly payment. These figures should match across every document you provide; discrepancies trigger requests for more paperwork and slow the file down.
The annual MIP rate is the input that trips people up. For FHA loans with terms longer than 15 years, annual MIP runs between 0.80% and 1.05% depending on the loan-to-value ratio and whether the base loan amount exceeds $625,500. For terms of 15 years or less, annual MIP ranges from 0.45% to 0.95%.1U.S. Department of Housing and Urban Development. Appendix 1.0 Mortgage Insurance Premiums The exact rate is on your original closing disclosure or promissory note, and it’s fixed for the life of the loan. Don’t estimate it. Pull the number from the document.
You don’t need an appraisal for an owner-occupied streamline. The worksheet uses your existing loan balance rather than a new property value, which means falling home prices won’t block the refinance. Investment properties and second homes originally financed with FHA loans can still use the streamline program, but only without an appraisal, and the loan cannot convert to an adjustable rate.2U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage
The Combined Rate
The worksheet doesn’t compare interest rates in isolation. It uses what HUD calls the combined rate: your interest rate plus your annual MIP rate. If your current interest rate is 6.5% and your annual MIP is 0.80%, your current combined rate is 7.30%. The proposed combined rate uses the new interest rate plus the new annual MIP rate. This distinction matters because a lower interest rate paired with higher mortgage insurance may not actually clear the benefit threshold.
The Net Tangible Benefit Test
Every FHA streamline must pass HUD’s net tangible benefit test, and the exact threshold depends on what type of rate you’re moving from and to, and whether you’re shortening the term.2U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage
Fixed to Fixed
For refinances with no term reduction, or a reduction of less than three years, the new combined rate must be at least 0.5 percentage points below the current combined rate. This is a half-point reduction in the rate itself, not a 5% cut in the monthly payment.3U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1 If your current combined rate is 7.30%, the new combined rate needs to be 6.80% or lower.
When the term is shortened by three years or more, the standard loosens: the new combined rate just has to fall below the current one by any amount. There’s a guardrail though. The new combined monthly payment of principal, interest, and MIP cannot exceed the current payment by more than $50.3U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1
Adjustable to Fixed
Moving from any adjustable-rate mortgage to a fixed rate requires a steeper reduction. The new combined rate must be at least 2 full percentage points below the current combined rate when there’s no significant term reduction. HUD sets the bar higher here because borrowers are gaining rate stability, so the trade has to be worthwhile on pure cost terms too.3U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1 If the ARM is currently sitting at a temporarily low introductory rate, clearing the 2-point threshold is often impossible, which is exactly what the worksheet exists to flag.
Upfront MIP and the Refund Credit
The standard upfront MIP for a streamline refinance is 1.75% of the new loan amount. One narrow exception: if your original FHA loan was endorsed on or before May 31, 2009, the upfront premium drops to 0.01%.4U.S. Department of Housing and Urban Development. What is the FHA Mortgage Insurance Premium Structure for Forward Mortgage Loans For nearly every current borrower, the 1.75% rate applies.
The worksheet has a dedicated line for the upfront MIP refund. If you close the new loan within 36 months of closing the original FHA loan, you receive a credit against the new upfront premium. The refund starts at 80% of the original upfront MIP if you refinance in the first month, then drops by 2 percentage points each month after that. By month 12 the refund is down to 58%. By month 36 it’s just 10%. After 36 months you get nothing back. The refund is never paid to you as cash; it’s applied directly as a credit toward the new upfront premium on the worksheet.1U.S. Department of Housing and Urban Development. Appendix 1.0 Mortgage Insurance Premiums
Because streamline seasoning rules mean you can’t refinance until at least 210 days after your first payment, the earliest realistic refund lands around 68% to 64% of the original upfront MIP. On a $300,000 loan where you paid $5,250 in upfront MIP, a refinance at month 8 produces roughly a $3,465 credit toward the new premium. That kind of offset changes the worksheet math substantially.
Calculating the Maximum New Loan Amount
The worksheet also enforces a cap on your new loan amount, and the formula is tighter than a standard refinance. For an owner-occupied streamline without an appraisal, the new loan can cover the outstanding principal balance, plus any interest owed through closing, minus the upfront MIP refund credit, plus the new upfront MIP. Closing costs cannot be rolled into the new loan amount.2U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage
For investment properties the formula is stricter still: the new base loan can only cover the outstanding principal balance minus the MIP refund, and the term is capped at the lesser of 30 years or the remaining term plus 12 years.5U.S. Department of Housing and Urban Development. HOC Reference Guide – Refinances
Filling In the Two Columns
The worksheet is a side-by-side comparison of current loan terms and proposed loan terms.
- Current loan column: unpaid principal balance, interest rate, annual MIP rate, combined rate, and the monthly payment broken into principal, interest, and mortgage insurance.
- Proposed loan column: new loan amount (principal balance plus new upfront MIP minus any refund credit), proposed interest rate, new annual MIP rate, new combined rate, and the projected monthly payment.
The lender enters the proposed interest rate based on current market pricing and any rate lock. The worksheet subtracts the proposed combined rate from the current combined rate and checks the result against the applicable threshold: 0.5 percentage points for fixed-to-fixed, or 2 percentage points for ARM-to-fixed. If the threshold is met, the loan passes the net tangible benefit test.3U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4000.1
Cash Back and Closing Costs
Cash back at closing is capped at $500. Any amount above that disqualifies the transaction as a streamline refinance.2U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage This is a hard line. If the payoff math produces excess proceeds above $500, the lender has to adjust the new loan amount downward.
Real closing costs still apply despite the “streamline” label. Title fees, recording fees, and lender charges are all on the table, and FHA prohibits lenders from folding those costs into the new mortgage balance.2U.S. Department of Housing and Urban Development. Streamline Refinance Your Mortgage You either pay them at closing or accept a slightly higher interest rate under a “no-cost” refinance, where the lender uses the rate premium to cover the fees. That higher rate feeds directly into your proposed combined rate on the worksheet, so it can be the difference between passing and failing the benefit test.
Eligibility That Has To Be True Before the Worksheet Matters
None of this math helps if the underlying loan isn’t ready to refinance. You need at least six monthly payments made on your current FHA mortgage, and at least 210 days must have passed since the date of your first payment. Both conditions apply, so stacking six payments quickly inside a 210-day window won’t work.
Payment history also matters. For a non-credit-qualifying streamline, every mortgage payment must have been made within the month it was due for the six months immediately before the lender assigns a new FHA case number. Beyond that six-month window, you can have no more than one 30-day late payment in the prior twelve months. For a credit-qualifying streamline (required when a borrower is being removed from the loan, such as after a divorce), the standard tightens: no more than one 30-day late across all mortgages on the property in the full six months before application.6Federal Deposit Insurance Corporation. FHA Streamline Refinance
Once every input is populated and the benefit test passes, the worksheet becomes part of the full application package. The lender reviews the payment history on the existing FHA loan, verifies the calculations meet federal standards, and submits the file.