Refinance an existing FHA, conventional, VA, or USDA loan into a new FHA loan to lower your rate, shorten your term, or escape an adjustable-rate mortgage. Up to 97.75% LTV on a primary residence and credit flexibility down to 580 — the FHA rate-and-term refinance is the most accessible way for credit-challenged Texas homeowners to capture a lower payment.
An FHA Rate & Term Refinance replaces your current mortgage with a new FHA-insured loan, changing the interest rate, the loan term, or both — without taking cash out beyond minimal closing-cost rounding (capped at $500). Unlike the FHA Streamline (which only works FHA-to-FHA with reduced documentation), the rate-and-term refinance is a full underwrite that accepts any existing loan type: FHA, conventional, VA, or USDA can all refinance into a new FHA loan.
This product shines for Texas homeowners who currently have a conventional loan but whose credit has slipped, or who hold an adjustable-rate mortgage and want the safety of a fixed FHA rate. Because FHA underwriting is more forgiving than conventional (580 credit floor, higher DTI tolerance with compensating factors), it's often the only refinance path available to borrowers who don't qualify for a conventional rate-and-term.
The trade-off is mortgage insurance. FHA loans carry both an upfront MIP of 1.75% (financed into the loan) and an annual MIP of 0.50%–0.55% that, for most loans originated today, stays for the life of the loan. For borrowers who can qualify conventionally, a conventional rate-and-term is usually cheaper long-term. FHA rate-and-term is the right call when conventional isn't an option — or as a bridge until credit improves enough to refinance into conventional later.
Texas homeowner with a 7.75% adjustable-rate conventional loan and a credit score that dropped to 605 after a medical collection. They can't qualify for a conventional refinance (needs 620+ and clean credit), but the FHA rate-and-term accepts 580+ and refinances them into a 6.625% fixed FHA loan — locking the rate and dropping the payment despite the credit hit.
| Requirement | FHA Rate & Term Standard |
|---|---|
| Minimum Credit | 580 (97.75% LTV) · 500–579 (90% LTV, rare) |
| Max LTV — Primary | 97.75% of appraised value |
| Max DTI | 43% standard · up to 56.9% with compensating factors |
| Occupancy | Primary residence only |
| Cash to Borrower | Max $500 (no real cash-out) |
| Mortgage History | No 30-day lates in last 12 months preferred |
| Net Tangible Benefit | Required — must improve borrower's position |
| Appraisal | Full appraisal required |
| UFMIP | 1.75% financed into loan |
| Annual MIP | 0.50%–0.55% · usually life of loan |
April 2026 illustrative rates. Contact Ethan for current pricing.
605 credit · conventional 5/1 ARM resetting up
640 credit · conventional at high rate
680 credit · build equity faster
720 credit · clean profile
Through NEXA's wholesale channel, FHA-approved lenders compete for your refinance. Ethan shops your file and presents the best pricing.
Ethan submits your file once and lets FHA-approved wholesale lenders compete. You don't reapply at each one — the winning lender pays NEXA from their margin, so you get retail-or-better pricing without out-of-pocket broker fees.
| Feature | FHA Rate & Term | FHA Streamline | Conventional R&T |
|---|---|---|---|
| Loan Types In | FHA · Conv · VA · USDA | FHA only | Any → Conventional |
| Appraisal | Required | Not required | Required |
| Income Verified | Yes — full | No | Yes — full |
| Min Credit | 580 | No min (lender overlay) | 620 |
| Cash Out | Max $500 | Max $500 | None (R&T) |
| Mortgage Insurance | UFMIP + annual MIP | UFMIP + annual MIP | None if <80% LTV |
| Max LTV | 97.75% | Based on existing loan | 95–97% |
| Best For | Conv/ARM → FHA, credit dropped | FHA → FHA, fast & easy | Strong credit, drop MI |
If your existing loan is already FHA and you just want a lower rate → FHA Streamline (no appraisal, faster). If your existing loan is conventional / VA / USDA and your credit fits FHA better than conventional → FHA Rate & Term. If your credit is strong (700+) and you can drop mortgage insurance → Conventional Rate & Term almost always wins long-term.
Because it's a full underwrite with appraisal, the FHA rate-and-term takes longer than a Streamline. Plan 25–35 days. Texas refinances also carry a federal 3-day right of rescission on primary residences — your funds disburse the business day after that window closes.
If your current loan is close to dropping PMI (conventional) or you've paid years of FHA MIP, refinancing into a fresh FHA loan restarts the MIP clock. On most modern FHA loans, annual MIP lasts the life of the loan. Calculate the lifetime MIP cost before refinancing.
FHA refinance closing costs (appraisal, title, UFMIP financed) can total several thousand dollars. If you only save $60–$80/month, break-even can be 7+ years. If you might sell or refinance again before then, the refi loses money.
FHA requires the refinance to genuinely benefit you — typically a meaningful rate/payment reduction or ARM-to-fixed conversion. If the numbers don't show clear benefit, the loan won't be approved. Don't refinance just to refinance.
If you can qualify conventionally at 700+ credit and under 80% LTV, conventional avoids FHA's lifetime MIP entirely. Many borrowers default to FHA out of habit and overpay. Always run both.
Free FHA rate-and-term refinance analysis. Ethan compares FHA vs conventional vs streamline so you take the cheapest path, not just the easiest one.
