USDA
Refinance

A USDA mortgage refinance is a home loan option available to homeowners with an existing USDA (United States Department of Agriculture) mortgage who want to lower their interest rate, reduce monthly payments, or access other loan benefits. Designed for rural and suburban areas, USDA loans aim to make homeownership affordable for low- to moderate-income borrowers, and USDA refinances continue this mission by offering simplified processes and favorable terms for those who qualify.

The following are the three types of USDA mortgage refinances currently offered:

USDA Streamline Assist Refinance
The USDA Streamlined-Assist Refinance is one of the simplest and fastest refinance options, created to make refinancing as accessible as possible.

Eligibility
Homeowners must have an existing USDA mortgage and must have made on-time payments for at least 12 months.

No Appraisal Requirement
This refinance typically doesn’t require a new home appraisal, which can save on time and fees.

Income Limits
Borrowers must meet USDA income eligibility guidelines for their area, which varies by region.

Loan Terms
The Streamlined-Assist Refinance is designed to lower the monthly payment by reducing the interest rate, though it cannot be used to cash out equity or to finance a second property.

This refinance is especially advantageous because it’s quick and doesn’t have strict qualification hurdles, making it a popular choice for USDA loan holders looking to save on monthly costs.

USDA Streamlined Refinance
The USDA Streamlined Refinance is another option for lowering monthly payments through a lower interest rate.

Appraisal Not Always Required
While not mandatory for all borrowers, some may need to obtain a home appraisal.

No Cash-Out
The Streamlined Refinance is exclusively for reducing the mortgage rate and payments, not for cashing out equity.

Credit and Income
Borrowers must meet the credit and income requirements set by USDA standards, and like the Streamlined-Assist option, the home must be in a USDA-eligible rural area.

This option works well for those seeking a more traditional refinance without extensive documentation requirements, provided they meet eligibility standards.

USDA Non-Streamlined Refinance
The USDA Non-Streamlined Refinance is a more comprehensive option, ideal for homeowners who need a full appraisal of their home or want to add closing costs into the loan balance.

Appraisal Required
Unlike the Streamlined options, a new appraisal is required for a Non-Streamlined Refinance, which may allow the homeowner to include closing costs in the loan.

Credit and Income Verification
USDA guidelines for credit and income still apply, and borrowers need to provide full documentation to demonstrate qualification.

No Cash-Out
Similar to other USDA refinances, this option does not allow for cash-out equity; it’s intended solely to help reduce monthly mortgage payments.

The Non-Streamlined option suits borrowers who may have higher closing costs or who need the flexibility to roll certain expenses into the new loan.

General USDA Refinance Requirements

Rural Location
The property must be located in a USDA-eligible rural or suburban area.

Primary Residence
USDA refinance loans are only available for primary residences, not second homes or investment properties.

On-Time Payments
A history of on-time payments over the past 12 months is required.

Income Limitations
Borrowers must meet income eligibility requirements, which vary by region but generally target low- to moderate-income households.

A USDA mortgage refinance can be a highly effective way for rural and suburban homeowners to reduce their monthly mortgage payments, secure a lower interest rate, and make their loan more manageable. With various options, USDA mortgage refinances cater to different financial situations, from the simplified Streamlined-Assist Refinance to the more flexible Non-Streamlined Refinance. For those in eligible locations, a USDA mortgage refinance can provide a straightforward and affordable way to refinance their home.