Have interest rates dropped since you took out your USDA mortgage? If so, you can likely refinance and reduce your monthly payments. To top it off, you may even be able to avoid much of the hassle typically associated with the refi process.
With a USDA streamline refinance, homeowners can reduce their interest rate and monthly payments faster with less paperwork than a standard mortgage and without needing an appraisal.
Key Takeaways
- The USDA streamline refinance is faster and simpler than the typical mortgage refi.
- No appraisal is needed, and most borrowers won’t have to meet credit or debt-to-income (DTI) requirements.
- Only existing USDA loans may be refinanced through the agency’s streamline program.
How Can the USDA Streamline Refinance Help Me?
The USDA streamline refinance is a simplified low-doc loan that allows you to refinance your existing USDA mortgage with minimal paperwork and without paying for an appraisal.
In most cases, you won’t need to undergo a detailed credit check or verify your income either.
This means the USDA streamline refi could be an ideal option for homeowners who:
- Are currently unemployed or have a reduced income
- Have high levels of debt
- Are underwater on their mortgage
Plus, unlike some other refinance programs, the USDA streamline allows you to wrap your costs and fees into your new loan balance for a “no closing cost refinance.”
However, keep in mind that the USDA streamline refinance is only available to existing USDA borrowers. Under current agency guidelines, homeowners with other types of loans are not eligible.
Eligibility Requirements for the USDA Streamline Refinance
The USDA streamline refinance’s eligibility requirements are lower than most other types of residential refis. That’s partly because you aren’t required to obtain a new appraisal and don’t need a certain amount of home equity.
However, some other requirements exist to be eligible for a streamline refi. The full eligibility requirements depend on whether you’re applying for a streamline-assist or standard streamline loan.
Requirements for the USDA Streamline-Assist
The USDA streamline-assist is the most common type of streamline refinance. The majority of homeowners eligible to refinance qualify for the streamline-assist loan. This option does not require a full credit check, nor do you have to provide detailed proof of your income or employment history.
To be eligible for the streamline-assist mortgage, you must:
- Have had your current USDA loan for at least 12 months
- Have had no late payments within the past year
- Be able to reduce your monthly payments by at least $50
- Keep all existing borrowers on the mortgage (except in the event of death)
Remember that while the USDA streamline-assist does not require you to verify your income thoroughly, you must provide proof that your household earnings still fall within USDA income limits for your area.
Requirements for the USDA Standard Streamline
The USDA standard streamline loan is available to homeowners who do not meet the requirements for the streamline-assist or have refinance needs outside of what the streamline-assist allows.
The most common reasons why someone would need a USDA standard streamline are:
- History of Late Payments: The standard streamline only requires six months of on-time payments. The streamline-assist requires borrowers to have an on-time payment history for the past year.
- Need to Remove a Borrower: The USDA standard streamline enables you to remove co-borrowers so long as at least one original borrower stays on the loan. The streamline-assist only allows you to remove deceased co-borrowers.
- Can’t Pass the Tangible Benefit Test: The streamline-assist program requires that you reduce your monthly principal, interest, and USDA annual fee payment by at least $50. The standard streamline does not have this requirement.
With the USDA standard streamline, you still don’t need an appraisal, but you will need to undergo a comprehensive credit check and verify your income. This means that you must meet lender-specific credit score requirements and have a debt-to-income ratio of no more than 44%.
Eligibility Requirements for All USDA Refinances
In addition to the guidelines for the standard streamline and streamline-assist loans, here are some eligibility requirements that apply to all USDA refinances:
- Refis are limited to current USDA loan holders.
- You must still occupy the home as your primary residence.
- Second mortgages and liens must be paid off or resubordinated.
- Mortgages must be fixed-rate for a 30-year term (with exceptions for low-earning borrowers).
- The new interest rate must be lower than the interest rate on the previous mortgage.
USDA Streamline Rates
The USDA offers two types of streamline loans: direct and guaranteed.
Direct loans are available to low-income borrowers and are issued directly through the agency. These loans typically come with lower rates than standard USDA loans do. As of December 1, 2024, the USDA offers Direct home loans at 4.375% or as low as 1% with payment subsidies as well as payback terms up to 38 years.
Guaranteed loans are issued through USDA-approved lenders with interest rates that fluctuate daily based on market conditions.
Guaranteed USDA streamline rates are typically lower than comparable conventional loans, thanks to their government backing. However, remember that the 0.35% USDA annual fee will add to your total borrowing costs. Here’s a quick look at how USDA refinance rates are trending compared to conventional refinance rates:
How we source rates and rate trends
Rates based on market averages as of Dec 02, 2025.Product Rate APR 30-year Fixed Refinance 6.35% 6.37% 30-year Fixed Usda Refinance 5.56% 5.70%
Pros and Cons of the USDA Streamline Refi
A USDA streamline refi will likely benefit homeowners who can drop their interest rate and reduce their monthly payments. However, there are some downsides to the streamline program to consider first.
Pros of the USDA Streamline Refi
- Reducing Your Monthly Mortgage Payment: The USDA streamline refinance program is designed with one goal – to save you money by cutting your interest rate and monthly mortgage payment.
- No Appraisal Required: Appraisals slow down the refinancing process and can cost $500+ in many areas. Opting for a USDA streamline refinance eliminates the need to reappraise your home.
- No Credit Check or Income Verification (for Most Borrowers): You only need to go through a full credit check and income verification if you’re removing a borrower, have made a late payment within the past year, or aren’t saving at least $50 per month with your refinance.
- Easier to Qualify for Than Other Mortgages: Because of the program’s relaxed guidelines, it’s possible to qualify for a USDA streamline refinance even with credit problems, employment gaps, or owing more than your home’s worth.
Cons of the USDA Streamline Refi
- Paying Closing Costs: All mortgages and mortgage refinances have closing costs, and the USDA streamline refi is no different. Expect overall costs to run between 3% and 5% of your balance, although your lender may allow you to include the total in your new loan.
- Paying the USDA Upfront and Annual Guarantee: USDA mortgages have an upfront guarantee of 1% of the loan amount and an ongoing annual fee of 0.35% that must be paid pro-rata for the life of the loan.
- Meeting USDA Income Limits: The USDA sets household income limits for all borrowers; if your income has grown and now exceeds program maximums, you won’t qualify for a streamline refi.
- No Cash-Out Allowed: The USDA does not offer a cash-out option with either type of streamline refinance. If you need to tap into your home’s equity, consider an FHA or conventional cash-out refinance instead.
Alternatives to a USDA Streamline
Ineligible for a USDA streamline or still unsure if it’s the best refinance option for you? Here are some refi alternatives and how they stack up against the USDA streamline-assist.
| USDA Streamline-Assist | Standard FHA Refinance | Conventional Refinance | Conventional Cash-Out | |
| Credit Score | n/a | 580* | 620 | 620** |
| Equity Required | 0% | 2.25% | 5% | 20%+ |
| Mortgage Insurance | Yes (0.35%) | Yes (~0.5%) | Only with under 20% equity | No |
| Get Cash Out? | No | No | No | Yes |
| Other Requirements | 1% Guarantee | 1.75% UFMIP | 50% DTI Max | Mortgage Must Be 12 Months Old |
*Refi.com requires a 620 credit score
**Refi.com requires a 660 credit score
Standard FHA Refinance
The Federal Housing Administration offers its standard rate-and-term refinance to borrowers with a credit score of 580 and up. However, homeowners with lower scores but with at least 10% equity may still be able to qualify through specific lenders.
You need a minimum of 2.25% equity in your home to be eligible for an FHA refinance. For example, with a $250,000 house, you could refinance an existing mortgage to almost $245,500.
Debt-to-income requirements are flexible for FHA loans, with some lenders allowing ratios as high as 56.9%. All FHA loans have an upfront mortgage insurance premium (UFMIP) of 1.75% and an annual MIP of around 0.5%.
Conventional Refinance
Homeowners with higher credit scores or more equity may opt for a conventional refinance instead. Conventional mortgages do not have an upfront fee, and mortgage insurance premiums are only required on loans with less than 20% equity.
Conventional lenders look for a minimum credit score of at least 620, although well-qualified borrowers have access to the lowest rates. Applicants just above the minimum may still be better off refinancing through the USDA due to the program’s government-insured rates.
Plan to need at least 5% equity to qualify for a conventional rate-and-term refinance, with lenders generally allowing a DTI as high as 50% with compensating factors.
Conventional Cash-Out
A conventional cash-out may be the most practical option if you need to access your built-up equity as part of your refinance. USDA refi loans do not allow you to receive cash back at closing, except as reimbursement for closing expenses.
Like the rate-and-term loan, a conventional cash-out refinance requires a credit score of at least 620, although some lenders may set their own higher requirements. You also need a DTI of 50% or under.
Conventional guidelines require that you have at least 20% equity left over after your cash-out, meaning you need to begin with more equity to be eligible. You must also have had your current loan for at least twelve months.
Since you need at least 20% remaining equity, conventional cash-out refis do not require mortgage insurance.
How to Apply for a USDA Streamline Refinance
Current USDA borrowers who can refinance and reduce their interest rate can benefit from the simple USDA streamline refi process. You won’t need to have your home reappraised; in most cases, you won’t need to verify your income or compare it against your debts either.
To find out if you qualify for a USDA streamline refinance, check out today’s refi rates and apply with a USDA lender who can go over exactly how much refinancing your current loan could save you every month.
Frequently Asked Questions
What Is the Funding Fee for a USDA Streamline Refinance?
The USDA streamline refinance has a 1% upfront funding fee. You can pay this fee at closing or wrap it into your new loan balance. Don’t forget that the USDA also charges a 0.35% ongoing annual fee split evenly among your monthly payments.
Can You Get Cash Out on a USDA Refinance?
No, the USDA does not have a cash-out refinance option and does not allow borrowers to use their home’s equity to get cash back at closing. However, guidelines allow some refinance expenses paid for by the homeowner to be reimbursed as part of the closing process.
How Long Do You Have to Wait to Refinance a USDA Loan?
All USDA refinance options require that you wait at least 12 months to refinance your current USDA-backed mortgage. In addition to this twelve-month seasoning, you must have no late payments within the past six months for standard streamline loans. The streamline-assist requires no late payments within the past year.
How Do I Get Rid of Mortgage Insurance on a USDA Loan?
Unfortunately, all USDA loans – including the streamline refinance – come with an ongoing annual fee currently set at 0.35%. While not technically mortgage insurance, this fee helps to ensure the stability of the USDA residential loan program. Borrowers with at least 20% equity may consider a conventional refinance to avoid paying the USDA funding fee or annual guarantee.
