Can you refinance a USDA loan?
But in order to qualify for a USDA loan refinance, you must meet certain criteria.
The first qualification in order to refinance into the USDA loan program is that you must currently have a USDA loan. If you don’t have a USDA loan currently, then you cannot refinance into a USDA loan. When refinancing from a USDA loan into another USDA loan, it can be quick and easy as there is no property inspection required to do a USDA refinance.
Other USDA Refinance Requirements
- The loan being refinanced must be a USDA loan
- The USDA loan must be current
- The new USDA loan must result in the monthly principal and interest payment being lowered
- No cash out allowed
While it is true that there is no maximum loan amount with the USDA loan program, the maximum loan amount that you can qualify for depends on your debt ratios. The new mortgage payment can’t be more than 29 percent of your gross monthly income and your total debt ratio cannot exceed 41%.
Your total monthly income must also meet the maximum allowable criteria – and the criteria varies by area and your loan officer can easily help you find that number for your area.
In addition to income requirements and debt to income requirements, the maximum amount allowed to be financed is 102% of the appraised value of the home. USDA allows 102% currently but this amount may rise – it hasn’t been released yet.
Thinking about refinancing your USDA loan? Be sure to work with a USDA loan expert, there are many things about the USDA loan program that are “different” from a traditional mortgage.