USDA Refinance in Texas
Quick answer: USDA's refinance options are only for homeowners who already have a USDA Guaranteed or USDA Direct loan. There are three: Non-Streamlined, Streamlined and Streamlined-Assist. All three require a fixed-interest loan, keep the same home as security, and don't allow cash out. If you have an FHA or conventional loan now, a USDA refinance isn't an option. All loans subject to credit and property approval.
Who can get a USDA refinance?
Texas homeowners whose current mortgage is a USDA Section 502 Guaranteed or Direct loan, who live in the home as their primary residence.
USDA's handbook is direct about this: the Guaranteed program "cannot refinance mortgage debt that is not financed or guaranteed by USDA" (HB-1-3555, Chapter 6). If you bought with FHA, VA or a conventional loan, you'd look at refinance options under those programs instead. Danny Nassar, NMLS 220172, can talk through those too.
There's one more case the handbook treats differently. Paying off a construction loan or a lot loan you took out to build a home is treated as a purchase, not a refinance. See USDA construction loans.
What are the three USDA refinance options?
Non-Streamlined, Streamlined and Streamlined-Assist differ mainly in whether a new appraisal, full credit review and debt ratio review are required.
| Feature | Non-Streamlined | Streamlined | Streamlined-Assist |
|---|---|---|---|
| New appraisal | Required | Not required for Guaranteed borrowers | Not required for Guaranteed borrowers |
| Credit review | Full USDA credit standards | Full USDA credit standards | Mortgage payment history; not all credit standards |
| Debt ratios | Reviewed | Reviewed | Not required |
| Required benefit | No | No | Yes, a minimum payment reduction set by USDA |
| Underwriting | GUS may be used | GUS may be used | Manual submission |
| Adding borrowers | Allowed | Allowed | Allowed |
| Removing borrowers | Allowed if an original borrower remains | Allowed if an original borrower remains | Not allowed, except a deceased borrower |
The two streamlined choices are explained in more depth on our USDA streamline refinance page.
What rules apply to every USDA refinance?
All three options share the same core terms: fixed interest that isn't higher than your current loan's, the same home, and primary-residence occupancy.
- Fixed interest. The new loan's interest must be fixed and can't be higher than the loan being refinanced.
- Same property. The home securing the new loan must be the same one, owned and lived in by you.
- Seasoning. Your current loan must have closed at least 180 days before the lender submits the refinance to USDA.
- Payment history. No mortgage payment more than 30 days late in the 180 days before submission.
- Income limit. Your household income still has to be within the current limit for your county.
- No cash out. USDA refinances can't put cash in your pocket.
What can be included in a USDA refinance?
The principal and interest balance of your current loan, reasonable and customary closing costs, and USDA's upfront guarantee fee, within each option's limits.
For a Non-Streamlined refinance, the new loan can go up to the new appraised value, plus any financed upfront guarantee fee. The streamlined options don't use a new appraisal for Guaranteed borrowers, so the limit is set by the existing balance plus eligible costs. Your Loan Estimate will show exactly what's included.
Is my home still eligible if the USDA map changed?
Yes. Homes in areas USDA has since reclassified as non-rural remain eligible for a USDA refinance.
That matters in rapidly growing parts of Texas, where some areas that were eligible when you bought may show as ineligible on today's map. The handbook allows the refinance to go ahead anyway. More on map changes on our USDA eligibility map page.
What if I have a USDA Direct loan?
Direct borrowers can refinance into a Guaranteed loan, but payment subsidy recapture has to be handled first.
If you received payment assistance on a USDA Direct loan, USDA may recapture part of it when you refinance. The handbook gives options: under a Non-Streamlined refinance the recapture can be included in the new loan (with a possible discount), or it can be paid or placed in a subordinate lien. A new appraisal is needed to calculate recapture. Danny will walk you through what applies to your loan.
Source: USDA Handbook HB-1-3555, Chapter 6 and Attachment 6-A. All loans subject to credit and property approval.
Frequently asked questions
Can I refinance an FHA loan into a USDA loan?
No. USDA's Guaranteed program only refinances loans that USDA already financed or guaranteed.
Can I take cash out with a USDA refinance?
No. USDA refinances don't allow cash out to the borrower.
Can I remove an ex-spouse from my USDA loan by refinancing?
With a Non-Streamlined or Streamlined refinance, a borrower can be removed as long as one original borrower stays on the loan. Streamlined-Assist doesn't allow removing a living borrower.
Do I need an appraisal?
A Non-Streamlined refinance requires a new appraisal. The streamlined options generally don't for Guaranteed borrowers.
How long do I have to wait to refinance a USDA loan?
USDA requires the current loan to have closed at least 180 days before the refinance is submitted to USDA.
Talk with Danny about your Texas USDA loan
Tell Danny the county you're buying in and who lives in your household. He'll walk you through the USDA rules that apply to you and the next steps.
All loans subject to credit and property approval.