USDA Streamline Refinance in Texas
Quick answer: USDA has two streamlined refinance options for homeowners who already have a USDA loan. The Streamlined refinance skips the new appraisal for Guaranteed borrowers but still reviews credit and debt ratios. The Streamlined-Assist skips the appraisal, the debt ratio review and most of the credit review, but your monthly payment must drop by at least the amount USDA sets. All loans subject to credit and property approval.
What is a USDA streamline refinance?
It's a simpler refinance for current USDA borrowers that doesn't require a new appraisal for Guaranteed loans, which matters when a home's value is hard to support.
"Streamline" is a common name for two different options in USDA's handbook: the Streamlined refinance and the Streamlined-Assist refinance. A third option, the Non-Streamlined refinance, uses a new appraisal and is covered on our USDA refinance in Texas page.
Streamlined vs Streamlined-Assist: what's the difference?
The Assist version has different underwriting requirements established by USDA.
| Feature | Streamlined | Streamlined-Assist |
|---|---|---|
| New appraisal (Guaranteed borrowers) | Not required | Not required |
| Credit review | Must meet USDA credit standards | Mortgage payment history only |
| Debt-to-income ratios | Reviewed; waivers possible with compensating factors | Not required |
| Tangible benefit | Not required | Required |
| Underwriting | GUS may be used | Manually submitted |
| Borrowers on the loan | Can add; can remove if one original borrower stays | Can add; existing borrowers stay, except a deceased borrower |
| Household income limit | Applies | Applies |
What is the tangible benefit test?
For a Streamlined-Assist refinance, your new monthly principal, interest and annual fee payment must be lower than the current one by at least the amount USDA sets.
USDA defines the required reduction in HB-1-3555, Chapter 6, and compares your total principal, interest and annual fee payment before and after. Property taxes and insurance aren't part of the comparison. Danny Nassar, NMLS 220172, will run the comparison on your actual loan before you apply so you can see whether it passes.
Who qualifies for a USDA streamline refinance?
Homeowners with a USDA Guaranteed or Direct loan that closed at least 180 days before submission, with no mortgage payment over 30 days late in the past 180 days.
- You live in the home as your primary residence.
- Your current loan is a USDA Section 502 Guaranteed or Direct loan.
- Your household income is within the current limit for your county. See USDA income limits in Texas.
- The new loan has fixed interest, no higher than your current loan's.
- No cash out.
Homes in areas that USDA has since reclassified as ineligible can still be refinanced.
Which option makes sense for you?
It depends on your credit, your current debts and whether the payment reduction test can be met.
- If your credit and debt ratios are in good shape, the Streamlined refinance may fit, and it doesn't need a benefit test.
- If your debts have grown or your credit has changed but you've paid the mortgage on time, the Streamlined-Assist may fit, as long as the payment drops enough.
- If you want to remove a living borrower, such as after a divorce, the Streamlined or Non-Streamlined options allow it when an original borrower stays on.
Call 512-743-5512 or send Danny a message with your current loan details. Source: USDA Handbook HB-1-3555, Chapter 6 and Attachment 6-A. All loans subject to credit and property approval.
Frequently asked questions
Does a USDA streamline refinance need an appraisal?
Not for existing Guaranteed borrowers. Direct loan borrowers who received payment subsidy may need one to calculate recapture.
Is there a credit check on a Streamlined-Assist?
The lender checks your mortgage payment history, which can come from a credit report or a verification from your servicer. Other credit accounts aren't considered for that review.
Can I lower my payment by removing a borrower with Streamlined-Assist?
No. Existing borrowers must stay on a Streamlined-Assist loan, except a deceased borrower. Other borrowers can be added.
Can I get cash out with a streamline refinance?
No. None of USDA's refinance options allow cash out.
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.