Who this is for
- Rates dropped since you bought
- Removing FHA mortgage insurance
- Switching an ARM to fixed
- Moving to a 15-year term
Typical Rate-and-Term Refinance requirements
| Max LTV | Up to 95–97% conventional; VA IRRRL and FHA streamline available |
|---|---|
| Break-even | Closing costs ÷ monthly savings |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
How it works
- Compare your current payment to the new one.
- Divide costs by monthly savings to find break-even.
- Lock and close.
Try the Refinance Break-Even Calculator
Pros and cons
Advantages
- Lower payment or faster payoff
Trade-offs
- Closing costs
- Resets amortization
Documents you’ll need
- Mortgage statement
- Income documents
Rate-and-Term Refinance FAQ
How much does the rate need to drop to refinance?
There is no fixed rule. Run the break-even: if you will keep the loan longer than the break-even period, it usually pays.
What is the break-even point on a refinance?
Divide your total closing costs by your monthly savings. If it costs $6,000 to save $200 a month, break-even is 30 months. Stay past that and you come out ahead.
How much does a refinance cost?
Usually 2 to 5% of the loan amount. On a $350,000 loan, expect $7,000 to $17,000, though lender credits can offset some of it.
Can I refinance with no closing costs?
Lenders can roll costs into the rate or the loan balance, but nothing is truly free. Compare the total cost over the years you will keep the loan, not just the cash at closing.
Should I refinance into a 15-year loan?
The payment jumps, but you can save six figures in interest over the life of the loan. It makes sense if the higher payment fits comfortably in your budget.
Can I remove PMI by refinancing?
Yes. If your home gained value or you paid down the balance to 20% equity, refinancing into a conventional loan drops PMI entirely.
How soon after buying can I refinance?
Most lenders want 6 months of payment history. FHA and VA streamline programs require at least 210 days and 6 payments.
Does refinancing hurt my credit?
Expect a small, temporary dip from the hard inquiry and new account, usually 5 to 15 points. It recovers within a few months of on-time payments.
Can I refinance an ARM into a fixed rate?
Yes, and it is one of the most common reasons people refinance. Locking a fixed rate removes the uncertainty of future adjustments.
Official sources
How Rate-and-Term Refinance compares
| Rate-and-Term Refinance | Cash-Out Refinance | VA Loans | FHA Loans | |
|---|---|---|---|---|
| Best for | Rates dropped since you bought | Paying off high-interest debt | Veterans and active-duty service members | First-time buyers |
| Down payment | , | , | $0 with full entitlement | , |
| Credit | , | , | VA sets no minimum; lenders commonly look for 580–620 | 580 for 3.5% down; 500–579 with 10% down |
| Income docs | , | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
Cash-Out Refinance
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference in cash, commonly up to 80% of your home’s value on a primary residence.
VA Loans
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs that lets eligible veterans, active-duty service members and certain surviving spouses buy with no down payment and no monthly mortgage insurance.
FHA Loans
An FHA loan is a government-insured mortgage that allows 3.5% down with a credit score of 580 or higher, or 10% down with a score from 500 to 579.