Refinance Requirements Explained

Refinance requirements vary by loan type, but most lenders look at four things: your credit score, your debt-to-income ratio, your home equity, and your payment history on your current loan.

Credit score requirements

Conventional refinances typically require a credit score of at least 620, though better rates are available above 740. FHA Streamline refinances are more flexible and sometimes don't require a new credit check at all. VA IRRRL refinances follow similar flexible standards for existing VA borrowers.

Debt-to-income ratio

Most lenders want your total monthly debt, including the new mortgage payment, to stay under 43% to 50% of your gross monthly income, though this varies by loan program and compensating factors like strong credit or significant reserves.

Home equity and loan-to-value

Rate-and-term refinances are generally more flexible on equity requirements than cash-out refinances. A standard cash-out refinance on a conventional loan typically caps at 80% loan-to-value, meaning you need at least 20% equity remaining after the refinance. VA cash-out refinances can go up to 100% for eligible borrowers.

Payment history and seasoning

Most refinances require a seasoning period, commonly around 6 months, since your current loan closed, and a clean payment history with no recent late payments. Streamline refinance programs are typically stricter about recent on-time payment history since they skip other verification steps.

What documentation to expect

Similar to a purchase loan: recent pay stubs, two years of tax returns if self-employed, bank statements, and a current mortgage statement. Streamline refinances significantly reduce this list, sometimes skipping income verification and appraisal entirely for qualifying FHA and VA borrowers.