Are You Ready to Refinance? A 10-Point Checklist
Credit score floors, DTI caps, seasoning periods and the exact paperwork a lender verifies before it will price a refinance for your loan type.
By Desmond Achebe-Park · Oct 06, 2026 · 9 min read
Refinancing is an underwriting decision, not a feeling about rates. Before you apply, you can check most of what a lender will check: your credit score against the floor for the program you want, your debt-to-income ratio against that program's cap, how long your current loan has been open, your payment history for the last 12 months, and whether the new loan clears the benefit or recoupment test your program applies.
The thresholds below differ by loan type — conventional, FHA, VA — and some state housing finance agencies set stricter ones. Work through the checklist with your own numbers, then confirm specifics with a licensed loan officer; this guide can't approve you or price your loan.
Readiness Checklist
Each item is a condition you can verify today with a document or a number.
- Your credit score meets the program floor. 620 for a manually underwritten Fannie Mae rate-and-term refinance, 640 for a manually underwritten conventional cash-out (LendingTree, undated); conventional generally starts at 620 (Experian, undated); 580 for an FHA refinance (Society Mortgage, 2025); as low as 500 for an FHA cash-out (Mortgage Research Network, undated).
- Your debt-to-income ratio is inside the cap. Fannie Mae conventional refinances run 45% to 50%, with 50% accepted for higher scores and ample cash reserves (LendingTree, undated). An FHA cash-out can go to 50% DTI (Mortgage Research Network, undated).
- You've checked whether a state agency program applies stricter limits. On CalHFA refinance programs, FHA manual underwriting requires a minimum 660 score and a maximum 43.00% DTI (CalHFA, undated) — tighter than agency minimums.
- Your current loan is seasoned enough. FHA Streamline: the existing FHA loan held at least 210 days (Society Mortgage, 2025). VA IRRRL: the current VA loan open at least 7 months, or 210 days (The Mortgage Reports, 2026).
- Your mortgage payment history is clean. FHA refinance requires 12 months of on-time mortgage payments with no gaps or missed payments (Society Mortgage, 2025). An FHA Streamline requires no delinquencies in the past six months and no more than one late payment in the past 12 (Mortgage Research Network, undated).
- The new loan passes the benefit test. A fixed-to-fixed VA IRRRL must cut the interest rate by at least 0.50 percentage points (Lower, undated). Fannie Mae's RefiNow requires a rate reduction of at least 50 basis points (Fannie Mae, undated).
- Closing costs recoup in time, if you're using a VA IRRRL. Total closing costs and fees — excluding the VA funding fee, escrow and prepaid items — must be recouped through monthly principal-and-interest savings within 36 months (USMilitary.org, 2026).
- Your equity supports the loan purpose. Conventional and FHA cash-out refinances generally cap the new loan at 80% of appraised value on an eligible primary residence (Lower, undated); VA guidelines permit up to 100%, though individual lenders set lower limits (Lower, undated).
- Your income file is assembled. Recent pay stubs, W-2s, and personal and business tax returns if you're self-employed, plus bank statements showing reserves — the reserves that let Fannie Mae stretch DTI toward 50% (LendingTree, undated). Exception: a non-credit-qualifying FHA Streamline requires no verification of income or employment, no minimum credit score, and no DTI calculation (Mortgage Research Network, undated).
- You know whether an appraisal is being ordered. Under Fannie Mae's RefiNow, obtaining an appraisal carries a $500 lender-level price adjustment credit (Fannie Mae, undated); cash-out loan-to-value limits depend on an appraised value.
What Lenders Actually Check
Underwriting is document-driven. Expect to supply pay stubs and W-2s for wage income, personal and business tax returns if you're self-employed, bank and asset statements for reserves, your current mortgage statement, your homeowners insurance declarations page, and — for a condo or any property in an association — the HOA dues statement, because dues count in your housing expense.
DTI is calculated from gross monthly income against the monthly debt payments that appear on your credit report plus the new housing payment: principal, interest, taxes, insurance, mortgage insurance and HOA dues. The thresholds attach to the program, not to you in general. Fannie Mae conventional refinances sit at 45% to 50%, with 50% reserved for higher credit scores and ample reserves (LendingTree, undated). An FHA cash-out can be approved to 50% DTI with a score as low as 500 (Mortgage Research Network, undated). Fannie Mae's RefiNow stretches to 65% DTI with no minimum credit score, provided the rate drops at least 50 basis points (Fannie Mae, undated). A CalHFA FHA manual underwrite stops at 43.00% DTI with a 660 score (CalHFA, undated).
Credit is checked twice: the score against the floor (620 conventional rate-and-term, 640 conventional cash-out, manually underwritten — LendingTree, undated) and the mortgage payment history line by line, where FHA wants 12 months clean (Society Mortgage, 2025).
Mortgage insurance differs by product and is priced into your payment: conventional loans carry private mortgage insurance until equity requirements are met, FHA loans carry an upfront and annual mortgage insurance premium regardless of equity, and VA loans carry no monthly mortgage insurance but charge a funding fee — 0.5% of the loan amount on all IRRRLs versus 2.15%–3.3% on other VA loans, with disabled veterans exempt (USMilitary.org, 2026).
One vocabulary point before you compare offers: the interest rate sets your principal-and-interest payment, while APR folds lender fees and certain costs into a single annualized figure, so two loans at the same rate can show different APRs. Market averages are rates, not APRs and not quotes: Freddie Mac put the 30-year fixed at 7.28% and the 15-year fixed at 6.60% as of October 1, 2026. Closing costs vary widely by state and metro, driven by transfer taxes, title practice and whether attorney involvement is required — get a Loan Estimate for your own address rather than relying on any national figure.
Common Disqualifiers
- A mortgage late payment inside the last 12 months. Disqualifies an FHA refinance outright, since the credit report must show 12 months of on-time mortgage payments with no gaps (Society Mortgage, 2025); for an FHA Streamline, more than one late in 12 months, or any delinquency in the last six, ends the file (Mortgage Research Network, undated).
- Applying too soon after your last closing. An FHA loan held fewer than 210 days fails Streamline seasoning (Society Mortgage, 2025), and a VA loan open fewer than 7 months fails IRRRL seasoning (The Mortgage Reports, 2026). The application is suspended until the date passes.
- A rate cut that's too small. A fixed-to-fixed VA IRRRL that doesn't lower the rate by at least 0.50 percentage points fails the net tangible benefit test (Lower, undated); a RefiNow loan without a 50-basis-point reduction is ineligible (Fannie Mae, undated).
- Closing costs that don't recoup in 36 months. A VA IRRRL where fees, excluding the funding fee, escrow and prepaids, aren't recovered through monthly principal-and-interest savings within 36 months cannot proceed as structured (USMilitary.org, 2026) — usually the fix is fewer points or a lender credit.
- A credit score below the program floor. Below 620 you fall out of a manually underwritten Fannie Mae rate-and-term refinance, and below 640 out of a conventional cash-out (LendingTree, undated); the file has to move to FHA or be re-scoped.
- DTI above the cap after the new payment is added. Over 50% kills most Fannie Mae conventional refinances (LendingTree, undated), and over 43.00% kills a CalHFA FHA manual underwrite (CalHFA, undated). Paying off or restructuring an installment debt is the usual remedy.
- An appraisal that comes in below expectations on a cash-out. Conventional and FHA cash-out generally stop at 80% of appraised value (Lower, undated), so a low value cuts your cash proceeds or converts the loan to rate-and-term.
- Undocumented large deposits or unverifiable self-employment income. Underwriting excludes funds and income it cannot source, which shrinks the reserves Fannie Mae relies on to allow DTI toward 50% (LendingTree, undated) and can push you over the cap.
Frequently asked questions
My score is under 620. Is any refinance still possible?
Possibly, on a different program. An FHA refinance starts at a 580 minimum credit score (Society Mortgage, 2025), and an FHA cash-out can qualify with a score as low as 500 alongside a DTI as high as 50% (Mortgage Research Network, undated). A non-credit-qualifying FHA Streamline has no minimum credit score and no DTI calculation at all (Mortgage Research Network, undated), and Fannie Mae's RefiNow carries no minimum score but requires a rate reduction of at least 50 basis points (Fannie Mae, undated). Pricing and mortgage insurance differ sharply between these, so compare Loan Estimates, not just eligibility.
Is the average rate I see in the news the rate I'd get?
No. Freddie Mac reported the 30-year fixed averaging 7.28% and the 15-year fixed averaging 6.60% as of October 1, 2026 — survey averages of interest rates, not APRs and not offers. Your interest rate determines the principal-and-interest payment; the APR adds lender fees and certain financing costs into one annualized number, which is why two offers at the same rate can have different APRs. Your own figure depends on credit score, loan-to-value, loan purpose, property type and the day you lock.
What will a VA IRRRL cost me in fees, and is there mortgage insurance?
VA loans carry no monthly mortgage insurance. Instead there's a funding fee of 0.5% of the loan amount on all IRRRLs, against 2.15%–3.3% for other VA loans, and disabled veterans are exempt (USMilitary.org, 2026). Separately, your other closing costs — excluding that funding fee, escrow and prepaid items — must be recouped through monthly principal-and-interest savings within 36 months (USMilitary.org, 2026). By contrast, an FHA refinance carries upfront and annual mortgage insurance premiums, and a conventional refinance carries PMI until the equity requirement is met.
Should I pay for an appraisal if the program might waive it?
Run the arithmetic for your specific program. Under Fannie Mae's RefiNow, obtaining an appraisal earns a $500 lender-level price adjustment credit (Fannie Mae, undated). An appraisal also matters if you want cash out, because conventional and FHA cash-out loans generally cap the new loan at 80% of appraised value on an eligible primary residence, while VA guidelines allow up to 100% subject to lender limits (Lower, undated). Ask your loan officer to quote the file both ways before you order one.
Sources
- LendingTree — Fannie Mae Guidelines: What You Need to Know
- Experian — What Credit Score Do You Need to Refinance a Mortgage?
- Society Mortgage — FHA Refinance Loan 2025: Requirements, Streamline, Cash-Out (2025)
- Mortgage Research Network — FHA Streamline Refinance: 2026 Guidelines and Requirements
- Lower — What is an IRRRL?
- The Mortgage Reports — VA IRRRL | Guidelines, Requirements & Rates 2026 (2026)
- USMilitary.org — VA IRRRL Guide 2026: Streamline Refinance Requirements, Rates & Process (2026)
- Freddie Mac — Mortgage Rates Average 7.28% (2026-10-01)
- CalHFA — FAQ refinance
- Fannie Mae — RefiNow Highlights
- Lower — How Much Can You Cash Out on a Refinance?
Written by
Desmond Achebe-Park
Desmond covers the renter's side of the market, from lease fine print to the etiquette of negotiating with landlords. He's interested in how small cities absorb people priced out of bigger ones. He writes with a skeptic's eye toward anything called a 'luxury amenity.'
