How to refinance an FHA loan to a conventional loan

You can refinance an FHA loan to a conventional loan any time you meet the lender's qualification requirements.

Some homeowners make this move to eliminate FHA mortgage insurance premiums. For most FHA borrowers who put down less than 10%, MIP lasts the life of the loan.

Conventional loans use private mortgage insurance instead, but this coverage won't be required if the loan balance is 80 percent of the home's value.

This creates an opportunity for FHA borrowers to save money each month, but there's more to a refi than canceling mortgage insurance.

...in as little as 3 minutes — no credit impact

Why homeowners refinance FHA to conventional

The FHA loan program has helped millions of Americans become homeowners without huge down payments and spotless credit reports.

But the FHA program requires its own form of mortgage insurance, and many borrowers find themselves paying for this coverage years after buying their home.

For many FHA borrowers, refinancing out of the program is the only way to eliminate these monthly fees.

Of course, there are other reasons to refinance from FHA to conventional, including:

• To get a lower interest rate: If rates are lower now than they were when the FHA loan closed, there may be a potential to save money with a refi.
• To change the loan's term: Shortening a loan's term gets the home paid off sooner and saves long-term interest. (Borrowers could also pay more on principal regularly to achieve a similar goal without a refi.)
• To tap into home equity: A new cash-out refinance mortgage can borrow cash from home equity.
• To convert the home into a rental: FHA loans finance primary residences but not investment properties.

Some homeowners can achieve two or more of these goals with one refinance.

Do you qualify? The three requirements

A refinance opens a new mortgage loan, and the homeowner must qualify for the loan.

Qualification factors include:

Credit score

The minimum credit score for a rate-and-term conventional refinance is generally 620, though this number can vary by lender. For cash-out refinances, many lenders look for a score in the mid-600s or higher.

Meeting the credit score minimum doesn't guarantee approval. Credit score is just one piece of the puzzle.

Debt-to-income ratio

Most lenders require a DTI of 45–50% or lower for a conventional refinance. Your DTI is your total monthly debt payments, including the new mortgage payment, divided by your gross monthly income.

If your income has grown since you took out the FHA loan, your DTI may now be significantly lower, which improves both your eligibility and the rates you may qualify for.

Home equity and LTV

Loan-to-value ratio (LTV) compares the amount borrowed to the value of the home. Along with determining eligibility, LTV also affects whether you'll need mortgage insurance:

• 20% equity or more (80% LTV or below): You qualify for the conventional refinance and avoid PMI entirely.
• Less than 20% equity: You can still refinance, but you'll pay PMI until you reach 80% LTV. This still makes sense if eliminating FHA MIP saves you more than you'd pay in PMI — but the math needs to be checked.

A new appraisal is required for a conventional refinance. The appraised value will determine your LTV and whether PMI applies.

How to estimate your equity

Divide your current loan balance by an estimate of your home's current market value. If your balance is $240,000 and your home is worth approximately $310,000, your LTV is roughly 77%, meaning you have about 23% equity and could avoid PMI on a conventional refinance.

Rate-and-term vs. cash-out refinance

There are two types of conventional refinances to consider, and they have different requirements.

• A rate-and-term refinance replaces your existing loan with a new one at a different rate, term, or both. No cash is taken out at closing. This is the most common path for FHA-to-conventional refinances.

• A cash-out refinance lets you borrow against your equity by taking out a new loan larger than your current balance and receiving the difference in cash.

For most homeowners hoping to escape lifetime MIP, the rate-and-term path is the right one. A cash-out refi requires more equity; new homeowners often don't have enough to qualify.

Does the math work? How to calculate your break-even

Refinancing means paying closing costs again. These costs usually range from 2% to 6% of the loan amount. On a $300,000 loan, that's $6,000 to $18,000.

Will your new loan save enough money to justify this upfront cost? The answer to that question comes from your breakeven point.

Your breakeven point is the time in the future when you've saved enough from the new loan to pay yourself back for its closing costs.

For example, if you spent $12,000 in closing costs for a loan that saves $200 a month, you'd need to make 24 of those new payments to build up $12,000 in savings.

Twenty-four payments is, of course, two years worth of payments. This means you'd need to keep the loan at least two years to avoid losing money on the refinance. The longer you keep the loan beyond two years, the more you'd save.

Knowing when to refinance your mortgage depends a lot on this break-even math. A refinance that looks attractive on the surface can be the wrong move if you're two years away from selling.

How the refinance process works, step by step

Refinancing an FHA loan to a conventional loan follows the same general process as any mortgage refinance.

• Step 1: Check your credit and equity. Pull your credit report and estimate your current LTV before you apply. This gives you a realistic picture of what you'll qualify for and whether MIP elimination is achievable.

• Step 2: Compare lenders and rates. Shopping for a mortgage across multiple lenders is a great way to reduce your rate. Even a small rate difference compounds significantly over a 30-year term.

• Step 3: Apply and submit documentation. A conventional refinance requires full income verification: pay stubs, W-2s, tax returns, and bank statements. Unlike an FHA streamline refinance, which allows reduced documentation, a conventional refinance requires complete underwriting.

• Step 4: Appraisal. A licensed appraiser will assess your home's current market value. This confirms your LTV and determines whether PMI applies on the new loan.

• Step 5: Underwriting. Your lender reviews your full financial picture — credit, income, assets, and property — before issuing a loan decision. This typically takes one to two weeks.

• Step 6: Close. You'll review and sign final loan documents and pay closing costs. Your new conventional loan replaces the FHA loan, and your MIP obligation ends.

The full process typically takes 30–60 days if all goes as planned. Having your documents together before applying should save a lot of time and hassle.

...in as little as 3 minutes — no credit impact

When it might not make sense

Refinancing from FHA to conventional isn't the right move in every situation.

Homeowners in the following situations should probably wait:

• You don't have enough equity to eliminate PMI. If your LTV is still above 80%, you'll exchange FHA MIP for conventional PMI. That's not necessarily a bad trade — PMI is cancellable and MIP is usually not — but the monthly savings will be smaller, which extends your break-even timeline. Run the numbers carefully.

• Your credit hasn't improved enough to get a better rate. If your credit score is at the minimum threshold, you may not qualify for a rate low enough to justify closing costs. A higher rate on a conventional loan paired with PMI could actually cost you more per month than your current FHA loan with MIP.

• You're planning to sell the home soon. Closing costs on a refinance can be money well spent if you stick with the loan long enough to save money. But if you pay closing costs and then sell the home too soon, those closing costs won't pay off.

• You're close to MIP falling off. If you put down 10% or more on your FHA loan, your MIP is scheduled to end after 11 years. If you're two years away from that point, you could just wait and save the costs of getting a new loan.

Homeowners should consider the big picture when deciding whether to refinance.

Frequently asked questions

Can I refinance my FHA loan to a conventional loan?

Yes. You can refinance an FHA loan to a conventional loan at any time, as long as you meet the qualification requirements. There is no mandatory waiting period for a rate-and-term refinance. For a cash-out refinance, most lenders require at least 12 months on the FHA loan.

When does it make sense to refinance from FHA to conventional?

It makes the most sense when you have enough equity to eliminate PMI on the conventional loan (20% or more) and your credit score has improved since you took out the FHA loan.

How much equity do I need to refinance an FHA loan to a conventional loan?

You need at least some equity to qualify, but the key threshold is 20%. At 20% equity, you can avoid PMI on the new conventional loan entirely, which maximizes your monthly savings.

Will I still have to pay mortgage insurance if I refinance to a conventional loan?

It depends on your equity. If you have 20% or more equity at closing, you won't need PMI. If you have less than 20%, you'll pay PMI, but PMI cancels automatically at 78% LTV and can be requested at 80%.

What credit score do I need to refinance FHA to conventional?

Most lenders require a minimum credit score of 620 for a rate-and-term conventional refinance, and mid-600s or higher for a cash-out refinance. Since November 2025, Fannie Mae and Freddie Mac have moved to a holistic credit risk assessment rather than a hard floor, but 620 remains the practical minimum at most lenders.

How long does it take to refinance an FHA loan to a conventional loan?

The process typically takes 30 to 60 days from application to closing. The appraisal, income verification, and underwriting review are the main time factors. Having your documents ready should speed up the process.

What are the closing costs for refinancing FHA to conventional?

Closing costs for a conventional refinance typically range from 2–6% of the loan amount. These include appraisal fees, title and escrow fees, origination fees, and prepaid items. Some lenders allow you to roll closing costs into the new loan, though that increases your balance and reduces the net benefit of the refinance.

Is an FHA streamline refinance better than switching to a conventional loan?

It depends on your goal. An FHA streamline refinance is faster and requires less documentation, but it keeps you in the FHA program, which means you continue paying MIP.

The bottom line on refinancing FHA to conventional

Some FHA borrowers want to graduate early from the FHA loan program by refinancing into a conventional mortgage.

Before taking this step, be sure to compare closing costs to money savings. The best refinances create enough savings to justify their upfront costs within a few years.

A mortgage pre-approval can help you see the costs of a new loan without making a commitment.

...in as little as 3 minutes — no credit impact