Refinancing your mortgage: Requirements explained

This article is for informational purposes only and is not intended to provide, and should not be relied on for, medical, legal, financial, or tax advice. You should consult with a qualified professional for advice specific to your situation. Consumers should independently verify that any services, products, or programs referenced meet their needs and comply with applicable requirements.

Refinancing is replacing your existing mortgage with a new one, commonly to access equity, lower your interest rate, or change your term.¹ Whatever your goals are, it’s important to understand the refinance requirements lenders have: debt-to-income ratio (DTI) and loan-to-value ratio (LTV) evaluations, credit, income, and asset checks.

Knowing what to expect in advance will help you better prepare, determine whether refinancing your mortgage is the right path, and allow for a smoother process.

Reasons to consider refinancing

Before we dive into what you need to refinance, you should consider what your goals are. Here are some common reasons that people refinance:

• Lower interest rate: A lower interest rate can mean less interest paid and lower monthly payments, but one important decision factor is the breakeven point after closing costs.
• Change term: Shorter terms mean less interest paid over time, but longer terms mean lower monthly payments. The interest rates are lower for shorter terms than they would be for longer ones.
• Debt consolidation: Using home equity to roll existing high-interest debt into a mortgage at a much lower rate may better a client’s financial position. A Home Loan Expert can help you with the blended rate calculation to see how this compares with a Home Equity Loan.²
• Taking advantage of equity: People often take cash out for a remodel, renovation, funding education, topping up retirement funds, or to accomplish any number of other goals.
• Going from an adjustable-rate mortgage (ARM) to a fixed rate: While adjustable rates can offer lower payments in the early part of the loan, refinancing an ARM to a fixed-rate mortgage down the line offers more payment certainty.
• Mortgage insurance removal: If clients have an FHA or a USDA loan, refinancing to a conventional loan after reaching 20% equity can avoid a monthly mortgage insurance charge. Rocket Mortgage doesn’t offer USDA loans at this time.

Refinance requirements

Because you’re getting a new home loan when you refinance, lenders will want to check that you meet their current eligibility standards. This includes looking at your finances and property value, your DTI and LTV. They evaluate everything from your income stability to whether the home is safe to live in.

There are also often requirements that you be in a loan for a certain length of time before you refinance. A history of on-time payments is helpful in qualifying for the new loan, but a lender will also consider various eligibility factors and its risk tolerance when deciding whether to approve you.

An adequate credit score

Your credit score is a number from 300 – 850 that represents your creditworthiness. Lenders look at your score to determine how likely you are to repay your debts and what mortgage rate to offer you.

The minimum credit score required to refinance a mortgage varies by loan type and lender. If you're worried about qualifying for a refinance with your credit score, there are strategies for refinancing with bad credit.

Conventional refinance credit score requirements

As with your original mortgage, the higher your credit score, the lower your interest rate. Fannie Mae and Freddie Mac no longer have a minimum credit score for conforming loans, instead relying on a more holistic evaluation of risk factors. Nevertheless, lenders may have their own standards.

Rocket Mortgage requires a credit score of 580 or higher if you plan to take cash out in a refinance. This helps to avoid the higher interest rates and other disadvantageous terms for borrowers that come with subprime lending.

FHA loan refinance credit score requirements

The FHA technically allows refinances with a credit score as low as 500.³ However, borrowers with scores below 580 are limited to a maximum 90% LTV – 10% equity.⁴ If you owe more than 90% of your home's value, a 580 minimum score is needed.

Because we want to set you up for success, Rocket Mortgage requires a 580 credit score with equity requirements starting at 2.25%. To take cash out, you have to leave 20% equity in the home. With debt consolidation, the minimum credit score is 580. Otherwise, it’s 620.

FHA Streamline refinance credit score requirements

You can also refinance through an FHA Streamline refinance, which enables you to refinance an existing FHA loan to a lower interest rate more quickly.⁵ This can avoid a lot of extra paperwork and enable you to continue with a no-appraisal refinance in many cases.

Since you’ve already proven you’re creditworthy for an FHA-guaranteed loan through your original FHA mortgage, the streamline option can save you time and money.

Although the FHA doesn't officially require a minimum credit score for a Streamline refinance, many lenders have their own minimums. Rocket Mortgage requires a score of at least 580 if your current loan isn’t with us. Additionally, you can have no late payments in the last 6 months and only one in the last year.

VA loan refinance credit score requirements

If you’ve had service time in the Armed Forces or are a qualified surviving spouse of someone who passed in action, you may be eligible for a VA loan.⁶ The VA itself doesn’t set a minimum credit score, but lenders often do. The minimum at Rocket Mortgage is 580.

VA IRRRL credit score requirements

If you already have an existing VA loan, the VA offers the Interest Rate Reduction Refinance Loan (IRRRL), or VA Streamline.⁷ Many benefits are similar to an FHA streamline, in that there’s reduced paperwork and you often don’t need an appraisal.

If we currently service your VA loan, there’s no minimum credit score. Otherwise, it’s 580.

Jumbo loan refinance credit score requirements

Jumbo loans involve larger loan amounts above and beyond conforming limits.⁸ Because of this and the fact that they’re backed by private investors, lenders have widely varying requirements. At Rocket Mortgage, the minimum credit score is anywhere between 680 – 740, depending on loan type and amount.

Substantial home equity

In addition to an adequate credit score, you must have built up enough equity in your home to qualify for a refinance. Home equity is the percentage of the home’s value you own, which is the amount you’d get if you sold the house and paid off your mortgage. As you pay off the principal balance of the mortgage, you build equity.

20% equity or more

Lenders typically require you to have at least 20% equity in your home to refinance. Most mortgage lenders allow you to borrow up to 80% of your home’s value.

“I’ve seen clients try to refinance with minimal equity, and they either can’t get approved or the terms are so bad that it’s not worth going forward with the refinance,” says Josh Katz, a CPA and personal finance expert.

If you’re doing a VA cash-out refinance, your lender may allow a higher loan-to-value ratio. At Rocket Mortgage, you can cash out up to 100% of your equity with a minimum 580 credit score.

Under 20% equity

If your equity is under 20% and you have a good credit rating, you may still be able to refinance. However, you might have to settle for a higher interest rate and pay for mortgage insurance. Still, it can be worth refinancing even if you don’t have much equity if interest rates have dropped significantly since you closed on your mortgage.

Interest-reduction FHA Streamline refinance loans have no equity requirements. You do need 20% equity for a cash-out refinance in most circumstances.

Limited other debts

Your debt-to-income ratio (DTI) also affects your ability to qualify for a refinance. Your DTI ratio reflects how much of your income must go toward your existing debt. You can calculate your DTI ratio by adding up your total minimum monthly debt and dividing that number by your gross monthly income.

Lenders use a DTI ratio to gauge your ability to pay back your loan. Your total minimum monthly debt is made up of the following minimum monthly payments:

• Car loans
• Student loans
• Credit card debt
• Home equity loans
• Mortgages
• Any other recurring debt 

“I see a lot of clients in my practice who don’t realize their car payment or credit card balances are keeping them from qualifying for a refinance, even though their credit score looks fine,” Katz says.

To qualify for the most possible options, we recommend that your DTI not exceed 43% to be eligible for a refinance. At Rocket Mortgage, you can refinance a conventional loan with a maximum DTI of 65%.

Money to cover closing costs

The cost to refinance will depend heavily on your closing costs. Most closing costs include loan origination fees, appraisal fees, prepaid property taxes, title fees, and credit check fees. You can expect your refinance closing costs to run anywhere from 3% – 6% of the total loan amount.

Some lenders, including Rocket Mortgage, will let you roll all your closing costs into the new mortgage or take a lender credit so that you don’t have to come up with the money up front. Of course, this increases your costs over the life of the loan.

“It’s often best to pay your closing costs upfront in full if you are planning to stay in the home long-term because you likely qualify for a lower rate that saves more money over time versus rolling your closing costs into the loan,” suggests Katz.

Established income

Just like when you took out your original mortgage, your lender will look at your income to confirm that you have enough money coming in to afford your new mortgage. Lenders are ultimately looking for documented income that’s likely to continue well after the loan closes.

You can expect to be asked to provide the following documents:

• W-2s
• Tax returns
• 1099s
• Pay stubs (past 2 to 3 months)
• Profit-and-loss statements (if you’re self-employed)

Enough time owning your home

The requirements you need to meet will also depend on the type of refinance you choose. For example, some conventional mortgages can be refinanced without a waiting period. However, if you’re looking to take cash out, you’ll have to wait at least 12 months.

An FHA Streamline refinance can be done as soon as 7 months after closing, but an FHA cash-out refinance can’t be done until 12 months.

Mortgage refinance requirements by type

FAQ

Let’s take a closer look at some frequently asked questions surrounding mortgage refinance requirements.

What are the income requirements for refinancing a home?

Lenders assess your income stability and debt-to-income ratio to determine whether you can afford your mortgage. Documents like W-2s, pay stubs, and tax returns can help your lender verify your income and help to provide proof that you’ll be able to repay your loan.

What credit score do you need to refinance your home?

The minimum credit score you’ll need is going to depend on the loan. Although there’s no official minimum for conforming conventional loans, lenders can set their own. The same is true of VA loans. FHA loans require a 500 credit score with 10% equity or 580 with 3.5% down.

What disqualifies you from refinancing?

Homeowners can be disqualified from refinancing because they have a low credit score, not enough equity, or too much debt. If your DTI ratio is above your lender’s maximum allowed percentage, you may not qualify to refinance your home. If you’ve missed payments on your mortgage, that can also disqualify you from a refinance.

What is needed at closing for a refinance?

You’ll need to bring a government photo ID, proof of homeowners insurance, and a cashier’s check or wire transfer to cover your closing costs if you’re not rolling them into your loan. You’ll also need to carefully review your Closing Disclosure, which indicates exactly what you’re signing and paying.

What do you need to do for the homeowners insurance verification?

To move ahead with a refinance, you need to have a current homeowners insurance policy on your home. It should have enough coverage to satisfy the lender’s requirements for your refinance. Contact your insurance provider to determine whether your coverage is sufficient.

Do you need title insurance when you refinance?

Each time you get a new mortgage, you’ll need to get a new lender’s title policy. This protects the lender if a title issue is discovered after closing. If you got an owner’s title policy when you purchased your home to protect your own interests, your existing policy is good for as long as you own the home.

What is the general rule for refinancing?

Refinancing is most beneficial when it lowers your interest rate or allows you to borrow the needed money with favorable terms. Just be sure you plan on owning the home long enough to recoup your closing costs or that the reduction in interest rate or loan term makes financial sense for you.

Is it hard to get approved for a refinance?

Approval depends on factors like credit, equity, and debt-to-income ratio, but good financial standing makes it easier. If your financial situation hasn’t worsened since you first took out your mortgage and you’ve built enough equity, it shouldn’t be much more difficult to get approved for a refinance.

The bottom line: Know what you need to refinance a home before applying

Refinancing your existing mortgage can help you pay less in interest, lengthen or shorten your term, remove mortgage insurance, or liquidate equity. But you need to ensure that you meet all requirements beforehand, including rules related to credit score, home equity, debt-to-income ratio, closing cost funds, and income.

If you’re ready to take the next step towards refinancing, you can reach out to Rocket Mortgage to learn more about your options.

¹ Refinancing may increase finance charges over the life of the loan.

² Home Equity Loan product requires full documentation of income and assets, credit score and max loan-to-value (LTV), combined loan-to-value (CLTV), and home equity combined loan-to-value (HCLTV) ratios. Requirements were updated 11/19/25 and are tiered as follows: 680 minimum FICO with a max LTV/CLTV/HCLTV of 80%, 700 minimum FICO with a max LTV/CLTV/HCLTV of 85%, and 740 minimum FICO with a max LTV/CLTV/HCLTV of 90%. Your debt-to-income ratio (DTI) must be 50% or below. Valid for loan amounts between $45,000.00 and $500,000.00 (minimum loan amount for properties located in Michigan is $10,000.00). Product is a second standalone lien and may not be used for piggyback transactions. Product not available on Ameriprise products. Guidelines may vary for self-employed individuals. Some mortgages may be considered “higher priced” based on the APOR spread test. Higher‑priced loans in the State of New York are subject to additional regulatory requirements. Additional restrictions apply. This is not a commitment to lend.

³ Rocket Mortgage is not acting on behalf of FHA or HUD

⁴ To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

⁵ The FHA Streamline program may have stricter requirements in some states. In order to qualify for the FHA Streamline program, an immediate .5% minimum reduction in interest and mortgage insurance premium is required. Some states may require an appraisal.

⁶ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

⁷ The VA Streamline program may have stricter requirements in some states. In order to qualify for the VA Streamline program, you must have a VA loan. The VA Streamline is only available on primary residences. Cash-out transactions are not allowed. In order to qualify for a VA Streamline, a 0.5% minimum reduction in interest rate on the previous fixed-rate loan must occur if the new loan will be a fixed rate or a 2% minimum reduction in interest rate on previous adjustable rate mortgage loan must occur; a minimum of 6 months of consecutive mortgage payments must be paid on the current loan at the time of application. Some states may require an appraisal. Additional restrictions/conditions may apply.

⁸ Rate pricing and closing costs dependent on loan qualification requirements and factors including but not limited to credit, income, assets, down payment, product selection and loan amount. This is not a commitment to lend.

Rocket Mortgage is a trademark or service mark of Rocket Mortgage, LLC or its affiliates.