Conventional Refinance Programs Comparison

Best for: Borrowers who want to lower their interest rate or change their loan term without taking cash out of their home.

A traditional refinance that changes the interest rate or loan term (for example, from a 30-year to a 15-year mortgage). This option requires a full appraisal to determine the home's value, along with standard underwriting (credit check, income verification, debt-to-income analysis). Closing costs can be rolled into the new loan amount, which means you won't need to pay them upfront out of pocket.

Key Requirements:

• Maximum loan-to-value (LTV) ratio: 95%
• No income limits
• Cash back limited to $2,000 or 2%
• Full appraisal required
• Standard underwriting (credit, income, DTI)
• Closing costs can be rolled into the loan

Why choose it: This is the most straightforward refinance option with minimal restrictions. Good for borrowers with solid credit and stable income.

Best for: Borrowers who want to access their home equity for major expenses like home improvements, debt consolidation, or other financial needs.

A cash-out refinance allows you to borrow against your home's equity. You'll receive funds at closing after paying off your existing loan. This option requires a full appraisal and standard underwriting. The amount you can borrow depends on your equity and the lender's requirements. Closing costs can be rolled into the new loan amount.

Key Requirements:

• Maximum loan-to-value (LTV) ratio: 80%
• No income limits
• Full appraisal required
• Standard underwriting (credit, income, DTI)
• Must have sufficient equity in the home
• Closing costs can be rolled into the loan

Why choose it: Perfect if you need funds for home repairs, education, or consolidating high-interest debt. Rates are typically better than credit cards or personal loans.

Best for: Low-to-moderate income borrowers who need flexible underwriting with reduced documentation requirements.

HomeReady is Fannie Mae's affordable refinance program designed for borrowers with lower incomes. It offers more flexible qualification rules than traditional refinances, including potential mortgage insurance savings and streamlined documentation. This program recognizes non-traditional credit and income sources. Closing costs can be rolled into the new loan amount, making it easier to refinance without out-of-pocket expenses.

Key Requirements:

• Income limited to 80% of area median income (AMI)
• Maximum loan-to-value (LTV) ratio: 97%
• Debt-to-income ratio: 50% maximum
• Full appraisal required
• Flexible credit and income verification
• Closing costs can be rolled into the loan

Why choose it: Excellent option if your income is moderate and you'd like more flexibility in documentation. Potential mortgage insurance savings.

Best for: Low-to-moderate income borrowers seeking flexible underwriting and competitive rates through Freddie Mac.

Home Possible is Freddie Mac's answer to affordable refinancing. Like HomeReady, it's designed for borrowers with lower incomes and offers flexible underwriting guidelines. This program does not allow cash-out refinancing—it's rate/term only. Closing costs can be rolled into the new loan amount to help with refinancing costs.

Key Requirements:

• Income limited to 80% of area median income (AMI)
• Maximum loan-to-value (LTV) ratio: 97%
• Debt-to-income ratio: 50% maximum
• Full appraisal required
• Rate/term refinance only (no cash-out)
• Flexible credit and income verification
• Closing costs can be rolled into the loan

Why choose it: Similar benefits to HomeReady but through Freddie Mac. Check which investor owns your current loan to determine eligibility.

Best for: Fannie Mae borrowers seeking lower monthly payments without extensive documentation or credit score requirements.

RefiNow is designed to help borrowers reduce their monthly mortgage payments. It's a streamlined program with minimal documentation and no credit score minimums. The primary goal is to lower your payment, not to access home equity. Many lenders allow borrowers to roll closing costs and prepaid items into the new loan amount, though this benefit may vary by lender.

Key Requirements:

• Your current loan must be owned by Fannie Mae
• Income limited to 100% of area median income (AMI)
• Maximum loan-to-value (LTV) ratio: 97%
• Debt-to-income ratio: 65% maximum
• No more than 1 late payment in the past 12 months
• Rate reduction requirement: Must reduce rate by at least 0.5%
• Must result in monthly payment savings
• No minimum credit score required
• Cash back limited to $250 maximum
• Loan must be seasoned 12+ months
• Closing costs and prepaid items may be rolled into the loan (varies by lender)

Why choose it: Excellent for borrowers who just want to lower their payment with minimal hassle. No credit score minimums make it very accessible.

Best for: Freddie Mac borrowers seeking to reduce their monthly mortgage payment with a streamlined process.

Refi Possible is Freddie Mac's payment-reduction refinance program. Like RefiNow, it's designed with minimal documentation and no credit score minimums. The focus is on lowering your monthly payment and making refinancing as simple as possible. Many lenders allow borrowers to roll closing costs and prepaid items into the new loan amount, though this benefit may vary by lender.

Key Requirements:

• Your current loan must be owned by Freddie Mac
• Income limited to 100% of area median income (AMI)
• Maximum loan-to-value (LTV) ratio: 97%
• Debt-to-income ratio: 65% maximum
• No more than 1 late payment in the past 12 months
• Rate reduction requirement: Must reduce rate by at least 0.5%
• Must result in monthly payment savings
• No minimum credit score required
• Cash back limited to $250 maximum
• Loan must be seasoned 12+ months
• Closing costs and prepaid items may be rolled into the loan (varies by lender)
• Closing costs and prepaid items may be rolled into the loan (varies by lender)

Why choose it: Freddie Mac version of RefiNow. Streamlined process with no credit minimums. Great for borrowers focused on payment reduction.