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FHA Refinance Guide 2025: Streamline, Cash-Out, or Rate & Term?

By Jerry Robinson, CEO, NMLS 4475 | 1st Choice Mortgage

f you are searching for the best FHA Refinance Options Idaho has to offer, you aren’t alone. Many homeowners with an FHA loan feel like they're dating a high-maintenance partner. Sure, they helped you get into your first home with a low down payment, but now you're wondering if it's time to change the terms.

Refinancing an FHA loan isn’t a “one size fits all” situation. In fact, for 2025, the Federal Housing Administration offers three distinct flavors of refinancing. Choosing the right one depends entirely on whether you want to lower your payment, pull out cash for a remodel, or just get a better rate without a mountain of paperwork.

At 1st Choice Mortgage, we help homeowners across the Treasure Valley - from Nampa to Boise - navigate these waters every day. Here is the objective breakdown of your three main options: the Streamline, the Rate and Term, and the Cash-Out.

1. The FHA Streamline Refinance: The “Low Stress” Option

Think of the Streamline Refinance as the “TSA PreCheck” of the mortgage world. It is designed to be fast, painless, and efficient.

Who it's for:
Homeowners who already have an FHA loan and just want a lower rate or monthly payment without a headache.

The Rules:

• No Appraisal Required: In most cases, you don't need a new appraisal. If your house is messy, don’t worry - no one is coming over to look.
• Income Verification: Often reduced or not required (depending on the specific lender overlay).
• Net Tangible Benefit: You can't just refinance for fun. The FHA requires a “Net Tangible Benefit,” meaning the refinance must improve your financial position, usually by lowering your rate by at least 0.5%.
• Seasoning: You must have made at least 6 on-time payments on your current loan, and 210 days must have passed since you closed your original loan.

The Idaho Context:
For our clients in Meridian or Eagle who bought at the peak of rates, this is often the fastest way to drop that monthly payment as rates soften.

2. The Rate and Term Refinance: The “Clean Slate”

This is the standard refinance. You are essentially replacing your old loan with a new one to get better terms, but you aren’t taking any cash home with you.

Who it's for:
Borrowers who might not qualify for a Streamline (perhaps you want to change who is on the title) or those moving from a conventional loan into an FHA loan (yes, you can do that).

The Rules:

• LTV Limits: You can refinance up to 97.75% of your home's value.
• Credit Check: Full credit qualification is required.
• Appraisal: Yes, you will need a full appraisal for this one.

3. The FHA Cash-Out Refinance: The “Piggy Bank” Unlock

Idaho home values have remained robust. If you bought your home in Nampa or Caldwell a few years ago, you likely have a significant amount of equity sitting there, doing nothing. A Cash-Out Refinance lets you tap into that wealth.

Who it's for:
Homeowners who want to pay off high-interest credit cards, fund a renovation, or consolidate other debts.

The Rules:

• Max LTV: You can borrow up to 80% of your home's appraised value.
  (Example: If your home is worth $400,000, your new loan amount cannot exceed $320,000.)
• Credit Score: While FHA technically allows lower scores, most lenders (including us) prefer a score of 580-620+ for cash-out transactions to ensure stability.
• Seasoning: You must have lived in the home and made payments for at least 12 months.

Why Idaho Housing Finance Association (IHFA) Matters

We can’t talk about FHA in Idaho without mentioning IHFA (Idaho Housing Finance Association). They offer specific refinance products that can sometimes be combined with these FHA programs.

• Refinance Only Options: IHFA has specific “Refinance Only” rates that can be competitive.
• Income Limits: Be aware that some IHFA specific products have income limits (e.g., Ada County limits differ from Canyon County), so it's worth checking with us to see if you qualify for special state-backed rates.
• Find out more about Idaho Housing and Finance (IHFA)

Frequently Asked Questions (FAQ)

1. Can I get cash out with an FHA Streamline Refinance?

No. The Streamline is strictly for lowering your rate or term. It does not allow you to take cash out (other than a max of $500 for minor adjustments at closing).

2. Do I have to pay Mortgage Insurance (MIP) again?

Yes. If you refinance into a new FHA loan, you will have a new Upfront Mortgage Insurance Premium (UFMIP) and monthly MIP. However, if you do a Streamline refinance within 3 years of your original loan, you may get a refund credit on your old UFMIP to apply toward the new one.

3. What is the FHA loan limit in Idaho for 2025?

It varies by county. For 2025, the “floor” in counties like Canyon or Payette is $524,225, while higher-cost areas like Blaine County go up to $759,000 or more. Ada County (Boise) sits at $586,500.

Ready to Run the Numbers?

Whether you want the speed of a Streamline or the financial flexibility of a Cash-Out, the math has to make sense for you.

Contact us today for more information. We can run a side-by-side comparison of your current loan vs. a new FHA option in minutes.

1st Choice Mortgage Company
NMLS 380736
(208) 375-LOAN