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How to Refinance an FHA Loan to Conventional [2025]

By Wirly Editorial Team | Updated March 30, 2026 | AI-assisted, human-reviewed

How to Refinance an FHA Loan to Conventional [2025]

Key Takeaways

  • You can refinance an FHA loan to a conventional loan once you have at least 20% equity in your home and a credit score of 620 or higher, though 700+ will get you the best rates.
  • The biggest reason to switch: FHA loans require a mortgage insurance premium (MIP) for the life of the loan, while a conventional loan lets you remove mortgage insurance once you reach 20% equity.
  • Expect to pay 2% to 5% of your new loan amount in closing costs, so use a break-even calculator to make sure the savings justify the expense.
  • You will need to meet conventional loan requirements, including a new appraisal, income verification, and a debt-to-income ratio typically at or below 45%.
  • Alternatives like an FHA streamline refinance may be simpler if you just want a lower rate without switching loan types.

Can You Refinance an FHA Loan to a Conventional Loan?

Yes, you can refinance an FHA loan to a conventional loan, and thousands of homeowners do exactly that every year. According to HMDA 2023 data, conventional loans made up the majority of refinance originations nationwide, reflecting a strong preference among borrowers looking to move away from government-backed mortgages.

The process works like any standard mortgage refinance. You apply for a new loan with a conventional lender, use it to pay off your existing FHA mortgage, and begin making payments on your new conventional mortgage. There is no waiting period set by Fannie Mae or Freddie Mac for this type of refinance, though most lenders prefer you to have made at least six months of on-time payments on your current mortgage.

Why Refinance from an FHA Mortgage to a Conventional Loan?

The primary reason homeowners refinance from an FHA loan to a conventional loan is to eliminate ongoing mortgage insurance payments. If you took out your FHA loan after June 3, 2013, and put down less than 10%, you are required to pay an annual mortgage insurance premium (MIP) for the life of the loan. This is one of the most significant costs of FHA loans, and it does not go away regardless of how much equity you build.

A conventional loan could save you hundreds of dollars per month. With a conventional mortgage, private mortgage insurance (PMI) is only required when your equity is below 20%. Once you cross that threshold, you can remove mortgage insurance entirely. According to Freddie Mac, borrowers who eliminate PMI through equity gains can redirect those savings toward paying down principal or other financial goals.

Additional Benefits of Switching

  • Lower your interest rate: If your credit score has improved since you took out your FHA loan, a conventional loan may offer a lower interest rate. Even a small rate reduction can save thousands over the loan term.
  • Shorter loan term: Refinancing gives you the option to move from a 30-year mortgage to a 15- or 20-year term, building equity faster.
  • Cash-out refinance opportunity: If you have significant equity, a cash-out refinance lets you access some of that value for home improvements, debt consolidation, or other needs.
  • No FHA upfront MIP: New FHA loans charge an upfront mortgage insurance premium of 1.75% of the loan amount. Moving to conventional means you avoid this cost on future refinances.

What Goes into Refinancing an FHA Loan to Conventional?

Requirements You Will Need to Meet

Conventional loans have stricter qualification standards than FHA loans. Here is what most lenders require:

  • Credit score: A minimum of 620, though a score of 740 or higher will qualify you for the best rates. According to the CFPB, shopping multiple lenders and comparing Loan Estimates is the best way to ensure you get a competitive rate regardless of your score.
  • Home equity: At least 20% equity to avoid private mortgage insurance on your new loan. You can refinance with less equity, but you will pay PMI until you reach the 20% mark.
  • Debt-to-income ratio (DTI): Most lenders want your total monthly debt payments (including the new mortgage payment) to be at or below 45% of your gross monthly income. Some lenders allow up to 50% with strong compensating factors.
  • Stable income and employment: Expect to provide two years of tax returns, recent pay stubs, and bank statements.
  • Home appraisal: A new appraisal is required to confirm your home’s current market value.

How Long Before You Can Refinance an FHA Loan to Conventional?

There is no mandatory seasoning period from Fannie Mae or Freddie Mac for an FHA-to-conventional refinance. However, most lenders require at least six months of payment history on your current mortgage. Practically speaking, you also need time to build enough equity to make the switch worthwhile. Use our refinance calculator to estimate your current equity and potential savings.

How to Refinance Your FHA Loan to a Conventional Mortgage

Follow these steps to refinance your existing FHA home loan to a conventional loan:

  1. Check your credit score and equity. Pull your credit report for free at AnnualCreditReport.com. Estimate your home equity by comparing your remaining loan balance to your home’s estimated value. If you have at least 20% equity and a 620+ credit score, you are a strong candidate.
  2. Shop multiple lenders. According to the CFPB, getting quotes from at least three lenders can save you thousands of dollars over the life of the loan. Compare interest rates, closing costs, and loan terms. Our best refinance lenders page can help you start your research.
  3. Gather your documents. Prepare recent pay stubs, two years of W-2s or tax returns, bank statements, your current mortgage statement, and homeowner’s insurance information.
  4. Submit your application. Choose a lender and formally apply. You will receive a Loan Estimate within three business days, which breaks down your interest rate, monthly mortgage payment, closing costs, and other fees.
  5. Complete the appraisal. Your lender will order a home appraisal. This typically costs between $300 and $600 and confirms your home’s current value.
  6. Review the Closing Disclosure. At least three business days before closing, you will receive a Closing Disclosure showing the final terms. Compare it carefully to your original Loan Estimate.
  7. Close on your new loan. Sign the paperwork, pay any closing costs not rolled into the loan, and your new conventional mortgage replaces your FHA mortgage.

Risks and Considerations

Refinancing may not always be the right move. Before you refinance your FHA loan, consider these potential downsides:

  • Closing costs add up: Expect to pay 2% to 5% of the new loan amount in closing costs. On a $250,000 loan, that is $5,000 to $12,500. Use our break-even calculator to determine how many months of savings it takes to recoup these costs.
  • Resetting the amortization clock: If you refinance into a new 30-year loan term after already paying on your FHA loan for five years, you are extending your repayment timeline. This can mean paying more total interest even with a lower rate.
  • Planning to move soon: If you expect to sell your home within two to four years, you may not stay long enough to break even on the closing costs of refinancing.
  • Credit score impact: Applying for a new loan triggers a hard inquiry on your credit report. Multiple inquiries within a 14- to 45-day window are typically counted as one, so shop for rates within a short timeframe.
  • Rate lock risks: When you lock in a rate, it is usually valid for 30 to 60 days. If your closing is delayed, the lock may expire, potentially leaving you with a higher rate. Ask your lender about float-down options that let you benefit if rates drop during the lock period.
  • Prepayment penalties: While FHA loans do not carry prepayment penalties, verify that your new conventional loan does not include one either.

According to CFPB complaint data from 2024, the most common mortgage-related complaint category is trouble during the payment process, accounting for the majority of complaints across major servicers. Before refinancing, research your prospective lender’s servicing reputation and understand who will service your new loan after closing.

Alternatives to Refinancing Your FHA to a Conventional

Refinancing to a conventional loan is not your only option. Consider these alternatives:

  • FHA streamline refinance: If you want a lower rate but do not need to switch loan types, an FHA streamline refinance requires less documentation, no appraisal, and typically lower closing costs. However, you will still pay the FHA mortgage insurance premium.
  • FHA cash-out refinance: This lets you tap into your home’s equity while staying in the FHA program. Refinancing may make sense if your credit score is below 620 and you do not yet qualify for conventional.
  • Wait for automatic PMI removal: If you already have a conventional loan, PMI is automatically removed when your loan balance reaches 78% of the original home value. This does not apply to FHA MIP, but it is worth understanding if you are comparing options.

Pros and Cons of Refinancing from an FHA to a Conventional Loan

Pros

  • Eliminate the annual mortgage insurance premium once you have 20% equity
  • Potentially lower your interest rate and monthly mortgage payment
  • Choose a shorter loan term to build equity faster
  • No upfront mortgage insurance premium on the new loan
  • A conventional loan may be easier to manage if you sell or refinance again later

Cons

  • Closing costs of 2% to 5% of the loan amount
  • Stricter credit and income requirements than FHA
  • Restarting the loan term can increase total interest paid
  • Appraisal may come in lower than expected, reducing your equity calculation
  • The process takes 30 to 45 days on average

The Bottom Line: Know Your Options Before Refinancing

Refinancing from an FHA loan to a conventional loan is one of the most effective ways to remove mortgage insurance and reduce your long-term borrowing costs. But it only makes sense when the numbers work in your favor. Calculate your break-even point, compare offers from multiple lenders, and make sure you have enough equity and a strong enough credit score to qualify for favorable terms.

Start by using our refinance calculator to see how much you could save, and explore our best refinance lenders to compare your options side by side.

FAQ

How long before you can refinance an FHA loan to conventional?

There is no set waiting period from Fannie Mae or Freddie Mac. However, most lenders want to see at least six months of on-time payments on your current FHA mortgage. The real constraint is building enough equity – ideally 20% – to qualify and avoid private mortgage insurance on the new loan.

Can you refinance an FHA loan to conventional in Texas?

Yes. Texas has specific home equity lending rules under the Texas Constitution, but a standard rate-and-term refinance from an FHA loan to a conventional loan works the same way as in other states. If you are pursuing a cash-out refinance in Texas, be aware that the state limits cash-out refinances to 80% loan-to-value and imposes additional closing requirements.

Is refinancing from an FHA to a conventional loan worth it if I have less than 20% equity?

It can be, but the savings are less dramatic. With less than 20% equity, your conventional loan will require private mortgage insurance. PMI rates vary based on your credit score and loan-to-value ratio, but they are often lower than FHA MIP. Run the numbers using a break-even calculator to compare the total cost of each scenario.

Do I need an appraisal to refinance my FHA loan to conventional?

Yes. Unlike an FHA streamline refinance, which may not require an appraisal, a conventional refinance requires a full appraisal to determine your home’s current market value. This is how the lender confirms your loan-to-value ratio and whether you qualify for the loan amount you are requesting.

What credit score do I need to refinance from an FHA loan to conventional?

The minimum credit score for most conventional loans is 620. However, borrowers with scores of 740 or above typically receive the lowest interest rates. If your score is between 620 and 700, you will still qualify, but you may pay a higher rate or additional fees compared to borrowers with stronger credit profiles.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Mortgage terms, rates, and qualification requirements vary by lender and individual circumstances. Consult with a qualified mortgage professional or financial advisor before making refinancing decisions.

Sources

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Written by the Wirly Editorial Team. Last reviewed: March 29, 2026. Fact-checked against HMDA 2023, CFPB 2024 complaint data, CFPB consumer guidance, Freddie Mac guidelines. See our methodology for how we evaluate lenders.

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This guide is for educational purposes only. Consult a licensed mortgage professional for personalized advice. Wirly is not a lender or mortgage broker.