Should You Refinance Your FHA Loan into a Conventional Loan? Here’s What to Know

If you started your homeownership journey with an FHA loan, you’re not alone. FHA loans are a great choice for first-time buyers, thanks to their low down payment and flexible credit requirements. But as your finances improve, refinancing into a conventional loan could help you save money — and that’s where E360 Mortgage is here to help.

Why Refinance From FHA to Conventional?

Refinancing your FHA loan into a conventional loan can offer some major benefits — especially if your credit score has improved and you’ve built up equity in your home. Here’s what you might gain:

* Say Goodbye to Mortgage Insurance

FHA loans typically require mortgage insurance premiums (MIP) for the life of the loan. But with conventional loans, once you reach 20% equity, you can avoid or eventually cancel private mortgage insurance (PMI) — potentially saving you hundreds of dollars a month.

* Take Advantage of Lower Interest Rates

If rates have dropped since you took out your FHA loan, refinancing could lower your monthly payment and reduce your interest over the life of the loan. Conventional refinance rates also tend to be lower than FHA refinance rates.

* You’ve Improved Your Credit Score

If your score was in the low 600s when you bought your home and it’s now in the mid-600s or above, refinancing could get you a much better deal on your mortgage.

* Tap Into Your Equity

Looking to consolidate debt or fund a renovation? A cash-out refinance with a conventional loan lets you access up to 80% of your home’s value — with no mortgage insurance in many cases.

Requirements to Refinance to a Conventional Loan

To qualify for a conventional refinance, most lenders will look for:

A credit score of at least 620
20% equity in your home (especially if you want to avoid PMI)
A debt-to-income ratio of 45% or less
Proof of income and homeowner’s insurance

At E360 Mortgage, we’ll walk you through the process and help you determine if you’re eligible — no guesswork involved.

When Can You Refinance?

Unlike FHA-to-FHA refinances (which require a 210-day waiting period), you can refinance to a conventional loan at any time, as long as you meet the qualifications. Some lenders may also require the refinance to result in a “net tangible benefit”, like a lower monthly payment or shorter loan term.

Things to Consider Before You Refinance

Refinancing isn’t always the right move — here are a few things to weigh:

– You Might Still Have PMI (for a While)

Even with 20% equity as the goal, if you don’t quite meet that threshold yet, you may still need to pay PMI — at least until you reach it.

– Closing Costs Add Up

Refinancing means taking out a brand-new loan. Which also means paying closing cost again and they are typically 2–5%, however we’ll explore options to reduce it even further. Sometimes you even have the option to roll these into your new loan, but it may affect your monthly payment.

– The Loan Process Starts Over

Get ready to gather paperwork again — income documents, tax returns, and more. It’s a similar process to your original loan, and average closing time is about 30 days.

Not Ready for Conventional? Consider FHA Streamline Refinance

If you’re not quite ready to switch to a conventional loan, an FHA Streamline Refinance might be a better fit. It’s a quicker, less paperwork-heavy option — no income verification or home appraisal required.

To qualify, you must:

Have made at least 6 payments and waited 210 days since closing
Be current on your payments
See a net tangible benefit, like lower monthly payments or switching from an adjustable to a fixed rate
Not take more than $500 in equity out

Thinking About Refinancing? Let’s Talk.

At E360 Mortgage, we’re here to make refinancing simple, smart, and tailored to you. Whether you’re hoping to cut costs, ditch mortgage insurance, or access your home’s equity, we’ll help you explore your options and make the best move for your goals.

Call us today or start your application online — and let’s see if a conventional refinance is right for you.

Edwina Crump Zackpah- NMLS# 2648582

Sr. Mortgage Advisor | e360 Mortgage powered by NEXA

470-404-5200 | ezackpah@nexamortgage.com |www.e360Mortgage.com