Key Takeaways
- After one year, you may qualify for several refinance options, including conventional and FHA cash-out loans, subject to their seasoning and other eligibility requirements. Rate-and-term and streamline refinances may be available sooner.
- Conventional and FHA cash-out refinances generally require you to retain at least 20% equity after refinancing. FHA streamline refinances have no loan-to-value limit but require on-time payments.
- Even if you’re eligible, refinancing only makes sense if savings exceed costs and align with your goals.
After one year, refinancing may be an option under conventional, FHA, VA or USDA rules. Cash-out refinances have additional seasoning requirements, while some rate-and-term and streamline refinances may be available sooner. Eligibility depends on the loan program and your circumstances.
Meeting a waiting period does not guarantee approval. Depending on the program, lenders may also review your equity, credit, income and payment history, and requirements vary by loan program and lender.
Refinance waiting periods by loan type
Waiting periods, also called seasoning requirements, depend on your loan type and whether you take cash out. Fannie Mae generally sets no minimum mortgage-age requirement for standard limited cash-out refinances, although special transactions have additional rules. For cash-out refinancing, an existing first mortgage being paid off generally must be at least 12 months old, measured from note date to note date. FHA cash-out generally requires 12 months of ownership and occupancy as a principal residence before case-number assignment, with limited exceptions. FHA streamline refinancing generally requires six payments, six full months since the first payment due date, and 210 days since closing, all satisfied before case-number assignment. VA IRRRLs require the later of six consecutive monthly payments or 210 days after the first payment due date. USDA refinancing requires the existing loan to have closed at least 180 days before submission to USDA. Other eligibility requirements apply.
Lenders can add their own, longer waiting periods, so confirm the rules with the lender you apply with.
Refinance waiting periods at a glance
| Loan type | Refinance type | Waiting period | Notes |
|---|---|---|---|
| Conventional | Rate-and-term (limited cash-out) | Generally no minimum mortgage-age requirement under Fannie Mae rules; special transactions and lender requirements may differ. | Cash back limited to the greater of 1% of the new loan amount or $2,000 (Fannie Mae) |
| Conventional | Cash-out | Generally, an existing first mortgage being paid off must be at least 12 months old, measured note date to note date, and at least one borrower must have held title for six months before disbursement. Exceptions apply. | Maximum 80% LTV on a one-unit primary home. Cash-out refinancing may carry higher rates or upfront costs than a comparable rate-and-term refinance; compare personalized quotes. |
| FHA | Streamline | By FHA case-number assignment: at least 210 days since closing, six payments made, and six full months since the first payment due date. | Existing FHA loan required. FHA does not require an appraisal or impose a maximum LTV, but maximum loan-amount, payment-history and net-tangible-benefit requirements apply. |
| FHA | Rate-and-term (full documentation) | No streamline-style seasoning test; the lender reviews your recent mortgage payment history | Waiting rules vary by lender |
| FHA | Cash-out | Generally, 12 months of ownership and primary-residence occupancy before FHA case-number assignment. Mortgage payments must have been made within the month due for the previous 12 months or since the mortgages were obtained, whichever is shorter. If the property is mortgaged, the current loan needs at least six months of payments. Exceptions and additional rules apply. | Maximum 80% LTV |
| VA | IRRRL | At least 210 days after the first payment due date and six consecutive monthly payments, satisfied by closing. | These seasoning requirements apply when refinancing an existing VA loan. Other eligibility requirements and lender overlays apply. |
| VA | Type I cash-out of a VA loan | At least 210 days after the first payment due date and six consecutive monthly payments, satisfied by the new note date. | Type I: the new loan, including the funding fee, is no more than the payoff of the existing loan. These seasoning requirements apply when refinancing an existing VA loan. Other eligibility requirements and lender overlays apply. |
| VA | Type II cash-out of a VA loan | At least 210 days after the first monthly payment was actually made and six monthly payments made, satisfied by closing; those six payments need not be consecutive. | Type II: the new loan, including the funding fee, is more than the payoff of the existing loan. These seasoning requirements apply when refinancing an existing VA loan. Other eligibility requirements and lender overlays apply. |
| USDA | Streamlined-assist, streamlined and non-streamlined | Existing USDA loan closed at least 180 days before the lender submits the refinance to USDA, with no payment more than 30 days late in that period | Reduced from 12 months in December 2024 |
Sources: Fannie Mae Selling Guide, HUD Handbook 4000.1, 38 U.S.C. 3709, 38 CFR 36.4306 and USDA Rural Development.
Check your refinance eligibility. Start hereWhen refinancing after 1 year makes sense
Refinancing after one year makes sense when your monthly savings recover the closing costs before you plan to sell or refinance again, or when the new loan meets a specific goal, such as removing mortgage insurance, switching to a fixed rate or shortening your term.
A lower mortgage rate is one of the most common reasons to refinance. Your rate is a major factor in your monthly principal and interest payment, so a meaningful rate drop could lower your payment and free up money for saving, investing or home improvements.
Equity matters most for cash-out refinances. Conventional and FHA cash-out loans are generally capped at 80% of the applicable property value, so you generally must retain at least 20% equity after refinancing. Cash proceeds and financed costs must fit within the applicable loan limits. Rate-and-term refinances may require less equity, and FHA streamline refinances have no loan-to-value limit. For a standard conventional refinance, a new loan-to-value ratio of 80% or less generally avoids a PMI requirement.
For FHA loans with case numbers assigned on or after June 3, 2013, annual mortgage insurance generally lasts for the loan term when the original loan-to-value ratio exceeds 90%. Refinancing into a conventional loan with a new loan-to-value ratio of 80% or less generally eliminates the need for mortgage insurance. You may also qualify for a lower interest rate, depending on market conditions and your qualifications.
Other reasons to refinance include switching from an adjustable-rate mortgage to a fixed-rate mortgage. This change can provide more stable monthly payments and protect you from potential rate increases.
If your credit score has improved since you closed on your original loan, you may qualify for a lower interest rate, but your loan-to-value ratio, loan program and lender also affect your terms.
Refinancing can also change your loan term. Moving from a 30-year loan to a 15-year loan usually raises your monthly payment, but you pay off the balance sooner and typically pay less total interest.
Time to make a move? Let us find the right mortgage for youHow to move forward with refinancing after 1 year
If it’s been a year and you feel refinancing is worth it, check your loan type to see how long you have to wait before applying.
After one year, most programs’ waiting periods have passed, but a recent late payment or a lender’s own rules can change the timeline. Also consider whether you want to stay with the same loan program or switch to another. For example, if you have an FHA loan, refinancing into a conventional loan with a new loan-to-value ratio of 80% or less generally removes mortgage insurance, subject to qualifying for the new loan.
While you can work with your current lender again, refinancing gives you the flexibility to shop around. You’re creating a new mortgage, so you’re not tied to the same bank.
Before you apply, check whether your current mortgage has a prepayment penalty. The CFPB describes it as a fee some lenders charge if you pay off all or part of your mortgage early, and a refinance pays off your current loan. Your loan documents or servicer can confirm whether one applies.
Ask your current lender and at least two other lenders for a Loan Estimate, then compare rates, fees, terms and customer reviews. The Consumer Financial Protection Bureau notes that getting multiple Loan Estimates can help you save money.
Run the numbers, too. Freddie Mac says to expect refinance closing costs of 3% to 6% of the loan principal, or $9,000 to $18,000 on a $300,000 loan. See this breakdown of refinance closing costs for the typical fees.
To find your break-even point, divide your closing costs by your monthly savings. If closing costs total $9,000 and the new loan lowers your monthly payment by $250, it takes 36 months to break even ($9,000 divided by $250). If you sell or refinance again before then, the refinance could cost more than it saves. This is a simple cash-flow break-even estimate, not a measure of total interest savings. Extending the repayment term or financing closing costs can increase your total borrowing cost. A refinance calculator can help you run your own numbers.
The bottom line
After one year, you may qualify to refinance under most loan programs. Whether it makes sense depends on your equity, your goal and how long you plan to keep the new loan.
If the numbers work, get Loan Estimates from several lenders and compare each offer’s break-even point before you choose.
For a broader look at timelines across all loan programs, see our guide on How Soon Can You Refinance a Mortgage?
