How to Choose the Right Type of Refinance for You

When you refinance, you’ll quickly find there’s no one-size-fits-all option. The best refinance loan depends on your current mortgage, how much equity you have, and whether you’re paying mortgage insurance—but with multiple refinance options available, there’s likely one that fits your goals.

In this article (Skip to…)

• Types of refinance loans
• Conventional refinancing
• Rate-and-term refi
• Cash-out refi
• Cash-in refi
• Streamline Refinancing

Types of refinance loans

Below are the minimum credit scores and maximum loan-to-value ratios for mainstream refinance programs. Note that these are only for refinancing a primary residence; vacation home and investment property refinance rules are different.

A loan-to-value ratio (LTV) is the loan amount compared to the home’s value.

As an example, a loan with an 85% LTV will often carry higher interest rates than one with a 75% LTV.

*Technically, no credit check is required for most streamline refinances. But some mortgage lenders will pull a credit score and report anyway

Conventional refinancing

Conventional refinancing replaces your current home loan with a new conventional loan. Homeowners often opt for this type of mortgage refinancing because it allows them to access lower interest rates, shorten their loan terms, and achieve other financial goals like refinancing a second home.

You can refinance your existing mortgage into a conventional loan no matter what type of mortgage you have currently.

Conventional refinancing is also popular because it does not require mortgage insurance with 20% home equity. It’s a good option for those who have decent credit and equity in their homes.

Conventional refinance rates for January 13, 2026

 *Interest rates and annual percentage rates for sample purposes only. Your own rate will be different. See our rate assumptions and advertising disclosures here.

Rate-and-term refinance

Many times, borrowers use a rate-and-term refinance to change their loan term, mortgage rate, or both.

Rate-and-term refinancing helps homeowners save money on their mortgage loans with lower monthly payments, or paying less interest due to lower rates or shortened loan terms.

Here are a few rate-and-term refinancing scenarios:

• Refinancing a 30-year fixed-rate mortgage into a new 15-year fixed-rate mortgage
• Refinancing a 30-year fixed-rate mortgage at 5% interest into a new 30-year fixed-rate loan at 3%
• Refinancing a 30-year fixed-rate mortgage at 5% interest into a new 15-year fixed rate loan at 3%

Many mortgage refinances are rate-and-term, especially in a falling-rate real estate market.

Cash-out refinance loans

A cash-out refinance allows homeowners to access their home’s equity and refinance their current mortgage simultaneously.

Your new home loan will be large enough to pay off your current loan. You’ll keep the leftover funds, as a lump sum of cash, to be used to achieve any number of financial goals.

Many borrowers use this cash out to fund college education, invest in real estate, or to pay down debt from credit cards or student loans.

Here’s how a cash-out refinance works:

• Home value: $400,000
• Current mortgage balance: $200,000
• New refinance loan: $250,000
• Cash out at closing: $50,000 (less closing costs)

Cash-out refinancing options

Most mortgage lenders offer three main types of cash-out refinancing loans.

• Conventional loans: With this cash–out refinance option, you can borrow up to 80% of your home’s value. You’ll normally need a minimum credit score of 620
• FHA loans: FHA cash–out refinancing lets you borrow up to 80% of your home’s value. You typically need a credit score of at least 600 to qualify
• VA loans: VA cash–out refinancing allows you to borrow up to 100% of your home’s value. The credit scores required for this refinance option vary, but requirements are often more lenient than other loan programs. Note that all VA loan products are only available to veterans, Reserve and National Guard members, active–duty service members, and certain surviving spouses

Each loan program has its own rules and requirements, so talk to your lender about your options.

Additionally, if you’re uncertain whether or not a cash-out refinance is right for your financial situation, then consider a home equity line of credit (HELOC) or even a home equity loan.

Both refinancing alternatives allow homeowners to borrow against their home’s value, but without replacing their current mortgage.

Cash-in refinance

Cash-in refinancing is the opposite of cash-out refinancing. It allows homeowners to reduce their loan amount by paying a lump sum toward their mortgage when they refinance. A cash-in refinance can lead to a lower mortgage rate or a shorter loan term.

Note that lenders often lump cash-in refinancing with rate-and-term refinancing (so it may not be presented as a separate option). If you’re interested in this type of refinance, simply ask your loan officer about its policies for cashing-in when you apply.

Many borrowers choose a cash-in mortgage refinance to get lower interest rates on a new home loan that are generally only available to lower loan-to-value ratios (LTV).

Homeowners may also use this refinance option to drop mortgage insurance premium (MIP) payments. When your existing mortgage loan gets to 80% LTV or lower, MIP payments are no longer required.

Although, this MIP rule doesn’t apply to FHA mortgages, which require MIP throughout the life of the loan. Still, a homeowner could refinance out of an FHA loan and into a conventional loan to remove mortgage insurance.

FHA Streamline Refinance

Current FHA loan holders might consider an FHA Streamline Refinance. It works much like other types of refinancing loans. Borrowers take out a new FHA mortgage to replace the existing one.

Refinancing from an existing FHA mortgage into a new FHA mortgage requires much less paperwork — no appraisal or income documentation is required.

Additionally, homeowners who refinance within the first three years of their existing mortgage may be eligible for a partial refund of the upfront mortgage insurance premiums (UFMIP) paid when closing on the original FHA loan.

Although, there are drawbacks to an FHA Streamline Refinance. You are not allowed to take cash out or shorten your loan term, and closing costs cannot be rolled into the loan balance.

FHA Streamline Refinance rates for January 13, 2026

Today’s average 30-year FHA rate is % (% APR), according to our lender network. Keep in mind that FHA mortgage insurance fees add 0.55% in annual costs. This also applies to Streamline Refinances.

Interest rates are for example purposes only. Your own rate will vary. See our rate assumption here.

VA Streamline Refinance

A VA Streamline Refinance replaces an existing VA loan with a new one at a lower rate.

The official name of this refinance option is VA Interest Rate Reduction Refinance Loan (IRRRL). However, it’s commonly referred to as a “streamline” loan because it requires no appraisal, and no verification of employment, income, or assets to qualify.

As with any VA loan program, veterans, active-duty servicemembers, Reservists and National Guard members, and some surviving spouses are eligible.

Additionally, only current VA home loans are eligible, and homeowners must also meet underwriting requirements set by the Department of Veterans affairs.

Current guidelines include:

• Current payment history with no more than one 30-day late payment within the past year
• Your new rate and monthly payment for the IRRRL needs to be lower than the existing monthly mortgage payment. This rule does not apply when refinancing an adjustable-rate mortgage into a fixed-rate mortgage
• No cash out allowed
• Certify that you currently or previously occupied the home
• Previously used your VA loan eligibility on the home you intend to refinance. You may see this referred to as a VA-to-VA refinance

VA Streamline Refinance Rates for January 13, 2026

*Interest rates and annual percentage rates for sample purposes only. Average rates assume 0% down and a 740 credit score. See our full loan VA rate assumptions here.

USDA Streamline Refinance

Homeowners with a USDA mortgage loan are eligible to use a USDA Streamline Refinance.

Similar to other government-backed mortgage loans, this refinance option requires less fees than standard underwriting.

There is no appraisal required for homeowners who do not receive a subsidy. But your mortgage lender will need to check your credit score and verify income.

Current guidelines include:

• You must meet the USDA credit score requirements
• You can finance the principal, interest, closing costs, escrow fees, and upfront guarantee fee into the new loan balance
• Your existing USDA loan must be paid on time for 180 consecutive days
• You must have held the current mortgage for minimum of 12 months
• Your home must be your primary residence
• Your household income must fall within the USDA’s income limits