How Soon Can You Refinance a Mortgage Loan? 2024 Rules

By: Erik J. Martin Updated By: Ryan Tronier Reviewed By: Paul Centopani
January 1, 2024 - 14 min read

How soon can you refinance your home after purchasing it?

If you’re wondering how soon you can refinance a mortgage, even if you’ve just bought a house or recently refinanced, the answer might surprise you.

Many homeowners have the option to refinance into a lower-rate loan immediately, with no waiting period.

Others may only need to wait as little as six months. This means there’s a strong possibility that you’re eligible for a mortgage refinance at today’s favorable rates.

Check your refinance eligibility. Start here

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How soon can you refinance a mortgage?

If you have a conventional mortgage, you can typically refinance to a lower interest rate as soon as you want. However, you’ll have to wait six months if you want a cash-out refinance or a Streamline Refinance.

Verify your refinance eligibility. Start here

  • Conventional refinance (no cash out): No waiting period
  • Cash-out refinance: 6-month waiting period
  • FHA or VA Streamline Refinance: 7-month (210-day) waiting period
  • USDA loan refinance: 6-12 month waiting period

Below, we take a closer look at the rules for each type of refinance loan.

Rules for refinancing a conventional loan

If you have a conventional mortgage—one backed by Fannie Mae or Freddie Mac—you might be able to refinance immediately after closing your home purchase or a previous refi.

Keep in mind that many lenders have a six-month “seasoning period” before a current borrower can refinance with the same company. So you’ll likely have to wait if you want to refinance with the lender you’re already using.

You can often get around the six-month seasoning rule by simply refinancing with a different lender.

But you can often get around that six-month refinance waiting period by simply shopping around and refinancing with a different lender.

While it’s rare, some lenders charge a prepayment penalty fee that could derail your refinance plans. Check to see if your current loan has a prepayment penalty clause before moving forward.

In any case, it’s recommended that you shop around before refinancing to make sure you’re getting the lowest rate possible.

Rules for a conventional cash-out refinance

If you’re hoping to do a cash-out refinance, you typically have to wait six months before refinancing, regardless of the type of home loan you have. In addition, a cash-out refinance usually requires you to leave at least 20% equity in the home.

So before you can use a cash-out refi, you need to be sure you’ve built up enough home equity to make one worthwhile. If you made a large down payment or if your home has appreciated in value, you may already have enough home equity to qualify.

If your only goal is to get cash and not to lower your interest rate or change your loan term, a home equity loan or line of credit may be less expensive than the closing costs on a cash-out refinance.

Check your cash-out refinance eligibility. Start here

Rules for refinancing an FHA loan

The Federal Housing Administration (FHA) provides homeowners with two main refinancing options: the FHA rate-and-term refinance and the FHA streamline refinance.

When it comes to how soon you can refinance an FHA loan, both types require a six-month waiting period. Furthermore, you’ll also need a recent history of on-time mortgage payments to qualify.

  • The FHA rate-and-term refinance allows borrowers to change their loan’s interest rate, the loan term, or both. To refinance this type of mortgage, you’re required to wait seven months, which is enough time to make six on-time payments on the mortgage.
  • The FHA Streamline Refinance offers a faster way to lower your interest rate with fewer requirements. This option is only available to homeowners who already have an FHA loan. To be eligible, the mortgage must have been yours for at least 210 days, and you must have made at least six on-time monthly payments.
  • FHA cash-out refinance: Before applying for a cash-out refinance, it is necessary to occupy your home as a primary residence for a minimum of 12 months. However, a cash-out refinance can be done on a home that you own outright without a waiting period. On the other hand, if you have a mortgage, you must have had one for at least six months before being eligible for an FHA cash-out refi. What’s more, any mortgage payments that were due in the last year had to be made on time.

Rules for refinancing a VA loan

The Department of Veterans Affairs (VA) offers two primary refinancing options: the VA cash-out refinance and the Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA streamline refinance.

  • The VA cash-out refinance allows eligible veterans, service members, and surviving spouses to refinance their conventional or VA loan into a VA loan and extract cash from their home’s equity. To qualify, you must wait at least 210 days or six on-time payments, whichever is longer.
  • The VA IRRRL, on the other hand, is a streamlined option for those who already have a VA loan and want to lower their interest rate. The process is relatively simple, with no need for an appraisal, income verification, or a new certificate of eligibility. Like the VA’s cash-out refinance, you must wait for at least 210 days or six payments, whichever comes first.

Rules for refinancing a USDA loan

For homeowners with existing USDA loans, the United States Department of Agriculture (USDA) offers a streamlined refinance program. To be eligible, your mortgage must be current with on-time payments for the previous 12 months. The new interest rate must be at least 1% lower than the original interest rate on the USDA loan, and the loan must result in a net tangible benefit, such as a lower monthly payment.

Rules for refinancing a jumbo loan

Jumbo loans, also known as non-conforming loans, are those that exceed Fannie Mae and Freddie Mac’s conforming loan limits. This type of mortgage has more rigorous standards because it is not federally guaranteed and is thus subject to individual lender policies.

The good news is that Fannie and Freddie don’t regulate this type of mortgage, so you can likely refinance a jumbo loan without having to wait. But your lender will decide whether or not you can do that. So talk to your loan officer to find out more.

Reasons to refinance a mortgage

Many homeowners wonder when a refinance is worth it. The decision to refinance your current mortgage should align with your financial situation and long-term goals.

An important aspect to consider is the break-even point, which is the time it takes for the savings from the new mortgage to surpass the refinancing costs. Experimenting with a refinance calculator can be an invaluable tool in this process, as it helps estimate your break-even point and provides a clearer picture of the potential financial benefits of refinancing.

Verify your refinance eligibility. Start here

“What’s most important to focus on is, what are the monthly and lifetime savings of the loan? What are the costs? And how long will it take you to recover those costs with the savings you’ll earn?” says Ralph DiBugnara, president of Home Qualified.

Get a better interest rate

Getting a lower interest rate is a common reason to refinance. When interest rates go down, you can save a lot of money on interest payments by refinancing. This is especially true for loans with long terms, such as a 30-year mortgage.

Own your home sooner

Another good reason to refinance is to shorten the length of the loan. Even though your monthly payments might go up, you’ll probably pay less in interest over the life of the loan. Also, you’ll own your home outright much faster.

Get a fixed-rate loan

Switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM) can provide financial stability. ARMs usually start out with lower rates, but they can go up a lot over time. By switching to a fixed-rate mortgage, you lock in a constant interest rate for the life of the loan, which makes budgeting easier.

Tap your home equity

With a cash-out refinance, homeowners can use their home equity to pay for big expenses like home repairs or to pay off debts with high interest rates like credit cards or student loans. This can make financial sense if the interest rate on the new mortgage is lower than the interest rate on the debts that are being paid off.

Drop mortgage insurance

Most conventional mortgages require private mortgage insurance (PMI) if you put less than 20% of the loan amount down at closing, and some government-backed loans require a monthly mortgage insurance premium (MIP) unless you put down at least 10%. You might save money by refinancing to drop mortgage insurance if the market value of your home has increased quickly or if you have more money to put down on a new loan.

Divorce settlement

Refinancing your home during a divorce mortgage settlement is an effective way to remove your spouse’s name from the mortgage. This process ensures that only one name remains tied to the property, ensuring sole ownership. It’s an important step in finalizing property matters in a divorce.

Costs of refinancing a mortgage

When you refinance a mortgage, you have to pay fees, just like when you first got the mortgage for the first time. Some of these are:

  • Application fees
  • Loan origination fees
  • Appraisal to determine your home’s current market value
  • Title search to ensure there are no issues with your home’s ownership records
  • Other closing costs, such as attorney fees

Most of the time, these costs are between 2% and 6% of the loan amount. So, the costs could be anywhere from $4,000 to $12,000 for a $200,000 mortgage.

Alternatively, many lenders can roll the closing costs into your mortgage principal or cover them in the form of a higher interest rate, so you don’t have to pay upfront. But be aware that a higher interest rate could make the loan more expensive in the long run.

How to refinance your mortgage loan

If you’ve decided to refinance, there are a few things you need to do. Mortgage refinancing is a strategic step for many homebuyers seeking better terms or lower interest rates. Here’s how you can navigate the process efficiently.

  1. Check your credit history: Before diving into mortgage refinancing, check your credit report and score. Clear up any errors to ensure you’re in the best position to apply for refinancing.
  2. Determine your home's equity: Understanding your home’s current value is crucial. Calculate the equity by subtracting the amount remaining on your existing mortgage from the current market value of your home. More equity often translates to more favorable refinance options.
  3. Explore refinance options: Shop around to compare terms and rates from various lenders. This step is vital to securing the best deal for your refinancing needs.
  4. Prepare your application: Once you’ve selected a lender, gather necessary documents, such as proof of income, assets, debts, and an appraisal of your home’s value. This detailed preparation can streamline the approval process.
  5. Finalize the refinancing: After your application is approved, the last step is closing on your new mortgage. This involves paying closing costs and signing the new loan agreement, marking the successful completion of your mortgage refinancing journey.

FAQ: How soon can you refinance your mortgage loan?

Verify your refinance eligibility. Start here

How soon can you refinance a house after buying it?

In many cases, there’s no waiting period to refinance. Your current lender might ask you to wait six months between loans, but you’re free to simply refinance with a different lender instead. However, you must wait six months after your most recent closing (usually 180 days) to refinance if you’re taking cash out. And homeowners using a government-backed Streamline Refinance program typically have to wait 210 days.

Can you buy a house and immediately refinance?

If you have sufficient credit and home equity and are using a conventional refinance loan, you might be able to refinance right after buying. Just remember that refinancing involves paying closing costs. So it might not be attractive to do so right after paying the down payment and closing costs on your home purchase.

Does refinancing hurt your credit? 

When you refinance, mortgage lenders check your credit report using a hard credit pull. A hard pull can knock a few points off your score. However, you can get refinance quotes from multiple lenders without having multiple credit dings. As long as you get all your quotes within a reasonable shopping period (2-4 weeks), all credit inquiries during that time count as a single event. So the effect on your credit will be minimal—typically five points or less.

How can I avoid closing costs on a refinance?

There are two main ways to avoid closing costs when you refinance. First, you can look for a no-closing-cost refinance, which typically means the lender covers your closing costs in exchange for a higher interest rate. Or, you may be able to roll closing costs into your new loan balance. Technically, you still pay closing costs with this method. But they’re financed along with the rest of your mortgage, so you don’t owe anything out of pocket on closing day.

How long does it take to refinance a house? 

Refinancing typically takes between 30 and 60 days. When you refinance, you have to fill out a mortgage application, provide documentation, go through underwriting, and often wait for a new home appraisal. That means it takes about as long to get a refinance loan as it does to get a home purchase loan. Government-backed Streamline Refinance loans, which often don’t require an appraisal, may close faster.

How many times can you refinance your mortgage?

You can refinance your mortgage as many times as it makes financial sense to do so. The only caveat is that you might have to wait six months from your most recent closing (whether it was a purchase or previous refinance) to do it again. Also, remember that refinancing includes closing costs. Those typically equal 2–5 percent of the loan amount, which is enough to deter most people from refinancing every time interest rates fall.

Does refinancing start your loan over?

Yes. When you refinance, you’re opening a brand new mortgage loan. So you start your repayment schedule over on day one. However, you have the option of choosing a shorter loan term when you refinance if you wish. For instance, you could refinance a 30-year mortgage into a 15-year mortgage and pay off the loan much sooner. Just be aware that a shorter loan term means you’ll have a larger monthly payment.

What’s the difference between a cash-out and no-cash-out refinance?

A cash-out refinance allows you to receive cash back at closing. This cash is borrowed from your home equity. In order to receive cash back, you’ll take out a larger loan amount than what you currently owe. The difference between your original loan amount and the new one is your cash-back amount. A no-cash-out refinance typically only changes your interest rate and monthly mortgage payment. You will not increase your loan size or receive cash back at closing.

Can you refinance if you have bad credit?

Sometimes. If you have an FHA loan, for example, you could get an FHA Streamline Refinance loan without a credit check, assuming you have made the last six months’ payments on time and that you’re able to get a lower refinance rate or lower monthly payments in the process. A VA loan also has its own streamline refinance program, the VA IRRRL. But you’d need to go through the credit qualification process to get a cash-out refinance or to get a new type of loan: Replacing an FHA loan with a conventional loan without PMI, for example, would require a 620 credit score or higher.

Understanding how soon you can refinance a mortgage

Mortgage refinancing can be a smart personal finance strategy, particularly if a thorough comparison reveals potential savings, either monthly or over the entire life of the loan.

Waiting a significant amount of time before refinancing is a common misconception. In reality, you’re often eligible to apply for refinancing shortly after closing your previous loan. To make an informed decision, use a mortgage calculator to better understand the financial implications of a refinance.

Click the links below to compare refinance rates from multiple lenders, assess your savings potential, and navigate your mortgage refinancing journey with confidence.

Time to make a move? Let us find the right mortgage for you

Erik J. Martin
Authored By: Erik J. Martin
The Mortgage Reports contributor
Erik J. Martin has written on real estate, business, tech and other topics for Reader's Digest, AARP The Magazine, and The Chicago Tribune.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.