FHA loan refinance to conventional

[Chandler Smith]

I read an article awhile back about refinancing an FHA loan to a conventional loan. If I remember correctly in order to refinance you must have 20% equity in the house. So my question is: If I bought a house on an FHA loan/203k and did a rehab, then got a new house appraisal showing a 20% or more increase could I then refinance to a conventional loan? If I did get it refinanced to a conventional loan would I be eligible to rent or sell the house? Does this violate any FHA regulations? Sorry newbie here

[Albert Bui]

Originally posted by @Chandler Smith:

I read an article awhile back about refinancing an FHA loan to a conventional loan. If I remember correctly in order to refinance you must have 20% equity in the house.
So my question is: If I bought a house on an FHA loan/203k and did a rehab, then got a new house appraisal showing a 20% or more increase could I then refinance to a conventional loan?

If I did get it refinanced to a conventional loan would I be eligible to rent or sell the house?

Does this violate any FHA regulations?

Sorry newbie here

 HI Chandler,

You do not need 20% equity to refinance into conventional.

If you have less than 20% equity you will need mortgage insurance or MI, however with conventional financing, mortgage insurance is private so its not set in stone like with FHA and VA financing.

With private mortgage insurance or PMI you can choose how you pay the MI whether its monthly (stereotypical), single premium (upfront - cash or financed or lender paid within the rate), or you do a split premium which is like a hybrid method where you pay a "bit," up front and you have a reduced monthly premium.

In practice, most people opt to do either monthly or single premium, as split is rarely ever used.

You will not be violating any thing if you decide to sell your house after you refinance. Although, your loan officer may not be happy because they will get charged back if the loan payoffs in under the EPO or early payoff period.

It does not violate any FHA regulations, you agreed to live there for 12 months as a primary, however extenuating circumstances happen all the time (relocation, divorce, family size increases, etc, etc).