source:
  type: guide
  id: hud-4000-1-ii-g-programs-and-products-refinance
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Programs
    and Products - Refinance (05/09/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Programs
    and Products - Refinance (05/09/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-g-programs-and-products-refinance-full
  canonical_id: hud-4000-1-ii-g-programs-and-products-refinance-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Programs
    and Products - Refinance (05/09/2022)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — g. Programs
      and Products - Refinance (05/09/2022)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'g. Programs and Products – Refinance (05/09/2022) i. Overview
      (A) Definition A Refinance transaction establishes a new Loan to pay off the
      existing debt for a Borrower with legal title to the subject Property. The existing
      debt to be paid off must be a Title I Property Improvement Loan. The refinance
      Loan may also advance funds for additional improvements. (B) Types of Refinances
      (1) Cash-Out or Cash Back (Not Permitted) A Cash-Out Refinance refers to a refinance
      of any loan that advances additional credit or provides cash back to the Borrower,
      or for which the loan proceeds are used for ineligible purposes. A Cash-Out
      Refinance transaction is not permitted for the Title I Property Improvement
      Loan program. (2) No Cash-Out Refinance Title I No Cash-Out Refinances are categorized
      into three possible refinance types. (a) Simple Title I Property Improvement
      Refinance A Simple Title I Refinance refers to a no cash-out refinance of an
      existing Title I insured Property Improvement Loan in which all proceeds are
      used to pay off the existing Title I Loan on the subject Property, and Financeable
      Fees and Charges. (b) Streamline Title I Property Improvement Refinance (Non-credit
      Qualifying) A Streamline Title I Property Improvement Refinance refers to the
      refinance of an existing Title I Property Improvement Loan for which the Lender
      is not required to perform credit or capacity analysis. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement
      Loan Program Handbook 4000.1 994 Last Revised: 11/26/2025 (c) Title I Property
      Improvement Refinance with Advance of Funds A Title I Property Improvement Refinance
      with Advance of Funds refers to the refinance of an existing Title I Property
      Improvement Loan, and advances of funds for additional improvements and financeable
      fees. ii. FHA-Insured to FHA-Insured Refinances FHA-Insured to FHA-Insured refinances
      may be used with any refinance type. iii. Conditions for Refinance An existing
      Title I insured Property Improvement Loan may be refinanced only under the following
      conditions. (A) Lender of Record Only An existing Title I Loan may not be refinanced
      by a Lender different from the originating Lender of record, unless the Loan
      has been sold, assigned, or transferred to the new Lender and HUD has transferred
      insurance coverage for the Loan. (B) Loan in Default A Loan that is in Default
      must not be refinanced for an amount greater than the lesser of: • the original
      principal balance of the Loan; or • the current principal balance plus reasonable
      closing costs and Upfront Mortgage Insurance Premium (UFMIP). (C) Title I Note
      and Security Refinancing is subject to the Title I Note and Security Instrument
      requirements. Refinancing requires the Borrower(s) to execute a new Note as
      well as cancel the old Note. The Lender must obtain and record a new security
      instrument and should release the original lien unless state law permits a renewal
      and extension of the original lien. (D) Co-maker or Co-signer on Loan If there
      are any co-makers or Co-signers on the original Note, a Lender must require
      that the same co-makers or Co-signers be obligated on the refinanced Note, except
      in cases of divorce or death, unless the Lender obtains HUD’s approval to release
      the co-maker or Co-signer from liability on the Note. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement
      Loan Program Handbook 4000.1 995 Last Revised: 11/26/2025 (E) Previous Assumption
      A Loan that was assumed may be refinanced as long as the original Borrower and
      any intervening assumptors were released from liability either at the time the
      Loan was assumed or later through permission from HUD. (F) Additional Improvements
      A Loan may be refinanced with funds for additional improvements if the additional
      improvements are eligible and the Loan is not in Default. iv. Nationwide Loan
      Limits The total principal obligation for a refinance must not exceed the Title
      I Property Improvement Nationwide Loan Limits for the property type/loan purpose.
      v. Maximum Loan Term The term of a refinance must not exceed the maximum Loan
      Term for the type of Loan. In addition, the total time period from the Disbursement
      Date of the original Loan to the final maturity of the refinance must not exceed
      the maximum term for the type of Loan plus 9 years and 11 months. vi. Other
      Documents A new Notice to Borrower of HUD’s Role in Title I Loans must be issued
      and signed by each Borrower. Copies of all documents pertaining to the original
      Loan must be retained in the case binder of the refinanced Loan. Payoff statement(s)
      for the existing Property Improvement Loan must be retained in order to be satisfied
      with the proceeds of the new refinance Loan. vii. Reporting the Loan in FHA
      Connection Refinanced Loans must be reported in FHAC within 31 Days from the
      date of loan Disbursement. When reporting a refinance, Lenders will supply information
      on the original Loan so that HUD may terminate the Title I insurance on the
      original Loan and make appropriate adjustments to the Lender’s insurance coverage
      reserve account. HUD will also prorate any unpaid installments on the insurance
      charge between the old Loan and the new Loan. Lenders are cautioned not to erroneously
      report a refinanced Loan as a new Loan. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 2. Property Improvement Loan Program Handbook 4000.1
      996 Last Revised: 11/26/2025 viii. Specific Eligibility Criteria (A) Simple
      Title I Property Improvement Refinance (1) Maximum Loan Amount The maximum loan
      amount of a Simple Title I Property Improvement Refinance is limited to the
      cost of prepaying the existing Loan, plus financeable fees and charges, not
      to exceed the Title I Property Improvement Nationwide Loan Limits. Cash back
      to the Borrower is not permitted. (2) Credit Qualification Lenders must underwrite
      the Simple Title I Refinance Loan to ensure compliance with Title I credit and
      capacity requirements. (B) Streamline Title I Property Improvement Refinance
      (1) Maximum Loan Amount The maximum loan amount of a Streamline Refinance is
      limited to the cost of prepaying the existing Loan, plus eligible fees and charges,
      not to exceed the original Title I loan amount. (2) Credit Qualification Lenders
      are not required to conduct credit or capacity analysis. (C) Title I Property
      Improvement Refinance with Advance of Funds (1) Maximum Loan Amount The maximum
      loan amount is the sum of the cost of prepaying the existing Title I Property
      Improvement Loan, plus the cost of additional improvements, and financeable
      fees and charges, not to exceed the Title I Property Improvement Nationwide
      Loan Limits. (2) Use of New Loan Proceeds (a) Eligible Use New funds must be
      used to finance: • eligible improvements for a new work project; or • additional
      work on an existing uncompleted project that was not financed by the prior Title
      I Loan. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 2. Property Improvement Loan Program Handbook 4000.1 997 Last Revised:
      11/26/2025 Funds that finance additional work on an existing project may be
      for an upgrade, or for new work that was unexpected and necessary to further
      an existing project toward completion. (b) Ineligible Use New funds must not
      be advanced for completion of an existing project when the original loan funds
      were used for purposes different from the work scope on which the prior Title
      I loan amount was based. New funds must not be advanced when the Lender has
      discovered misuse of loan proceeds, or other irregularities. (3) Credit Qualification
      Lenders must underwrite the Title I Refinance with an advance of funds to ensure
      compliance with Title I credit and capacity requirements. ix. Required Documentation
      (A) Disclosure To Borrower: “Notice to Borrower of HUD’s Role” For each new
      Title I insured Loan, a Notice to Borrower of HUD’s Role in Title I Loans must
      be issued and acknowledged by all Borrowers. (B) Existing Loan Payoff Amount
      A loan payoff statement is required on all Title I Loans secured by the Property
      that will be paid off with the new Title I Loan. The Lender must obtain the
      payoff statement for all existing Loans. (C) Note and Security Requirements
      Refinancing requires the Borrower(s) to execute a new Note. The new Note must
      comply with the same requirements as an original Title I Property Improvement
      Loan. When the loan amount exceeds $7,500, the Lender must obtain and record
      a new security instrument and ensure a release of any existing Title I lien
      unless state law permits a renewal and extension of the original lien. Refinance
      Loans must comply with Title I Property Improvement Lien Priority requirements.
      (D) Original Title I Case Binder For a Title I Refinance, copies of all documents
      pertaining to the original Title I Loan must be retained in the refinance case
      binder. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured
      Programs 3. Direct and Dealer Loan Process for Manufactured Home Loan Program
      Handbook 4000.1 998 Last Revised: 11/26/2025 x. Insurance Processing Refinanced
      Loans must be reported to HUD for insurance within 30 Days after loan Disbursement
      as outlined in Closing and Disbursement. When reporting a refinance of a prior
      Title I Loan, Lenders must supply information on the original Loan so that HUD
      may terminate the Title I insurance on the original Loan. HUD will also prorate
      any unpaid installments on the insurance charge between the old Loan and the
      new Loan. Lenders are cautioned not to erroneously submit a refinanced Loan
      as a new Loan. 3. Direct and Dealer Loan Process for Manufactured Home Loan
      Program Loans insured under FHA’s Manufactured Home Loan program are categorized
      by either of two origination processes: Direct Loans or Dealer Loans. A Dealer
      for a Manufactured Home Loan refers to a person or business that is engaged
      in the business of manufactured home retail sales. Dealers of manufactured home
      sales have a financial interest (either direct or indirect) in the transaction.'
  judgment: false
