Should I go from FHA loan to FHA Refinance or from FHA to Conventional: What’s Better in 2026?

If you currently have an FHA loan, you might be wondering whether you should refinance into another FHA loan — or switch to a conventional mortgage. Both paths have the ability to lower your rate or monthly payment, but the best choice depends on your credit, equity, long-term goals, and how soon you want to eliminate mortgage insurance.

Here’s the good news: FHA borrowers have more refinance options than almost any other loan type. But each option has different benefits, costs, and eligibility rules.

This guide breaks down the differences between FHA → FHA refinances and FHA → Conventional refinances, when each makes sense, and how to decide which one is right for you.

Key Takeaways

✅ FHA → FHA refinance (including FHA Streamline) is the easiest option — minimal documents, flexible credit, and often no appraisal (varies by lender).

✅ FHA → Conventional refinance may eliminate mortgage insurance (PMI) if you have strong credit and at least 20% equity.

✅ FHA loans often have more flexible DTI requirements.

✅ Switching to conventional loans may make sense once you improve your credit and build equity in the home.

💡 Pro Tip: Don’t guess whether you have the most competitive loan terms. After applying for a loan, upload your Loan Estimate to Fincast to compare your options, whether FHA or conventional. There are no extra credit pulls or spam to worry about.

FHA to FHA Refinance: The Easiest Path

If you currently have an FHA loan and don’t have at least 20% equity in the home, refinancing into another FHA loan may be the simplest option.

There are two main FHA refinance types:

1️⃣ FHA Streamline Refinance (Most Popular)

This is often one of the easiest refinance programs in the country.

Benefits

• Appraisal waivers may apply, depending on lender overlays

• No full income or employment verification required in many cases (varies by lender)

• No full credit underwriting is required in many cases (Lenders may still review your credit for qualifying purposes)

• Fast closing timeline in most cases

• Lower MIP (mortgage insurance premiums) for some borrowers, depending on the year their FHA loan originated

Best for:

• Borrowers with lower credit scores

• Homes with uncertain or declining values

• Anyone with an FHA loan who is eligible for a lower rate

💡 Pro Tip: FHA Streamline is the best option if your home value hasn’t risen enough for conventional approval, but you qualify for a lower interest rate on another FHA loan.

2️⃣ FHA Rate-and-Term Refinance

This is still an FHA loan, but requires:

• Full income documentation

• Credit review

• Appraisal

Best for:

• Removing a co-borrower

• Restructuring your loan term

• Converting from ARM → fixed

Why choose FHA → FHA?

• Lower credit barriers

• Easier approval with higher DTIs

• Lower interest rates than conventional for some credit tiers

FHA to Conventional Refinance: The Upgrade Path

Refinancing from FHA → Conventional is the preferred path for borrowers who have:

• Higher credit scores

• 20% or more equity in the home

• A desire to eliminate mortgage insurance permanently

This option is more difficult to qualify for — but comes with bigger long-term savings.

1️⃣ Eliminate Mortgage Insurance

This is the #1 reason homeowners switch to conventional.

FHA mortgage insurance lasts the entire life of the loan.

For FHA loans with less than 10% down, MIP lasts for the life of the loan. For FHA loans with a 10% or more down payment, MIP lasts for 11 years. By law, conventional PMI must automatically drop to 78% LTV based on the amortization schedule.  Borrowers can request removal, usually around 80%, but it’s subject to lender approval.

Requirements:

✔ At least 20% equity

✔ A solid credit score (typically 680–700+)

✔ Satisfactory appraisal

💡 Pro Tip: If your home value has increased, a new appraisal may push you over the 20% equity threshold, allowing you to request removal of PMI.

2️⃣ Better Rates for Strong Credit Borrowers

Conventional loans reward good credit.

If your FICO is 700–740+, you may qualify for better conventional rates than FHA loans offer.

Best for:

• Borrowers with strong financial profiles

• Homes that have appreciated significantly

• Anyone planning to stay long-term and avoid lifetime FHA MIP

3️⃣ Lower Closing Costs & More Flexibility

Conventional refinances:

• Often have lower mortgage insurance costs

• Do not charge FHA’s upfront MIP (1.75%)

• Offer more flexible PMI structures

• Make it easier to remove co-borrowers

FHA to FHA vs. FHA to Conventional: Side-by-Side Comparison

When FHA → FHA is Better

Choose FHA → FHA if:

• Your credit score isn’t ready for conventional approval

• You have less than 20% equity

• Your home value is uncertain

• You want the easiest approval

• You need a lower payment quickly

• Your debt-to-income ratio is high

💡 Pro Tip: FHA Streamline is one of the only options in the market that doesn’t require an appraisal with most lenders — a huge benefit in cooling markets.

When FHA → Conventional is Better

Choose FHA → Conventional if:

• You have 20%+ equity

• Your credit score is 680+

• You want to remove mortgage insurance

• You want more competitive long-term pricing

• You plan to stay in the home for years

This move can save homeowners hundreds per month just by eliminating MIP.

How Much Equity Do You Need for an FHA to Conventional Loan?

You need:

✔ 20% equity to remove PMI immediately

OR

✔ At least 3–5% equity to qualify for a conventional loan (but PMI will still apply)

The big savings happen at the 20% equity mark.

How to Decide Which Refinance You Should Choose

Use this simple 3-step decision framework:

Step 1: Check Your Equity

• < 20% equity → FHA to FHA

• ≥ 20% equity → FHA to Conventional (

Step 2: Check Your Credit

• < 680 → FHA to FHA

• 680–739 → Both options possible

• 740+ → FHA to Conventional likely best

Step 3: Consider Your Timeline

• Short-term homeowner → FHA Streamline

• Long-term homeowner → Conventional to eliminate MIP

Which Saves More Money?

Short-term:

FHA Streamline wins — fast, easy, low cost.

Long-term:

FHA → Conventional wins — eliminates lifetime MIP and often reduces rate.

💡 Pro Tip: If rates are dropping soon, streamline now and switch to conventional later once equity grows.

How Fincast Helps You Choose the Right Path 🚀

Refinancing can be confusing — especially when comparing FHA vs. conventional rules. Fincast makes the decision simple.

Here's how:

1️⃣ Upload your Loan Estimate (securely)

2️⃣ Fincast shares it anonymously with vetted lenders

3️⃣ Lenders compete to beat your FHA or conventional offer

4️⃣ You choose the best deal — no spam, no extra credit pulls

With lenders competing, you’ll instantly see whether FHA → FHA or FHA → Conventional gives you better savings.

Even a slightly lower rate can save you thousands—and Fincast confirms whether you’re getting the best deal.

FAQs

1. Can I switch from FHA to conventional without 20% equity?

Yes, but you’ll still have PMI until you reach 20% equity.

2. Is the FHA Streamline worth it?

It can be — especially if you want quick savings with minimal paperwork and no appraisal.

3. When should I switch from FHA to conventional?

Once your credit is strong and you have 20% equity, you can remove PMI.

4. Does conventional refinancing cost more upfront?

No. It actually eliminates FHA’s upfront MIP, which can save you thousands.

5. Can I refinance from FHA to conventional with bad credit?

Typically, no — you’ll need strong credit (680+ is preferred by most lenders, but requirements vary).

6. Can I remove FHA mortgage insurance without refinancing?

No. FHA MIP lasts the life of the loan unless you refinance into a conventional loan.

Bottom Line

Both FHA → FHA and FHA → Conventional refinances offer strong benefits — but for different situations.

You're in the best position when:

✅ You know your equity

✅ You understand your credit strength

✅ You’ve compared both FHA and conventional pricing

✅ You’ve uploaded your Loan Estimate to Fincast to find the best savings

Whether you want quick monthly savings or long-term financial freedom, there’s a refinance path that fits your goals.

Pro Tips (Save These!)

💡 Use FHA Streamline if your credit or equity isn’t ready

💡 Switch to conventional once you hit 20% equity

💡 Improve your credit before switching for the best pricing

💡 FHA → Conventional = greater chance of eliminating mortgage insurance

💡 Upload your Loan Estimate to Fincast for real lender competition

Action Checklist

Check your current equity

Review your credit score

Decide whether your priority is quick savings or long-term savings

Compare FHA → FHA vs. FHA → Conventional options

Request a Loan Estimate

Upload your Loan Estimate to Fincast

Choose the refinance path that gives you the biggest long-term payoff

👉 Ready to see whether an FHA-to-FHA or FHA-to-Conventional refinance saves you more?

Upload your Loan Estimate to Fincast, where vetted lenders compete to give you the best deal — no spam, no extra credit pulls, just real savings.