Skip to Content

Remove a Borrower From the Loan with an FHA Streamline Refinance

Remove borrower fha streamline

An FHA Streamline refinance can drop your rate and payment with no appraisal, income, or full credit check. But it can also help you remove someone from the loan.

Here’s how to take someone off the mortgage using this program.

2 FHA Streamline Options: Low-Doc Refinance vs Full Re-Approval

When you refinance with the FHA Streamline option (FHA-to-FHA refinance), you have two choices. These are important when deciding how you’ll remove the borrower.

  • Low doc: this is called a “non-credit qualifying” refinance and does not require income documentation, a credit check, or an appraisal.
  • Full re-approval: This is called “credit qualifying” and requires you to be re-approved for the loan using your current income documentation and credit report. No appraisal is required.

If possible, you want to use the low doc non-credit qualifying version. This will save you time and money.

Check out all guidelines for this program here: FHA Streamline Waiting Period, MIP Refunds, + Guidelines

Removing a Borrower Using the Low-Doc Option (Non-credit Qualifying)

There are only three instances when you can remove a borrower without re-qualifying for the loan.

  • Divorce
  • Legal separation
  • Death of a borrower

You will supply the divorce decree or separation agreement showing the property was awarded to the one staying on the loan. In the case of death, FHA does not require documentation such as a death certificate, but lenders may ask for it anyway.

In addition, you have to supply bank statements or other proof that the remaining borrower has made six on-time payments alone without the help of the departing borrower.

Removing a Borrower Using Full Re-Approval (Credit Qualifying)

If you can’t meet the above requirements, you can opt for a “credit qualifying” FHA Streamline. This is just like a regular refinance, except no appraisal is required.

At least one original borrower must stay on the loan.

You will submit pay stubs, W2s, and other income documentation. The lender will pull your credit.

The lender must make sure that you qualify for the FHA refinance using only your income, assets, and credit profile.

This can pose a problem if the departing borrower earns most of the income. The remaining party may not make enough to re-qualify. In this case, it may not be possible to remove the borrower.

Options if You Don’t Qualify

Here are things you can do if you don’t meet any of the requirements to remove the borrower.

  • In the case of divorce, legal separation, or death of a borrower, make six on-time mortgage payments. Then apply for a non-credit qualifying FHA Streamline.
  • If you need full re-qualification, wait until you have enough income. Then apply for the refinance. The full payment plus all debt payments should be under 57% of your gross income.
  • If the remaining borrower has insufficient income showing on tax returns, try a bank statement loan. This will require 12 to 24 months of bank statements. This is not an FHA loan but an alternative loan options offered by many banks.
  • Sell the home

While some of the above options are not ideal, they may help to eventually remove the borrower.

Adding Someone to Title or the Mortgage

You can add a borrower to the title and/or mortgage using an FHA Streamline refinance very easily.

There are no restrictions on who can be added to the loan. Also, re-qualification is not required for the existing or new borrower.

Simply add the individual to the loan application. Their credit, income, or assets need not be reviewed or approved.

Start Your FHA Streamline

If you’re looking to remove a borrower from your loan, an FHA Streamline refinance can be a great way to do it.

With no appraisal, income documentation, or credit report required, this option saves you time and money compared to a traditional refinance.

About The Author:

Tim Lucas began his mortgage career in 2001 at Washington Mutual, reviewing wholesale loan files submitted by mortgage brokers. In the mid-2000s, he transitioned to retail lending at M&T Bank as a Mortgage Loan Processor, working with a wide range of borrowers: first-time buyers, investors using now-notorious "option ARMs" and jumbo buyers financing $1–5 million homes.

Tim later launched his own loan processing company while originating loans for his own clients, mainly FHA and USDA loans for first-time buyers. When the 2008 housing crash hit, he pivoted to assisting a prominent Loan Officer at Seattle Mortgage and Golf Savings Bank. He eventually became a Mortgage Processing Supervisor at Mortgage Advisory Group. There, he earned a reputation as a solutions-oriented processor, known for solving complex loan scenarios and uncovering obscure guidelines to help clients get approved.

In 2013, after more than a decade in lending, Tim moved into mortgage education—creating trusted content for sites like MyMortgageInsider.com and TheMortgageReports.com. Today, he blends 10+ years of hands-on mortgage experience with another decade in consumer education at Three Creeks Media, where he leads MortgageResearch.com. Tim is also a licensed Loan Originator (NMLS #118763).

See if you can lower your payment
9,042 people checked their eligibility today!