Refinances fall into two major categories:
Cash‑Out Refinance → tap home equity for cash
Rate‑and‑Term Refinance → lower rate, change term, remove PMI
1. Conventional Refinance
Rate‑and‑Term or Cash‑Out
- Equity needed:
- 3% for rate‑and‑term
- 20% recommended for cash‑out
- Credit: 620+
- Best for: Lowering rate, removing PMI, consolidating debt, or pulling cash out
- Most common refinance option in California
2. FHA Refinance
FHA Rate‑and‑Term
- Minimum equity: 3.5%
- Flexible credit
- Great for borrowers with higher DTIs
FHA Streamline
- No appraisal
- No income documentation
- Must already have an FHA loan
- Best for quick, low‑paperwork rate reduction
FHA Cash‑Out
- Up to 80% LTV
- Ideal for homeowners with equity but lower credit scores
3. USDA Refinance
(Useful since your USDA purchase page is also open)
USDA Streamlined Assist
- No appraisal
- Must already have a USDA loan
- Can lower payment even if underwater
4. Jumbo Refinance
- Equity: 10–20%
- Higher credit + reserves required
- Available as rate‑and‑term or cash‑out
- Best for high‑value California homes (Bay Area, SoCal, coastal counties)
5. HELOC / Home Equity Loan
(Not a full refinance — second‑position loan)
- HELOC → revolving line of credit
- Home Equity Loan → fixed second mortgage
- Great for cash‑out without touching a low first‑mortgage rate