How often can you refinance your home?

This article is for informational purposes only and is not intended to provide, and should not be relied on for, medical, legal, financial, or tax advice. You should consult with a qualified professional for advice specific to your situation. Consumers should independently verify that any services, products, or programs referenced meet their needs and comply with applicable requirements.

There’s no hard limit on how often you can refinance your mortgage. Lenders generally require a waiting or “seasoning” period before you can refinance again. You will have to meet other lender requirements as well. Homeowners may refinance to lower their interest rate, mortgage payment, or both.¹ Accessing existing home equity could allow you to complete home improvement projects, consolidate debt, or accomplish other financial goals. Make sure you can meet lender requirements and that it makes sense for your financial situation.

Key takeaways:

• There’s no limit to the number of times you can refinance your home, though there may be waiting periods before you can refinance.
• While refinancing can save you money or allow you to borrow your equity, it's important to weigh the cost of refinancing against the benefits.
• As when you originally financed your home, lenders will evaluate your financial situation before approving a mortgage refinance.

Why refinance your mortgage more than once?

Because there’s no limit, the question, “How many times can you refinance a house?” isn’t nearly as important as your reasoning for doing so.

Deciding to refinance your home is a goals-based decision. There's no real difference between refinancing your home for the first time or the fifth. Refinancing again follows the same process, but costs and underwriting still apply. If you're ready to check out refinancing options, here are some common reasons people refinance.

To obtain a lower interest rate

A commonly cited guideline some people use is that it's worth refinancing if you can reduce your mortgage interest rate by 1% – 2%. However, this isn't a hard rule that applies to every refinance. After all, when you’re dealing with loan amounts in the hundreds of thousands of dollars, a drop of 0.5% or even 0.25% makes a difference.

A better decision test is to calculate your break-even point by dividing the closing costs by any monthly payment savings to see how many years you must stay in the new loan for it to make financial sense. Be mindful that longer terms mean more interest paid over the life of the loan.

To change your loan term

If your income has increased, you may want to consider refinancing to a shorter loan term, allowing you to pay off your mortgage earlier and save on interest.

On the other hand, extending your loan term helps lower your mortgage payment, making it more affordable. However, you can expect to pay more interest on your loan.

To eliminate mortgage insurance

If you bought a home using a conventional loan and made a down payment of less than 20%, you generally have private mortgage insurance (PMI) premiums added to your monthly mortgage payment. PMI cancellation is possible without refinancing once your equity reaches 20% based on the original payment schedule, among other termination avenues.

Refinancing is a practical option, however, when you want to eliminate PMI while also changing your interest rate or loan term.

If you have an FHA loan, a down payment of less than 10% means you'll pay a mortgage insurance premium (MIP) for the life of the loan.² If you put down 10% or more, you must pay MIP for 11 years.

USDA loans have upfront guarantee fees as well as annual guarantee fees that are divided into monthly increments and added to your payment. Rocket Mortgage doesn’t offer USDA loans currently.

Once you reach 20% equity, you may be able to refinance into a conventional loan and avoid paying FHA mortgage insurance, PMI, or USDA guarantee fees if you qualify.

To borrow your home equity

A cash-out refinance replaces your mortgage with a larger loan, and you take the difference in cash. A cash-out refinance can still be an option after a recent refinance if your needs change and you meet the lender’s waiting period and equity requirements.

Whether you want to pay for home renovations, college tuition, or consolidate high-interest debts, this allows you to access your equity and repay it as part of your new loan.

Factors to consider when refinancing multiple times

While refinancing helps many homeowners achieve their financial goals, there are drawbacks to refinancing more than once.

You can deplete your equity

Frequent refinancing may leave you without sufficient equity to refinance. Most lenders won't let you borrow 100% of your home's value. You usually must keep at least 10% – 20% in equity if you're refinancing a home.

You’ll need to do some math and figure out exactly how much equity you have before refinancing. You can calculate your equity as a percentage of your overall home value by subtracting your current mortgage balance from your home value and then dividing by your home value.

Lenders simplify this calculation a bit by dividing your current mortgage balance into your home value. While this avoids the initial subtraction step, it does require you to flip the way you think about things. So having 20% equity means you have 80% LTV.

Higher LTVs mean you might not have enough equity in the home to accomplish your goals by refinancing.

You always pay closing costs

Refinancing isn't free. Every time you refinance, you can expect to pay about 3% – 6% of the loan amount in closing costs. You can avoid paying those fees up front with a no-closing-cost refinance, but that just wraps those fees into your loan balance and likely will cost you more in interest.

If you refinance to reduce your monthly payment, you'll need to recoup what you spent in closing costs before you start saving money. This is called the refinance break-even point. If you refinance before reaching the break-even point on your previous refinance, refinancing again will lose you money.

You'll need to meet your lender's credit standards

Lenders check that you meet their standards when you refinance, including not only having enough home equity but also personal factors like a qualifying credit score and debt-to-income ratio (DTI), as well as income and employment stability.

Paying close attention to these factors leading up to your application not only increases your chances of being approved, but it may also help you get a better interest rate.

To prepare, you should make sure you’re making all your payments on time, maintain a credit utilization under 30%, and pay off as much existing debt as possible.

The bottom line: You can refinance your home multiple times

Refinancing your mortgage numerous times can help you achieve your financial goals. If refinancing saves you money, it can be the right move. Ensure that each refinance benefits you before you commit.

Ready to refinance? You can start an application online with Rocket Mortgage.

1 Refinancing may increase finance charges over the life of the loan.

2 Rocket Mortgage is not acting on behalf of FHA or HUD.

3 The FHA Streamline program may have stricter requirements in some states. In order to qualify for the FHA Streamline program, an immediate .5% minimum reduction in interest and mortgage insurance premium is required. Some states may require an appraisal.

4 Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

5 The VA Streamline program may have stricter requirements in some states. In order to qualify for the VA Streamline program, you must have a VA loan. The VA Streamline is only available on primary residences. Cash-out transactions are not allowed. In order to qualify for a VA Streamline, a 0.5% minimum reduction in interest rate on the previous fixed-rate loan must occur if the new loan will be a fixed rate or a 2% minimum reduction in interest rate on previous adjustable rate mortgage loan must occur; a minimum of 6 months of consecutive mortgage payments must be paid on the current loan at the time of application. Some states may require an appraisal. Additional restrictions/conditions may apply.

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