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Use our rate term refinance calculator to find out if you can lower your monthly payment, shorten your loan term, or qualify for HomeReady. Enter your numbers and get instant LTV, DTI, and AMI eligibility — no signup needed.

Rate Term Refinance Calculator

Estimate your new payment • Check LTV & DTI • See HomeReady eligibility

Lower your rate or shorten your term with our rate term refinance calculator. This rate term refinance calculator tells you whether you qualify for a simple rate term refinance. HomeReady requirements are included in case you qualify for that special financing. Results reflect a rate term refinance on a single-family, owner-occupied home. See below for more information.

Area Median Income Lookup
Fannie Mae AMI Lookup Freddie Mac AMI Lookup
Check if your loan is owned by Fannie Mae or Freddie Mac:
Fannie Mae Loan Lookup Freddie Mac Loan Lookup
Required for HomeReady eligibility. Your loan must be owned by Fannie Mae or Freddie Mac.
Enter 100% of AMI from the lookup tools above. The calculator reduces it to 80% for HomeReady eligibility.
HomeReady requires income at or below 80% of AMI.
Credit & Loan Type
PMI factors differ between fixed-rate and adjustable-rate loans.
A. PROPERTY & CURRENT LOAN INFORMATION
Enter your current appraised or estimated market value.
B. INCOME INFORMATION
For HomeReady eligibility, annual income must be at or below 80% of AMI.
C. NEW LOAN INFORMATION
HomeReady allows 97% LTV for low-to-moderate income borrowers.
D. CLOSING AND PREPAID COSTS
Calculated from 10 months of taxes and 14 months of insurance.
MONTHLY DEBT PAYMENTS LTV: 0% DTI: 0%
Debt Type Balance Monthly Payment Payoff?  
Conventional Rate Term Refinance Analysis

Understanding Rate Term Refinance Options

A conventional rate term refinance comes in two forms:

Standard Rate Term Refinance

  • Requires a minimum of 5% equity (95% LTV maximum)
  • Standard PMI rates based on LTV and credit score
  • No income restrictions
  • Available to all borrowers regardless of income

HomeReady Rate Term Refinance

  • Refinance up to 97% of appraised value
  • Reduced PMI rates versus standard conventional
  • Often lower interest rates than standard conventional
  • Income must be at or below 80% of Area Median Income
  • Current mortgage must be owned by Fannie Mae or Freddie Mac
HomeReady advantage: If you qualify, HomeReady usually prices better than a standard conventional refinance on both rate and PMI, which makes it a strong option when equity is limited.

HomeReady Program Requirements

Two requirements must be met:

  1. Income limit - annual household income must not exceed 80% of the area median income for your county or metro area.
  2. Existing loan - your current mortgage must be owned or securitized by Fannie Mae or Freddie Mac.
Check your loan ownership:
Fannie Mae Loan Lookup Tool
Freddie Mac Loan Lookup Tool
If your loan is not owned by Fannie Mae or Freddie Mac, a standard refinance may still work.

Property Taxes and Homeowners Insurance

To find your annual amounts:

  • Multiply your monthly real estate tax by 12, or
  • Call your mortgage servicer and ask for the annual cost of taxes and insurance.
Tip: Annual taxes and insurance drive your monthly escrow payment. Enter annual amounts in the calculator for accurate results.

Estimating Closing Costs

Refinance closing costs vary by state and lender. A working rule of thumb:

Home Value 3% Estimate 4% Estimate 5% Estimate
$200,000$6,000$8,000$10,000
$250,000$7,500$10,000$12,500
$300,000$9,000$12,000$15,000
$350,000$10,500$14,000$17,500
$400,000$12,000$16,000$20,000
Tip: Use 3% as a conservative estimate. Actual costs vary by state and lender - always get a Loan Estimate for accurate numbers.

Key Factors That Impact Your Refinance

  • Credit score - higher scores earn better rates and lower PMI
  • Loan-to-value - lower LTV means less risk and better terms
  • Debt-to-income - 43% or lower for most conventional loans
  • Income - determines HomeReady eligibility at 80% of AMI

Frequently Asked Questions About Rate Term Refinance

What is a rate term refinance?

A rate term refinance replaces your current mortgage with a new loan that has a different interest rate, loan term, or both. Unlike a cash-out refinance, no additional cash is taken out beyond covering closing costs and prepaids. The primary goal is to lower your monthly payment, shorten your loan term, or both.

What is the maximum LTV for a conventional rate term refinance?

For a standard conventional rate/term refinance, the maximum LTV is 95%. For HomeReady, the maximum LTV is 97% for owner-occupied single-family homes. Both require PMI when LTV exceeds 80%. Use the rate term refinance calculator above to check your specific LTV.

What is HomeReady and how do I qualify?

HomeReady is Fannie Mae's program offering reduced PMI rates and lower interest rates for borrowers with income at or below 80% of Area Median Income (AMI). It allows refinancing up to 97% LTV. Your existing loan must also be owned or securitized by Fannie Mae or Freddie Mac.

What DTI do I need for a conventional rate term refinance?

Most lenders prefer a DTI of 43% or lower for conventional refinances. Some may allow up to 50% with strong compensating factors such as significant cash reserves or a long history of on-time payments. Our rate term refinance calculator shows your DTI and suggests ways to improve it.

How is PMI calculated for a rate term refinance?

PMI is calculated based on your credit score, loan type, and LTV ratio. Higher credit scores and lower LTV result in lower PMI rates. The rate term refinance calculator uses actual PMI factor tables to estimate your monthly PMI cost.

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