Refinance with a USDA Loan? Here’s What You Need to Know

Meta Description: Yes, you can refinance a USDA loan — and it may help you lower your monthly payment, get a better interest rate, or free up cash. Learn how USDA refinancing works, who qualifies, and the best options available.

If you purchased your home with a USDA loan, you already know how valuable this program can be. Designed to make homeownership more affordable in eligible rural and suburban areas, USDA loans offer 100% financing, low interest rates, and flexible credit requirements. But what happens if your financial situation changes — or if you want to take advantage of lower interest rates?

The good news: yes, you can refinance a USDA loan. And depending on your goals, doing so could save you money, shorten your loan term, or help you tap into your home’s equity. Here’s a complete breakdown of how it works.

What Is a USDA Loan?

A USDA loan is a type of mortgage backed by the U.S. Department of Agriculture. It’s available to qualified homebuyers purchasing homes in USDA-approved areas and is especially popular among first-time buyers because it offers:

No down payment required
Competitive interest rates
Low mortgage insurance costs
Flexible credit guidelines

But just like any other mortgage, USDA loans can be refinanced — and there are a few different ways to do it.

USDA Loan Refinance Options

The USDA offers several refinancing programs, each designed to meet different needs. The best choice for you depends on your financial goals, current loan type, and how long you’ve owned your home.

1. USDA Streamlined Refinance

This is the most common and straightforward USDA refinance option. It allows homeowners to refinance their existing USDA loan with minimal paperwork and no new appraisal.

Benefits:

No home appraisal required
No credit score requirement
Reduced documentation (e.g., income verification often not needed)
Faster and easier process

Best for: Homeowners who simply want to lower their interest rate or monthly payment.

2. USDA Streamlined-Assist Refinance

This option is even more flexible than the standard Streamlined Refinance and is designed to reduce monthly payments by at least $50.

Benefits:

No credit check required
No home appraisal required
Limited documentation
Great for homeowners with less-than-perfect credit

Best for: Borrowers who may have had credit or income changes but still want to reduce their monthly payment.

3. Non-Streamlined USDA Refinance

If you’re looking for a cash-out refinance or if you want to change the terms of your loan significantly, the non-streamlined option might be right for you. Unlike the other USDA refinance programs, this one requires a new home appraisal and full underwriting.

Benefits:

Potential to adjust loan term
May allow access to home equity (though USDA does not typically offer traditional cash-out refinances)

Best for: Homeowners looking for flexibility beyond just lowering their rate or payment.

Requirements

While USDA refinancing is often simpler than other types of mortgage refinancing, there are still a few key eligibility requirements you’ll need to meet:

The home must remain your primary residence
You must already have a USDA-backed mortgage
Your mortgage must be current (no recent late payments)
You must meet income eligibility requirements for your area

Should You Refinance Your USDA Loan?

Refinancing isn’t always the right choice, but here are a few situations when it might make financial sense:

Interest rates have dropped since you took out your original loan
You want to lower your monthly payment
You’d like to switch from an adjustable-rate mortgage (ARM) to a fixed-rate loan
You plan to stay in your home long-term and want to save money over time

A quick rule of thumb: if you can reduce your interest rate by 0.5% or more, refinancing could be worth it.

The Bottom Line

Refinancing a USDA loan is not only possible — it’s often a smart move. With options like the USDA Streamlined and Streamlined-Assist Refinance programs, homeowners can enjoy a faster, simpler, and more affordable refinancing process than with many other loan types.

If you’re considering refinancing, the first step is speaking with a mortgage professional who understands USDA guidelines. At ALCOVA Mortgage, our team specializes in helping homeowners explore their refinance options and decide if it’s the right financial move.

Ready to Refinance?

Whether you’re looking to lower your monthly payment or explore new mortgage options, ALCOVA Mortgage is here to help. Contact us today to review your current USDA loan and see how much you could save by refinancing.