Key Takeaways
- 30-year refinance rates are around 7.43% as of late September 2026, up sharply from July's 6.8%.
- You'll typically need a 620+ credit score, 20% equity, and a debt-to-income ratio under 43%.
- The 2026 conforming loan limit is $832,750 in most areas, $1,249,125 in high-cost markets.
- Closing costs run 2%-6% of your loan amount — calculate your breakeven point before refinancing.
The average 30-year mortgage refinance rate is 7.43% as of September 28, 2026, up nearly half a point over the past two weeks after the Fed’s September rate hike. That’s the opposite of the “rates just cut” story you may have heard — refinance rates have been climbing for three straight days.
Most homeowners are still locked into a rate well below what’s available now, which is exactly why refinance activity stays low — the same dynamic that keeps monthly mortgage payments high relative to rent for anyone buying today. But refinancing can still make sense in specific situations — mainly cash-out needs, dropping mortgage insurance, or escaping an adjustable-rate loan before it resets. Here’s what actually determines whether you qualify, and how to tell if it’s worth it.
What Refinancing Actually Changes
Refinancing replaces your existing mortgage with a new one, ideally on better terms. People refinance to lower their rate, shorten or extend their loan term, drop mortgage insurance, or pull cash out of their equity (a cash-out refinance).
Each of those has different underwriting requirements. A no-cash-out “rate-and-term” refinance is the easiest to qualify for. A cash-out refinance, where you borrow against your equity for renovations or debt consolidation, gets underwritten more like a new purchase loan.
Credit Score Requirements
Conventional refinance: 620 is the typical minimum, but pricing improves substantially as your score climbs. Scores above 740 generally get the best rates and the highest allowable loan-to-value. Scores in the 620-679 range often get capped at a lower LTV, meaning you need more equity to qualify at all.
FHA refinance: Can work with scores as low as 580. FHA Streamline refinances (for borrowers who already have an FHA loan) often skip the credit check and appraisal entirely if you’re not taking cash out.
Cash-out refinances: Usually need a higher score than a rate-and-term refinance — commonly 640-680 minimum — since pulling equity out increases the lender’s risk. Your FICO score is the single biggest lever you control here.
Equity and Loan-to-Value Requirements
Most conventional lenders want at least 20% equity, based on a current appraisal, not what you originally paid. If you’re underwater or close to it, you likely won’t qualify for a standard refinance.
Cash-out refinances are typically capped at 80% loan-to-value, meaning you need to keep at least 20% equity even after pulling cash out.
There’s an important exception: FHA Streamline and VA Interest Rate Reduction Refinance Loans (IRRRL) are built specifically to lower your rate on an existing government-backed loan. They generally don’t require a new appraisal or equity check at all, because you’re not borrowing more, just repricing what you already owe.
Debt-to-Income Requirements
Lenders generally want your DTI ratio under 43%, though some conventional programs allow up to 50% for otherwise strong borrowers. Cash-out refinances are stricter — often capped around 36-45% depending on your credit score and loan-to-value.
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2026 Conforming and Jumbo Loan Limits
The 2026 conforming loan limit is $832,750 in most of the country, and up to $1,249,125 in high-cost areas (Alaska, Hawaii, Guam, and the U.S. Virgin Islands go even higher, to $1,873,675). Refinancing within that limit means your loan can be sold to Fannie Mae or Freddie Mac, which generally means better pricing.
Refinance above the conforming limit and you’re in jumbo loan territory — stricter underwriting, often a larger equity cushion required, and historically a rate premium of 0.25 to 0.5 points over conforming loans, though that gap has narrowed in recent years. For the full breakdown, see FHA vs. Conventional Loans in 2026.
Closing Costs and the Breakeven Math
Refinance closing costs typically run 2% to 6% of your loan amount, covering the appraisal, origination fee, title insurance, and other standard mortgage costs. On a $400,000 refinance, that’s roughly $8,000 to $24,000.
The number that actually matters is your breakeven point — how many months it takes your monthly savings to cover those closing costs. Divide your total closing costs by your monthly savings to get the answer.
Marcus bought his home in 2023 with a 5/1 ARM fixed at 7.9% for the first five years, set to adjust in 2028 based on then-current rates. Rather than wait and risk a worse reset, he refinanced into a 30-year fixed at 7.43% now. His payment barely moved, but he traded reset-rate uncertainty for a fixed rate he can plan around — the point wasn’t to save money today, it was to stop gambling on 2028.
Tom applied for a cash-out refinance to consolidate credit card debt, but his DTI came in at 48% once the new loan was included — above his lender’s 45% cap for cash-out refinances. He was approved instead for a smaller cash-out amount that kept his DTI under the limit, rather than the full amount he originally requested.
Refinance Mistakes That Cost You Money
Confusing today’s rate environment with 2020-2021. If you locked in a rate below 4% during the pandemic-era refinance wave, a 7.43% refinance almost never makes sense purely to lower your rate. Today it usually makes more sense for cash-out needs, dropping mortgage insurance, or getting out of an adjustable-rate mortgage before it resets.
Underestimating how much a lower credit score costs you. The difference between a 620 and a 760 credit score on the same loan can mean a meaningfully different rate — often a quarter to half a percentage point — which compounds over a 30-year term.
Forgetting that a second mortgage or HELOC complicates things. If you have a home equity loan or line of credit, that lender typically has to agree to “subordinate” it behind your new first mortgage before you can refinance. Some lenders are reluctant to do this, which can stall or block a refinance entirely.
Not shopping multiple lenders. Refinance rates and closing costs vary meaningfully between lenders for the exact same borrower profile. Rate-shopping inquiries within about 14-45 days typically count as a single inquiry for credit scoring purposes, so getting three or more quotes costs you little.
Ignoring the tax and opportunity-cost angle. Mortgage interest may be tax-deductible depending on your situation, and cash you’d spend on closing costs has an opportunity cost if it could otherwise be invested. Run the full numbers, not just the new monthly payment.
Where Refinance Rates Go From Here
Rates climbed after the Fed’s September 16 hike to 3.75%-4.00%, and mortgage rates track the 10-year Treasury yield more closely than the Fed funds rate itself — so the next move depends on inflation and growth data more than the Fed alone. I cover the broader rate picture, including why home prices haven’t cooled despite higher rates, in my mortgage rates and home prices outlook.
The 21st Century ROAD to Housing Act became law on July 11, 2026, and ties FHA loan limits to automatic annual adjustments going forward — worth knowing if you’re near the conforming/jumbo line in a high-cost area.
If you’re deciding whether now is the right time, your own credit score and how long you plan to stay in the home matter more than trying to time the broader rate market. A rate that looks bad next to 2021 can still be the right move if it fixes a worse problem, like an ARM about to reset.
