Mortgage Refinance Rates 2026

Refinancing your mortgage replaces your current loan with a new one at a lower rate, a lower monthly payment, or a different term. As of May 2026, the average 30-year refinance rate is 6.49% APR, and the 15-year refi averages 6.00% APR. While these rates are higher than the historic lows of 2020-2021, refinancing can still make sense if you can lower your current rate by 0.50% to 0.75% or if you need to tap your home equity for improvements or debt consolidation. Cash-out refinance rates currently range from 6.50% to 7.00% APR.

The decision to refinance comes down to simple math. Your closing costs — typically $3,000 to $8,000 — need to be recouped through monthly savings before you come out ahead. The break-even period is the number of months it takes for your monthly savings to equal the closing costs. If you plan to move or sell before reaching the break-even point, refinancing may not be worthwhile. Home equity of at least 20% and a credit score of 620 or higher are typically required to qualify for the best refinance rates.

Current Refinance Rates

When to Refinance

The general rule of thumb is to refinance when you can lower your current interest rate by at least 0.50% to 0.75%. However, there are other valid reasons to refinance beyond simply lowering your rate. You might refinance to switch from an adjustable-rate mortgage to a fixed rate for payment stability. You might choose a shorter term — going from a 30-year to a 15-year mortgage — to build equity faster and pay less total interest. You might need cash out to fund home improvements, pay off high-interest debt, or cover a major expense. Each scenario requires running the numbers to confirm that the savings or benefits justify the closing costs.

Break-Even Calculation

The break-even point determines whether refinancing makes financial sense. Divide your total closing costs by your monthly savings to find the number of months needed to recoup the costs. For example, if your closing costs are $5,000 and refinancing saves you $150 per month, your break-even point is 33 months ($5,000 / $150 = 33.3). If you plan to stay in the home for at least three years, this refinance would be worthwhile. If you expect to move in two years, the savings would not cover the costs. Most lenders recommend a break-even period of no more than 3 to 5 years.

Rate-and-Term Refinance

A rate-and-term refinance is the most common type. It replaces your existing mortgage with a new loan that has a lower interest rate, a different loan term, or both. The loan amount stays the same — you are not taking cash out or paying down principal. This type of refinance is ideal for borrowers whose credit has improved since they got their original mortgage, or who have a higher-rate loan from when rates were elevated. Reducing your rate from 7.50% to 6.00% on a $300,000 loan saves approximately $300 per month and over $100,000 in interest over the life of a 30-year loan.

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a larger loan, and you receive the difference in cash at closing. This lets you tap your home equity without taking out a second mortgage. Cash-out refinance rates are typically 0.25% to 0.50% higher than standard refinance rates because the lender takes on more risk. The most prudent uses for cash-out proceeds are home improvements that add value to your property, debt consolidation at a lower interest rate, or funding education expenses. Using home equity for discretionary spending or vacations is risky because your home serves as collateral.

Cash-In Refinance

A cash-in refinance involves bringing money to the closing table to pay down your principal balance. This reduces your loan-to-value ratio, which can help you eliminate private mortgage insurance, qualify for a better rate, or switch from a jumbo loan to a conforming loan with better terms. Cash-in refinancing is most common among borrowers who have received a windfall, such as an inheritance or bonus, and want to reduce their monthly payment or build equity faster.

Best Refinance Lenders

Rocket Mortgage offers the fastest digital refinance process with real-time online tracking and streamlined documentation. Chase provides relationship discounts for existing banking customers, potentially reducing your rate. First Federal Bank consistently offers competitive low rates for refinancing. For FHA borrowers, the FHA Streamline Refinance program provides a simplified process with minimal documentation if you already have an FHA loan. For VA borrowers, the VA IRRRL (Interest Rate Reduction Refinance Loan) offers a streamlined refinance option with no appraisal and limited credit underwriting.

FHA Streamline Refinance

The FHA Streamline Refinance program is designed for borrowers who already have an FHA loan and want to lower their rate or switch from an adjustable to a fixed rate with minimal documentation. No appraisal is required, and the credit qualifying requirements are less stringent than a standard refinance. You must have made at least six consecutive on-time payments on your current FHA loan, and the refinance must result in a tangible benefit such as a lower monthly payment or a shorter term. Closing costs are typically lower than a standard refinance.

VA IRRRL

The VA Interest Rate Reduction Refinance Loan, also known as a VA streamline refinance, is available to veterans with an existing VA loan. The IRRRL process is simplified — no appraisal is required, no credit underwriting packet is needed, and the VA funding fee is lower than a regular VA loan. You must certify that you previously occupied the home, but no new occupancy verification is needed. The IRRRL can lower your rate, reduce your monthly payment, or convert an adjustable-rate VA loan to a fixed rate. The streamlined process means closing can happen in as little as 30 days.