Millions of Homeowners Now Have a Chance to Save on a Mortgage Refinance

To qualify, borrowers must have a federally backed mortgage and earn no more than 80% of their area’s median income.

A lender will be required to cut a qualified borrower's monthly mortgage payment by $50 or more and provide at least a half-point (0.5) interest rate reduction — say, from 3.5% down to 3%.

“This new refinance option is designed to help eligible borrowers who have not already refinanced save between $1,200 and $3,000 a year on their mortgage payment,” Calabria says in a news release.

More: Early mortgage payoff calculator

How the program cuts refinance costs

Refinancing costs vary by state and lender, but it’s not unusual to pay 3% or more of the amount you owe one your house in refinance fees — "closing costs."

If you qualify for the FHFA’s new program, your lender must provide a credit of up to $500 for an appraisal if you need one and waive the usual 0.5% fee for borrowers with loan balances at or below $300,000.

But to be eligible, you must not have missed a payment in the past six months and have no more than one missed payment in the past 12 months.

Plus, you must meet specific requirements related to how much debt you're carrying and how much equity you have in your home.

Finally, you can't have a credit score lower than 620. If you’re not sure if yours will make the cut, it’s easy to peek at your credit score for free.

Millions more can benefit from a refi, a new study shows

If you don’t qualify for the government’s new refi option, you may still want to consider trading in your loan for a cheaper one. Average 30-year fixed mortgage rates have fallen below 3% again for the first time since late February.