What Is HARP?

The Home Affordable Refinance Program (HARP) was set up by the federal government in 2009 in response to the widespread collapse in home prices that had occurred as a result of the 2007-08 credit crunch. Lower home prices saw millions of homeowners plunged into negative equity (a.k.a. having an "underwater" or "upside down" mortgage), and that stopped them from reducing their monthly outgoings by refinancing to lower mortgage rates. Since then, home prices have risen in many areas, but the recovery has been geographically patchy. And as recently as the second quarter of 2016, 3.6 million Americans still had underwater mortgages.

HARP has evolved since it was first introduced, and many of its original eligibility rules have been loosened. As its official government website suggests:

Turned down before? Now's the time to try again.

HARP has been significantly enhanced since it launched in 2009. The program now requires less documentation and has simpler guidelines, all designed to approve more loans.

To date, the program has helped more than 3.4 million homeowners. In August 2016, the Federal Housing Finance Agency (FHFA) announced it was working with Freddie Mac and Fannie Mae to develop a new streamlined refinance offering, which is due to be introduced in October 2017. In the meantime, the current version of HARP will continue to be available up until September 30, 2017. At the time it made that announcement, the FHFA reckoned around 300,000 homeowners remain eligible to refinance under HARP, but are yet to do so.

If you're one of them, the program offers some real benefits:

  1. Lending criteria are much less strict than with other mortgages, so you're more likely to be approved
  2. It doesn't matter how far underwater your existing mortgage is
  3. You shouldn't normally pay more in mortgage insurance than you currently do
  4. Refinance closing costs should be affordable because many fees and charges are capped – and you can bundle them all up within your new loan

Who Is Eligible for a HARP Mortgage?

Even though it's easy for many to get approved for a HARP loan, there are still a few hoops you'll need to jump through.

In particular, your existing mortgage must be owned or guaranteed by either Freddie Mac or Fannie Mae. There's a good chance yours is, even if you think it isn't. That's because your original lender might have sold it on without your noticing. And the company to which you make monthly payments is no guide to your mortgage's ultimate ownership. Luckily, you can check in minutes whether yours is now owned or guaranteed by one of these enterprises using the simple online lookup tools on the Freddie and Fannie websites. Be sure to use both lookup tools.

Don't despair if you have a mortgage that's ineligible for help under HARP. VA, USDA, FHA and jumbo loans can often be refinanced under other streamline programs.

There are a few other hoops:

  • Your existing mortgage must have been originated on or before May 31, 2009. Don't worry if you're unsure about your date: it will appear when you use those Fannie and Freddie lookup tools.
  • Your LTV must be greater or equal to 80 percent. LTV stands for loan-to-value ratio, and you can calculate yours by dividing the current balance(s) on your mortgage(s) by the current market value of your home. Hate math? Use the LTV calculator on Fannie Mae's website. This rule excludes homeowners who have lots of equity, because a HARP refinance is intended to help those with little or none. There's no top limit on the amount by which your mortgage balance exceeds the value of your home.
  • You must be current on your mortgage, and not have been more than 30 days late within the last six months. And you can have been 30+ days late no more than once in the last year. If that's a problem, get and stay current as soon as you can so you become eligible.
  • The home you're refinancing must be one of the following: your main residence (condos, coops or manufactured homes are usually fine), OR a second home (such as a vacation home) that's a single-unit dwelling, OR an investment property that comprises between one and four residential units.

HARP Loan Qualifications, Requirements and Guidelines

It's important to recognize that, while the government will guarantee your refinanced loan, you'll still be borrowing from a private lender. And that lender is entitled to apply stricter criteria than are laid down in the HARP guidelines (PDF from Freddie Mac), which are noticeably easygoing. However, that may not be an insurmountable problem. You can undertake a HARP refinance with any lender that participates in the Home Affordable Refinance Program, so if yours is blocking your way forward, shop around for one that cuts you more slack.

HARP requirements that some lenders ignore include:

  • You may not have to prove your income providing you have a good record for on-time mortgage payments
  • You don't need to have a particular credit score (yours can be poor) providing your monthly payments won't increase by more than 20 percent after you've refinanced
  • Your mortgage can be any depth underwater

Of course, you'll probably want to talk to your existing lender early on in the process. During that call, ask whether it participates in the HARP program. If it does, explore some other questions:

  • Does it think you and your home are eligible?
  • If not, why not?
  • Does it impose its own rules over and above HARP's official guidelines? If so, what are they?
  • What refinance rate would it offer you? However good that rate sounds, and however happy you are with the amount you could save each month, still shop around for competitive quotes. You might find even lower rates and even bigger savings.

Don't give up if some lenders (including your current one) put up barriers. Keep looking, and there's a good chance you'll find one that will help.

HARP Mortgage Rates

HARP refinance rates are comparable to other refinance rates. That doesn't mean you'll get the same deal as someone with stellar credit and a huge down payment, but you will be playing within the same ballpark. Usually, you can expect to pay between 0.25 percent and 2.00 percent more for a HARP loan than others from Fannie and Freddie.

But that's just a guideline. Lenders can set the rates they want, which is why it's so important to compare quotes from multiple lenders. Compare refinance rates from our network below:

Refinance rates now in Ashburn, VA [Change this]

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    Home Price (Purchase)
    When you get a mortgage to purchase a home, the lender uses the lower of the agreed-upon purchase price or the property's appraised value to determine your maximum loan amount. The loan amount divided by the property home price equals your loan-to-value ratio, or LTV. That ratio is one of the major factors that lenders use to set your mortgage rate. If your LTV exceeds 80 percent, you'll probably be required to pay mortgage insurance, which increases your monthly payment. If the property appraises for less than the agreed-on purchase price, you are not usually required to complete the purchase.
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    Home Value (Refinance)
    This is your estimate of the current value of your property. When you refinance, your home is almost always evaluated by a licensed appraiser. The refinance loan amount divided by the property's appraised value equals your loan-to-value ratio (LTV), and that number is one of the major factors that determine your mortgage rate. To get an accurate refinance rate quote, your home value estimate must be reasonably accurate.
  • ?
    Down Payment
    The down payment is the amount you pay upfront when you finance property. Your purchase price minus your down payment equals your mortgage amount. The higher your down payment, the more likely you are to be approved for a home loan. If your down payment is less than 20 percent of the purchase price, you'll probably be required to pay for mortgage insurance, which increases your monthly payment.
  • ?
    Credit Score
    Your credit score is a number designed to measure your credit-worthiness. It's based on a formula that combines many factors, including your payment history, amount of credit used and number of accounts. This number is used by lenders to calculate the probability that you'll default on your mortgage. Most lenders won't approve mortgages to applicants with credit scores lower than 620. Your credit score is one of the most important factors that determines your mortgage rate - applicants with higher scores are offered better mortgage rates.
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Mortgage rate quotes displayed on LendingTree LoanExplorer℠, including loan pricing data, rates and fees, are provided by third party data providers including, but not limited to, Mortech®, a registered trademark of Zillow®, LoanXEngine, a product of Mortgage Builder Software, Inc., and LoanTek, Inc.

How Much Can You Save with HARP?

You can find online many estimates of how much a HARP refinance could save you. Some suggest $200 a month on average. Others estimate savings of $60,000 or $70,000 over the life of a 30-year loan. But how much you personally will save won't become clear until you've found the best possible deal, and compared your new monthly payment with your existing one.

In the meantime, you could try modeling some scenarios using the LendingTree refinance calculator and refinance payment calculator. Naturally, if you refinance an adjustable-rate mortgage (ARM) to a fixed-rate one, or if you refinance to a 15-year or other shorter term loan (both of which are possible under HARP guidelines), you may actually pay more each month – while likely reducing the overall cost of your borrowing. But however you choose to use the savings you make with a new HARP mortgage, you're almost bound to benefit a great deal.

Frequently Asked Questions