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HARP Replacement Programs

Updated on:
Content was accurate at the time of publication.

HARP is short for the Home Affordable Refinance Program, and it was created to help homeowners refinance underwater home loans after the 2008 housing crisis. A loan is considered underwater or “upside-down” when the balance is larger than the home’s value.

Although HARP ended in 2018, HARP replacement programs have been created to help homeowners who owe more than their home is worth refinance their mortgages.

What are HARP replacement programs for underwater mortgages?

HARP replacement programs give homeowners refinance options even if they have “negative equity” loans. Equity is the difference between how much you owe and your home’s value. For example, if your house is worth $300,000, but you owe $375,000, you have $75,000 of negative equity.

Lenders often express your negative equity as a percentage of your home’s value by dividing your home’s worth by the amount you owe. This calculation is known as your loan-to-value (LTV) ratio, and your LTV ratio must be very high to be eligible for a HARP replacement program.

In the example above, the homeowner has a 125% LTV ratio ($375,000/$300,000 = 1.25 or 125%). This simply means the mortgage balance is 25 percentage points higher than the home’s value.

Before HARP was introduced, borrowers had no way to refinance a home that was worth less than the loan balance.

Understanding the HARP replacement program net tangible benefit

HARP replacement programs are designed to deliver a financial benefit to upside-down borrowers, known as a “net tangible benefit.” In fact, the lender must prove that you’ll accomplish one (or several) of the following goals:

  • A lower monthly payment
  • A lower interest rate
  • A shorter repayment term to build equity faster
  • A more stable loan product (like switching from an adjustable-rate mortgage (ARM) to a fixed-rate loan)

Benefits of HARP replacement programs

If you live in an area of the U.S. with a higher share of negative equity, there are some unique features that make HARP replacement programs especially helpful.

  • You can use them more than once. The original HARP program gave borrowers only one shot at a lower rate for the life of their loan. The new HARP replacement programs allow refinancing as often as it makes financial sense and as long as they qualify.
  • Your mortgage insurance transfers to the new loan. If you put down less than 20% on your mortgage, you’re probably paying for private mortgage insurance (PMI). Even if your home’s value has dropped, you won’t need new mortgage insurance coverage, as the current PMI will transfer to the new loan.
  • You won’t need to purchase new PMI. If you don’t pay for PMI now, you won’t pay it on a HARP replacement loan, even if you have less than 20% equity or negative equity.
  • You won’t need as much financial paperwork. Lenders aren’t required to document income or assets with as much documentation as a standard refinance.
  • You may qualify with a low credit score or a higher DTI ratio. There’s no minimum credit score — and, in most cases, lenders don’t analyze your debt-to-income (DTI) ratio (a measure of your total monthly debt compared to your gross monthly income).
  • You may get an appraisal waiver. Depending on your home’s location and the results of an automated value analysis, an appraisal may not be required. That can save you $300 to $400 on the average cost of a home appraisal.
  • You may qualify even with recent major financial and credit problems. The standard waiting periods for bankruptcy discharges and foreclosures may not apply to a HARP replacement mortgage.

Current HARP replacement programs

Fannie Mae and Freddie Mac are government-sponsored enterprises that fuel the U.S. mortgage market, and they’ve created two HARP replacement programs. To be eligible, you must verify that your loan is currently owned by Fannie Mae or Freddie Mac (we’ll explain how to do that below.)

IMPORTANT NOTE: Because very few people have applied for these programs since they were launched, Fannie Mae and Freddie Mac have suspended them until further notice. However, you may qualify for one of the high-LTV refinance programs listed below.

Fannie Mae HIRO program: How it works and how to qualify

The Fannie Mae High Loan-To-Value Refinance Option (HIRO) program allows homeowners with a loan owned by Fannie Mae to refinance even if their loan balance is higher than their home’s value. The HIRO program also permits manual underwriting to help upside-down homeowners with special circumstances.

HIRO program requirements

You’re eligible for the HIRO program if:

  • You currently have a Fannie Mae-owned loan.
  • The note date on your current loan is on or after Oct. 1, 2017.
  • It’s been at least 15 months since you took out your current mortgage.
  • You haven’t been late on your mortgage payment in the last six months.
  • You’ve had only one late payment in the last 12 months.
  • You don’t have more than 3% equity (for a single-family primary residence).
Things you should know

Use the Fannie Mae loan lookup tool or call 800-2FANNIE to determine if your current loan is owned by Fannie Mae.

Freddie Mac FMERR program: How it works and how to qualify

The Freddie Mac Enhanced Relief Refinance® (FMERR) program was created for underwater borrowers who currently have a Freddie Mac-owned loan. FMERR can help homeowners benefit from a lower payment or faster payoff with no minimum credit score requirement.

FMERR program requirements

You’re eligible for the FMERR program if:

  • You currently have a Freddie Mac-serviced loan.
  • It’s been at least 15 months since you took out your current mortgage.
  • You haven’t been late on paying your current mortgage in the last six months.
  • You don’t have more than one late mortgage payment in the last 12 months.
  • You don’t roll more than $5,000 in closing costs into the loan amount and receive a maximum of $250 cash back.

Use the Freddie Mac loan look-up tool or call 800-FREDDIE (press 2 for a customer service representative) to verify if your current loan is owned by Freddie Mac.

How to apply for HARP replacement programs

There are four steps to applying for the Fannie Mae HIRO mortgage program or Freddie Mac’s FMERR program. (Note: You won’t be eligible for either program if your current loan was already refinanced under the HARP program.)

  1. Confirm that your current loan is owned by Fannie Mae or Freddie Mac. Use the lookup tools referenced above.
  2. Find out what your current lender offers. Your current loan servicer already knows who backs your loan, and they might make you a competitive offer to keep you as a customer.
  3. Find a lender that offers HARP replacement programs. Once you’ve confirmed which agency owns your loan, get offers from other lenders that offer HARP replacement programs. Try a mortgage rate comparison tool to save time since lenders will only contact you based on the information you input. Once you’ve compared all of the figures, choose the option with the lowest rates and fees.
  4. Fill out a loan application and follow your loan officer’s guidance. Lenders must show you the financial benefit of your refinance. They’ll then verify your payment history to approve the loan, and your credit score to offer you a rate.

Other high-LTV refinance options

Consider these programs if you’re not upside-down but have very little equity, or currently have a government-backed loan:


This new Fannie Mae program gives low-income borrowers a way to refinance with an LTV ratio up to 95%, no minimum credit score and a debt-to-income (DTI) ratio as high as 65%. The RefiNowTM DTI ratio maximum is much higher than other conventional refinance programs that don’t allow your total monthly debt to exceed 50% of your monthly income.

Income limits apply and an appraisal is required to verify your home’s value. However, eligible borrowers may get a $500 credit to cover the upfront cost of a home appraisal.


The Freddie Mac Refi Possible℠ program is almost identical to Fannie Mae RefiNow, except it allows up to a 97% LTV ratio for a one-unit home as opposed to the 95% cap for Fannie’s program. Income limits apply, but there’s no credit score requirement and the DTI ratio can be as high as 65%


Borrowers who used the Fannie Mae HomeReadyⓇ loan to buy a home may be surprised to learn they can also refinance their current Fannie Mae loan up to a 97% LTV ratio, as long as they still meet the income limits. Eligible HomeReady borrowers can even use “cash on hand” to cover closing costs.


The Freddie Home PossibleⓇ mortgage allows income-eligible borrowers to refinance with as little as 3% equity in their home. You can even add income from someone renting out a room if you can document receipt of this income over the past year.


If your current mortgage is insured by the Federal Housing Administration (FHA), you may qualify for the FHA streamline refinance program. Lenders don’t factor in your home’s current value and there’s no appraisal or income verification. Your mortgage payment history primarily determines your eligibility. Another perk: There’s no minimum credit score requirement.


Eligible military borrowers with a current loan guaranteed by the U.S. Department of Veterans Affairs (VA) may qualify for the VA interest rate reduction refinance loan (IRRRL). Your income and home value aren’t verified, and there’s no minimum credit score.


If you own a home with a loan backed by the U.S. Department of Agriculture (USDA), you may be able to qualify for the USDA streamlined assist refinance program without verifying your income or home’s value. To qualify, you must’ve paid your current USDA loan on time for the last 12 months.


If you don’t meet any of the criteria for HARP replacement programs or government streamline refinance loans, ask your lender about a mortgage modification. Your current lender’s servicing department may reduce your payment by extending your loan term or temporarily lowering your monthly payment.


If you’ve come into a large sum of money and want to lower your payment without refinancing, you can use it to pay down your loan balance and ask the lender to recast your mortgage. Your mortgage payment is adjusted based on the new loan balance at your current interest rate, effectively lowering your payment without going through a full refinance.

How do I know if my home is underwater?

In the fourth quarter of 2021, only 2.1% of all mortgage properties (1.1 million homes) were underwater, according to CoreLogic’s Homeowner Equity Insights report. The table below shows the four states with a very high share of underwater homes, based on data through the end of 2021.

StatePercentage of homes underwater

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