HIRO Mortgage Program 2021: High LTV Refinance Option

Peter Miller
Peter Miller
The Mortgage Reports Contributor
September 15, 2021 - 13 min read

What is the HIRO program?

Fannie Mae’s HIRO program is a high–LTV refinance loan, meant to help homeowners with little or no equity refinance into a lower interest rate and monthly payment. HIRO was created for borrowers who have not benefitted from rising home values in recent years.

However, with the housing market heating up nationwide, homeowners have more equity than ever. Many are refinance eligible and don’t know it yet.

If you still have an above–market mortgage rate, it’s worth checking your refi eligibility with a lender.


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The High–LTV Refinance Option

HIRO – formally known as the High–LTV Refinance Option – is a mortgage relief program run by Fannie Mae.

The HIRO program was originally created to help homeowners whose property values were stagnant or falling. In those markets, some borrowers lost equity or saw their mortgages go ‘underwater.’

An underwater loan is one where the borrower owes more on their home loan than the property is worth. These types of loans aren’t eligible for standard refinance programs. Fannie Mae’s High–LTV Option helped solve that problem.

The good news is that underwater homes are becoming increasingly rare.

As the housing market heated up during Covid, most homeowners saw their properties increase in value. And as a result, the number of high–LTV and underwater loans dropped significantly.

Now, many homeowners are eligible to refinance even without a special high–LTV program. But they might not know it yet.

Even if you bought your home recently, or you had a high–LTV loan in the past, you should double check your mortgage status with a lender.

There’s a good chance you’ve gained more equity over the past year than you realize. And you might qualify for a refinance without any extra assistance.

You can start your eligibility check right here.

Editor’s note: Fannie Mae has temporarily paused the HIRO program due to a low number of applicants. With home equity increasing nationwide, many owners are eligible to refinance without needing a special program like HIRO. Contact a lender to check your equity levels and find out whether you qualify for a refinance.

How the HIRO refinance program works

The Fannie Mae High LTV Refinance Option (HIRO) is designed to help borrowers with little or no equity.

In fact, it can actually help some underwater borrowers – borrowers who owe more on their homes than the property is worth.

While a lack of equity is a problem for millions of homeowners, there is also a less visible issue.

Low–equity borrowers are often trapped with high–cost mortgages which cannot be refinanced at today’s rates.

Using the HIRO program, these homeowners may be able to lock in a lower rate and more affordable mortgage payments.

High LTV refinance example

For instance, say you purchased a home with 3% down using Fannie Mae’s HomeReady loan program in late 2017.

Your situation might look like this:

  • Original purchase price: $250,000
  • Down payment: $7,500 (3%)
  • Current loan balance: Around $238,000
  • Home’s current value: $245,000
  • Current loan–to–value: 97.14%

In this scenario, the loan–to–value ratio would be too high for a traditional refinance. But you might be able to qualify for the HIRO high–LTV refinance.

Because rates are falling, the Fannie Mae High LTV Refinance Option can lower your monthly payment and free up needed cash in your budget.

Why is Fannie Mae easing loan requirements under this program?

After all the paperwork is shuffled, the borrower has a lower monthly cost or a better loan. And Fannie Mae has a borrower with a good payment record who represents less risk of delinquency or foreclosure.

Who qualifies for HIRO?

Only homeowners who currently have a Fannie Mae–backed mortgage can qualify for the HIRO refinance. If you’re not sure whether Fannie Mae backs your loan, use Fannie’s Lookup Tool to find out.

Other requirements for the high LTV refinance option include:

  • The mortgage was originated on or after Oct. 1, 2017
  • You’ve held the mortgage at least 15 months before applying for HIRO
  • You made no payments more than 30 days late in the last 6 months
  • You made no more than one payment up to 30 days late in the past 12 months, and have no payments greater than 30 days late

In addition, the HIRO refinance must have a “net tangible benefit” for the homeowner.

That means the loan must result in at least one of these four benefits:

  • Reduced monthly principal and interest payment
  • Lower interest rate
  • Shorter amortization term (for example, switching from a 30–year mortgage to a 15–year mortgage)
  • More stable mortgage product, such as moving from an adjustable–rate mortgage to a fixed–rate mortgage

If any of the above applies to you, you might be eligible for the HIRO mortgage program. Find out here.

Minimum loan–to–value ratios for the HIRO program

Fannie Mae is trying to help good borrowers in areas with little or no property value increases. If you have “too much” equity, you can’t qualify for the HIRO program.

The minimum loan–to–value (LTV) ratios to qualify for HIRO are:

Type of Residence Number of Units LTV Required for HIRO
Primary residence 1-unit 97.01% or higher
2-unit 85.01% or higher
3-4 unit 75.01% or higher
Second home 1-unit 90.01% or higher
Investment property 1-4-unit 75.01% or higher

Keep in mind these aren’t maximums for the new loan. These are minimums for your current loan.

Here are two examples of how the minimum LTV rule can be applied to a 1–unit, single–family residence:

Example: Not eligible for a HIRO mortgage

  • Property value: $300,000
  • Current loan balance: $260,000
  • Current LTV: 86% (LTV not eligible)

Example: Eligible for a HIRO mortgage

  • Property value $300,000
  • Current loan balance: $295,000
  • LTV: 98.3% (LTV eligible)

And remember – you’re only eligible for Fannie Mae’s HIRO program if your current mortgage is owned by Fannie Mae.

Maximum loan–to–value ratios for the HIRO program

The Fannie Mae High LTV Refinance has no maximum LTV for fixed–rate mortgages.

That means your current loan can be at 125% or even 150% LTV and you are still eligible.

For those refinancing an adjustable–rate mortgage (ARM), the maximum amount is equal to 105% of the property’s value.

When to seek a high LTV refinance

Even if you have great credit and income, it’s difficult or impossible to refinance a home without equity.

It’s true that home values have been rising. But not everywhere. Not all home prices are up.

Every community likely has places which have not appreciated much and perhaps not at all. In fact, there are entire metro areas where home prices on average have declined.

About 2.6 million U.S. properties were seriously underwater in the fourth quarter of 2021, according to ATTOM Data Solutions.

That means about one in 20 homeowners has a mortgage loan balance that’s at least 25% higher than their home’s value.

If you’re one of those homeowners, HIRO might help you refinance into a lower rate.

HIRO program alternatives

The HIRO program is only for homeowners whose current mortgages are backed by Fannie Mae.

But borrowers who are ineligible for HIRO may have other mortgage relief options.

For homeowners with mortgages backed by Freddie Mac, there’s the Freddie Mac Enhanced Relief Refinance (FMERR). This works much like the HIRO program, but for homeowners with loans bought by Freddie instead of Fannie.

FHA, VA, and USDA borrowers may get similar benefits from a Streamline Refinance.

Government–backed Streamline programs don’t require a new appraisal. That means even if your home’s value has fallen, you might still qualify for a refinance. And lenders don’t need to verify your income or credit, either.

These programs can all help borrowers refinance into today’s low interest rates with little or no home equity.

HIRO program FAQ

What is a HIRO mortgage?

HIRO is a mortgage refinance program. HIRO is short for “high LTV refinance option” – a special refi program run by Fannie Mae. If you have very little equity, but want to refinance into today’s low mortgage rates, you might be able to use this loan to your advantage. It could help lower your rate and make your monthly mortgage payment more affordable.

Who can use the HIRO program?

There are a few main eligibility requirements to qualify for HIRO. First, the current loan must be owned by Fannie Mae. Second, the loan must have been originated (opened) on or after October 1, 2017. Third, at least 15 months must have passed between opening the original loan and applying for the HIRO program. Finally, you must have no 30–day late payments during the past six months, not more than one 30–day late payment in the past 12 months, and no delinquency greater than 30 days.

When does HIRO expire?

Fannie Mae has not set an expiration date for the HIRO mortgage program. However, the program was put on hold in August 2021 due to a low number of applicants.

Do credit scores matter with the High LTV Refinance Option?

Fannie Mae has no minimum credit score for the HIRO program. The reason is that the new loan is financing a property where the borrower has a good financial history. However, check with your lender. Just because Fannie Mae doesn’t set a minimum credit score doesn’t mean the lender can’t “layer” their own rules on top of Fannie Mae guidelines.

Is there a debt-to-income ratio (DTI) limit for the HIRO program?

Generally, there is no debt–to–income ratio ceiling. The logic is that the borrower has been making full and timely payments and the new financing is likely to reduce monthly costs. However, the lender may be required to calculate a new debt–to–income ratio for the refinance if your payment increases by 20%, you are removing a borrower from the loan, or you trigger the Alternative Qualification Path in another way.

Does the HIRO mortgage program require re-verification of income?

The HIRO Program lender must obtain one of the following: Verbal verification of current employment or self–employment for at least one borrower; Documentation of non–employment income such as a pension; Or documentation of liquid financial reserves equaling at least 12 months of the new full housing payment including taxes, insurance, etc.

Do I need to provide bank statements?

Typically, no, unless your payment is increasing by 20%, or you are removing a borrower from the existing home loan.

Does the HIRO mortgage require an appraisal?

Some HIRO loans will require a new, full appraisal. But because there is no maximum LTV, you don’t need to worry about the appraised value coming in too low. For some loans, Fannie Mae will permit an appraisal waiver. This is determined when you make full application with the lender. An appraisal waiver will save the applicant time and money by skipping the appraisal process.

Is mortgage insurance required with the high LTV refinance option?

Any existing mortgage insurance will be transferred to the new loan. If the current loan does not carry mortgage insurance, new PMI is not required.

Can you remove a borrower with Fannie Mae’s High LTV program?

Yes, however, you will have to re–qualify for the loan. That means you’ll have to prove your income and meet the minimum credit score of 620 and the maximum debt–to–income ratio of 45%. Not all lenders will allow you to remove a borrower.

Is the High LTV Option a replacement for HARP?

Yes. The Home Affordable Refinance Program (HARP) expired in 2018, so this program was rolled out for those who didn’t use that program. You cannot use HIRO if you used HARP.

Can I receive the High LTV Refinance Option if I used HARP?

No. If you refinanced with HARP, you are not eligible to use this program, since it is meant for those who didn’t get a chance to use HARP.

What about HIRO rates?

As with all loan options, it pays to shop around. HIRO financing rates at this time are generally in line with other refinancing options.

Check your refinance eligibility

Fannie Mae works with mortgage lenders nationwide, so you can easily check your refinance eligibility and compare rates.

If refinancing could get you a lower monthly mortgage payment, there’s no reason to delay. Check in with a few lenders to find your best refi deal and start saving.

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