HARP Replacement 2019: Fannie Mae High Loan-To-Value Refinance Option guidelines, rates, and eligibility

Peter Miller
The Mortgage Reports contributor

Fannie Mae unveils new high LTV refinance to replace HARP in 2019

The Fannie Mae High Loan-To-Value Refinance Option (HLRO) is for homeowners who are underwater on their mortgages but want to refinance into today’s low rates.

If you have a recent mortgage with high rate, but not enough equity to refi, the HLRO may be the solution to your problems.

With rising home prices around the country the HLRO might seem unnecessary to some. However, there are still areas of the country where home prices are stagnant or falling.

Homeowners who purchased homes since late-2017 and made a small down payment could benefit greatly from HLRO.

Shop High LTV Refinance Option rates with top lenders here. (Jan 19th, 2020)

What is the Fannie Mae High LTV Refinance Option (HLRO)?

The Fannie Mae High LTV Refi Option is a new loan program designed to help homeowners refinance into a lower rate and payment even if they have little or no equity in their home.

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.

More than 5 million U.S. properties were seriously underwater in the fourth quarter, according to ATTOM Data Solutions. These are properties “where the combined estimated balance of loans secured by the property was at least 25% higher than the property’s estimated market value, representing 8.8% of all U.S. properties with a mortgage.”

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

Get High LTV Refinance Option rate quotes from top lenders. (Jan 19th, 2020)

The Fannie Mae High LTV Refi Option advantage

The Fannie Mae High LTV Refi Option is designed to help borrowers with little or no equity. In fact, it can actually help some underwater borrowers, borrowers who owe more 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 owners are often trapped with high-cost mortgages which cannot be refinanced at today’s rates.

For instance, if you purchased a home with 3% down using Fannie Mae’s HomeReady loan 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
  • Current value: $245,000
  • Current loan-to-value: 97.14%

In this scenario, you might be eligible for the HLRO since you have an LTV that’s too high to refinance with a traditional loan.

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. Fannie Mae has a borrower with a good payment record who represents less risk.

Minimum loan-to-value ratios

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 HLRO program. The minimum current loan-to-value (LTV) ratios are:

  • Primary residence
    ◦ 1-unit: 97.01% LTV
    ◦ 2-unit: 85.01%
    ◦ 3-4 unit: 75.01%
  •  Second home
    ◦ 1-unit: 90.01%
  • • Investment property
    ◦ 1-4-unit: 75.01%

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

For example, here are numbers for a 1-unit primary residence.

Not eligible

  • Property value: $300,000
  • Current loan balance: $260,000
  • Current LTV: 86%


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

Maximum loan-to-value ratios

The Fannie Mae High LTV Refi Option program has no maximum LTV for new 30- and 15-year fixed-rate mortgages. That means your new loan can be at 125% or even 150% LTV and you are still eligible.

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

Contact top lenders to check your High LTV Refinance Option eligibility. (Jan 19th, 2020)

The applicant must benefit from the refinance

Both borrowers and lenders want to assure that any real estate refinancing creates a net tangible benefit. In the case of the Fannie Mae High LTV Refi Option, the company says the loan must result in at least one of these four benefits.

  • Reduced monthly principal and interest payment
  • Lower interest rate
  • Shorter amortization term
  • More stable mortgage product, such as moving from an adjustable-rate mortgage to a fixed-rate mortgage
Who qualifies for the HARP replacement program?

While the need for the Fannie Mae High LTV Refi Option is wide, not all property owners can qualify. Owners need to check certain boxes to get into the program.

– The current loan must be owned by Fannie Mae. To see if your loan qualifies, go to the Fannie Mae Lookup Tool
-The loan must have been originated (opened) on or after October 1, 2017
-At least 15 months must have passed before the loan can qualify for the HLRO program. For example, says Fannie Mae, if the note date on the existing loan is January 1, 2018, the note date (closing date) of the new loan must be no earlier than April 1, 2019.
-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 it expire?

Fannie Mae has not set an expiration date for the program.

Do credit scores matter with the Fannie Mae High LTV Refi?

With Fannie Mae High LTV Refi Option loans there are no credit score worries. Lenders are generally not required to consider credit scores. 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.

What about Debt-to-income ratio (DTI)?

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.

Does the High LTV program require re-verification of income?

The 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
-Documentation of liquid financial reserves equaling at least 12 months of the new full housing payment including taxes, insurance, etc.

The lender is not required to calculate a new debt-to-income ratio for the refinance unless your payment increases by 20% or you are removing a borrower from the loan, or trigger the Alternative Qualification Path in another way. The Alternative Qualification Path is any situation where the lender has to re-qualify the loan because it is changing from the former loan in a significant way.

Do I need to provide bank statements?

Typically, no, unless your payment is increasing by 20%, or you are removing a borrower

Does the HLRO require an appraisal?

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.

However, some 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.

Is mortgage insurance required?

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, proving income, and there is a miminum credit score of 620 and 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. HARP expired in 2018, so this program was rolled out for those who didn’t use that program. You cannot use HLRO 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 HLRO rates?

As with all loan options, it pays to shop around. HLRO financing rates at this time are generally in line with other refinancing options. Get an HLRO rate quote here.

Apply for the High LTV program now

Fannie Mae works with lenders nationwide, so there is no problem getting High LTV Refi Option information.

If this refinance type means a lower monthly mortgage payment for you there’s no reason to delay. Speak with lenders now for HLRO information.

Shop High LTV Refinance Option rates with top lenders here. (Jan 19th, 2020)

Step by Step Guide

Refinancing a Home