HIRO Mortgage Program 2021: The High LTV refinance option

Peter Miller
The Mortgage Reports contributor

What is the HIRO mortgage program? 

The Fannie Mae High LTV Refinance Option (HIRO) is a mortgage relief program. 

It’s intended for homeowners who want to refinance into today’s low rates, but don’t have enough equity for a traditional refi. 

The HIRO program can help homeowners who have not benefited from rising home values in recent years and are stuck with high rates. 

If you purchased a home since late-2017 and made a small down payment, you might benefit greatly from this program.

Find out if you qualify for the HIRO program (Jun 23rd, 2021)

In this article (Skip to…) 

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 owners 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. 

Check your HIRO refinance eligibility (Jun 23rd, 2021)

High LTV refinance example

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, your 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.

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
  • 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. 

Check your HIRO refinance eligibility (Jun 23rd, 2021)

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 current loan-to-value (LTV) ratios 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

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

Example: Eligible for a HIRO mortgage

  • Example 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 30- and 15-year 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 3.5 million U.S. properties were seriously underwater in the fourth quarter of 2019, according to ATTOM Data Solutions

That means one in 16 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.

Check your HIRO refinance eligibility (Jun 23rd, 2021)

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?

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:

1. The current loan must be owned by Fannie Mae. To see if your loan qualifies, go to the Fannie Mae Lookup Tool

2. The loan must have been originated (opened) on or after October 1, 2017

3. At least 15 months must have passed before the loan can qualify for the HIRO 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

4. 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.

Do credit scores matter with the High LTV Refinance Option?

With Fannie Mae High LTV Refi Option (HIRO) 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.

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

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 HIRO mortgage program require re-verification of income?

The HIRO Program lender must obtain one of the following:

1. Verbal verification of current employment or self-employment for at least one borrower

2. Documentation of non-employment income such as a pension

3. 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%, you are removing a borrower from the loan, or you 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 HIRO mortgage 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 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.

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. 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.

Apply for the HIRO high LTV refinance 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 HIRO information.

See if you qualify for the HIRO program. Start here (Jun 23rd, 2021)