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NOTE: Due to the coronavirus outbreak, refinancing may be a bit of a challenge. Lenders are dealing with high loan demand and staffing issues. If you can’t pay your current home loan, refer to our mortgage assistance resource. For the latest information on how to cope with financial stress during this emergency, see NerdWallet’s financial guide to COVID-19.
You may be able to refinance your mortgage, even if you owe more than your home is worth, using one of two programs:
Freddie Mac Enhanced Relief Refinance, also known as FMERR, the ERR program, the FMERR program and the FMERR relief program.
Fannie Mae High Loan-to-Value Refinance Option.
Both refinance options are for homeowners who don't qualify for standard refi programs because they owe more than 97% of the value of their homes. The Fannie and Freddie programs replace HARP, the Home Affordable Refinance Program that operated from 2009 to 2018.
Why you should consider HARP replacement options
Like HARP, the new refinance options can decrease the term or interest rate on your existing loan, as well as reduce your overall monthly principal or interest payments. These benefits may free up space in your monthly budget to meet other financial obligations.
High-LTV refinance program eligibility
To be eligible, you must:
Owe more than 97% of the home's value, if it's a single-family home and it's your primary residence.
Not have made a late payment within the past six months.
Not have missed more than one payment within the previous 12 months.
Have stable and predictable income.
Receive at least one of the following benefits from the refinance: a reduction in the monthly principal and interest payment, a lower interest rate, a shorter amortization term, or a more stable loan product (switching from an adjustable-rate mortgage to a fixed loan, for example).
Advantages of applying for a high-LTV refinance
These new loans have several advantages over a traditional refinance. For typical borrowers, they:
Don't require a minimum credit score.
Don't mandate a maximum debt-to-income or loan-to-value ratio limit for fixed-rate loans.
Often don't require an appraisal.
Have a streamlined application and documentation process.
How to get help
If you want to refinance but traditional lenders have turned you away, ask Fannie Mae or Freddie Mac if you qualify for one of these HARP replacement programs. And contact your current lender as soon as possible to explore mortgage relief options.