Fannie Mae's HIRO program helps you refinance, even if you're underwater on your mortgage

  • The HIRO program lets you refinance your mortgage if your loan-to-value ratio is over 97%.
  • Your must already have a conventional mortgage backed by Fannie Mae to qualify.
  • You can refinance into a new interest rate, monthly payment, and term length.
  • See Insider’s picks for the best mortgage refinance lenders »

What is the Fannie Mae HIRO program?

The Fannie Mae High LTV Refinance Option (HIRO) program is for people with a conventional mortgage who want to refinance but don’t have enough equity in their home to do a regular refinance. It’s especially useful for people whose homes have lost value since they bought them.

Lenders typically require you to have at least 20% equity in your home to refinance, although they may accept less if you have an excellent credit score or debt-to-income ratio. But with HIRO, you can refinance if you have less than 3% equity.

You can even qualify for HIRO if you’re underwater on your mortgage, meaning you owe more than the home is currently worth.

You’ll refinance into another conventional mortgage with a new interest rate, monthly payment, and possibly term length. You may decide to refinance with the same lender you used for your original mortgage, but you don’t have to. Shop around for the lender that offers you the best interest rate and lowest fees.

Who qualifies for the HIRO program?

Not everyone is eligible for Fannie Mae’s HIRO program. You’ll need to meet the following criteria:

  • Conventional mortgage. You can’t use the program to refinance your FHA, VA, or USDA mortgage. Your current conventional mortgage needs to already be backed by Fannie Mae, and you must have closed on it October 1, 2017, or later. (Not sure if your mortgage is backed by Fannie Mae? Find out here.)
  • History of refinancing. If you previously refinanced your Fannie Mae mortgage through the Home Affordable Refinance Program (HARP), you aren’t eligible for HIRO. HARP was a Fannie Mae program similar to HIRO that has expired.
  • Loan-to-value ratio. If you’re refinancing the mortgage on your primary, single-family residence, you need to have less than 3% equity in your home. Another way of saying this is that your LTV ratio should be above 97%. The minimum LTV ratio will differ if you’re refinancing a second home, investment property, or multi-family home.
  • Seasoning period. At least 15 months must have passed since you either closed on your original mortgage or last refinanced.
  • Current on payments. You should have no 30-day delinquencies in the last six months. You can’t have more than one 30-day delinquency in the last 12 months or any delinquencies longer than 30 days.
  • Financial benefit. Refinancing must help you out financially for you to be approved. This could come in the form of a lower interest rate, lower monthly payments, or a shorter term. You can also switch from an adjustable rate to a fixed rate, which makes monthly budgeting easier for some people.

Should you apply for the HIRO program?

Pros of the HIRO program

  • Loan-to-value ratio. Most lenders require you to owe 80% or less of your home value to refinance, but the HIRO program lets you refinance with a much higher LTV ratio. There is no maximum ratio if you refinance into a fixed-rate mortgage. With an adjustable-rate mortgage, your ratio can be as high as 105%.
  • Save money. You must benefit financially from refinancing to qualify for this program. You could get a lower rate and/or monthly payments, get a shorter term, or refinance from an adjustable rate to a fixed rate.

Cons of the HIRO program

  • Closing costs. Just like with your original mortgage, you’ll need to pay closing costs when you close on your new mortgage. (This is the case with all refinances, not just HIRO.) Closing costs typically come to thousands of dollars, so make sure you can afford this upfront expense before you refinance.
  • Only available to Fannie Mae customers. Your mortgage must already be backed by Fannie Mae to go through the HIRO program. Otherwise, you don’t qualify. If your mortgage is backed by Freddie Mac, look into the FMERR program.

If you have a Fannie Mae-backed mortgage and have very little equity in your home (or are underwater on your mortgage), the HIRO program could be a good fit.

Laura Grace Tarpley is the associate editor of banking and mortgages at Personal Finance Insider, covering mortgages, refinancing, bank accounts, and bank reviews. She is also a Certified Educator in Personal Finance (CEPF). Over her four years of covering personal finance, she has written extensively about ways to save, invest, and navigate loans.

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