The U.S. Government’s Home Affordability Refinance Program (HARP) was a lifeline for American homeowners who found themselves in a tight spot, possessing little or no home equity following the Great Recession. HARP allowed these homeowners to refinance their mortgages at more favorable interest rates.
The program officially launched on April 1, 2009, and ended on December 31, 2018.
HARP was the government’s proactive response to the widespread mortgage distress that resulted from the Great Recession. Although the program concluded in 2018, its legacy lives on through several other federal mortgage refinancing initiatives — including programs administered by Fannie Mae and Freddie Mac — that provided similar benefits to underwater homeowners.
HARP Replacements
A handful of programs emerged after HARP, including Freddie Mac’s Enhanced Relief Refinance Mortgage® and Fannie Mae’s High LTV Refinance Option (HIRO) mortgage program.
Like HARP itself, these programs are no longer active. Fannie Mae and Freddie Mac put both programs on hold in 2021 due to low application volume.
Homeowners who are underwater and seeking a refinance should contact their servicer or another lender to determine what options are available. Those with an FHA or VA loan may also want to explore the FHA Streamline Refinance or VA Interest Rate Reduction Refinance Loan (IRRRL) — both of which are designed to make refinancing easier for existing government-backed loan holders, often with reduced documentation requirements. Note that individual lenders may apply their own credit score and eligibility requirements to these programs.
HARP History
The following provides historical information about HARP requirements. HARP is no longer an active program; as mentioned above, additional options may exist for underwater borrowers.
Who Qualified for HARP?
To qualify for HARP, homeowners had to have a mortgage backed by Fannie Mae or Freddie Mac. Much of the market at the time fell into this category, with the exception of those with FHA, VA, or jumbo loans.
Additional requirements included:
- The mortgage had not previously been refinanced through HARP.
- Borrowers had to be current on their mortgage payments — no more than one late payment over the past year and no late payments in the last six months.
- Fannie Mae or Freddie Mac must have purchased the mortgage before May 31, 2009.
- The current loan-to-value (LTV) ratio was greater than 80%.
Was HARP Restricted to Underwater Mortgages?
HARP was not strictly limited to underwater mortgages. The program allowed refinancing for mortgages with an LTV greater than 80% (meaning less than 20% equity), as well as truly underwater mortgages where the borrower owed more than the property was worth. Many of the loans refinanced under HARP involved borrowers who had some equity — just not enough to qualify for a conventional refinance.
125 Percent Cap Lifted
The biggest change in HARP 2.0 came in October 2011, when HARP lifted the limit on how far underwater a mortgage could be to qualify. Previously, there was a 125% loan-to-value cap — meaning the balance owed could be no more than 25% greater than the home’s value. Under the updated rules, it no longer mattered how much the home’s value had declined. Borrowers could still qualify to refinance.
Automatic Appraisals
Updated program rules allowed lenders to use automated systems to estimate home value rather than requiring a full appraisal. This offered several benefits: it eliminated the cost of a traditional appraisal (often several hundred dollars), sped up the process, and made it easier to qualify — particularly once the LTV cap was lifted and a precise home value estimate was less critical. In some situations, lenders still required a full appraisal.
Not Required to Refinance with the Same Lender
Under HARP, borrowers were not required to refinance with their current mortgage servicer. However, many larger banks only participated in HARP 2.0 refinances for their existing customers — so in practice, many borrowers started by contacting their current servicer.
Lenders May Have Had Additional Rules
Similar to today’s mortgage market, lenders under HARP could apply their own overlays on top of the program’s base guidelines. The requirements described above reflect the basic HARP 2.0 rules set by Fannie Mae and Freddie Mac — individual lenders could impose stricter standards.
For example, while HARP had no minimum credit score requirement, many lenders required a score of at least 620 before approving a HARP refinance. Some lenders also maintained the 125% LTV cap internally, even though Fannie and Freddie had removed it at the program level.
This concept of lender overlays is still common in today’s refinance market. If you’re exploring a refinance now, the credit score and eligibility requirements you encounter will reflect both program guidelines and your lender’s specific standards.
Why Only Fannie and Freddie Mortgages?
HARP was limited to Fannie Mae and Freddie Mac loans because both entities entered government conservatorship during the financial crisis — giving the government authority to direct how they handled mortgage refinancing. Since HARP operated through Fannie and Freddie, it couldn’t be used to refinance loans backed by strictly private lenders.
The FHA, VA, and USDA — all government programs — have their own separate refinance programs for underwater and low-equity borrowers with loans guaranteed by those agencies.
Borrowers Using HARP: A Real-World Example
Consider a couple who purchased their home in 2006 for $200,000, putting $20,000 down and securing a $180,000 mortgage at 6% interest. Their monthly payments were manageable, and they were happy homeowners — until the Great Recession hit in 2008.
Their home’s value dropped to $130,000. Despite staying current on payments, they were now underwater — owing more than the home was worth. When their bank began offering rates as low as 4%, refinancing would have meaningfully reduced their monthly payment and total interest costs. But the bank required them to cover the $50,000 gap between the home’s value and their outstanding balance — something they couldn’t afford.
HARP solved that problem. The program let them refinance to the lower 4% rate without needing to make up the difference in equity — saving them significantly on their monthly payment and potentially tens of thousands of dollars over the life of the loan.
While HARP is no longer available, today’s refinance market still offers options for homeowners looking to lower their rate or access equity. See if you qualify for a lower rate at Refi.com or start your application today.
