If your mortgage balance is close to your home’s value, a standard refinance can feel impossible. Most lenders want to see 20% equity, and mortgage insurance can wipe out the savings. The Fannie Mae High LTV Refinance Option was created to solve exactly that problem. It let borrowers with little or no equity refinance into a better loan—sometimes without new mortgage insurance. The program has since been retired and replaced by RefiNow, but the mechanics are still worth understanding. If you’re shopping for a high-LTV refinance with less than 20% equity, the lessons from Fannie’s old program show up everywhere.
What the Fannie Mae High LTV Refinance Option Actually Was
Fannie Mae rolled out the High LTV Refinance Option in 2017. It was designed as a successor to the Home Affordable Refinance Program, or HARP. HARP helped homeowners who were underwater after the housing crash, but it only covered loans owned by Fannie Mae or Freddie Mac before June 1, 2009. Millions of borrowers who took out loans after that date had no equivalent relief. The High LTV Refinance Option filled that gap for Fannie Mae loans.
At its core, it was a rate-and-term refinance for existing Fannie Mae borrowers with high loan-to-value ratios. It allowed LTVs up to 97% of the home’s appraised value. You could not take cash out. The goal was to lower your payment, reduce your interest rate, or shorten your loan term—not to tap equity.
One of the most attractive features was mortgage insurance. With a standard conventional loan, an LTV above 80% usually triggers PMI. The High LTV Refinance Option did not require new mortgage insurance in most cases, even at 95% or 97% LTV. That alone could save hundreds of dollars a month for a borrower who was previously paying MI.
Who Qualified for a Fannie Mae High LTV Refinance
Your Existing Loan Had to Be Owned by Fannie Mae
This was not a first-time buyer program or a general refinance. You needed an existing mortgage that Fannie Mae already owned or securitized. You can check that through Fannie Mae’s loan lookup tool. If your loan was owned by Freddie Mac, you’d look at the Freddie Mac Enhanced Relief Refinance instead. If your loan was FHA, VA, or USDA, different rules applied.
LTV Up to 97% and No Cash Out
The maximum LTV was generally 97% for fixed-rate loans. For adjustable-rate mortgages, the cap was lower, often 95%. The property had to be a primary residence. Second homes and investment properties were not eligible. If you own a rental and want to refinance, an investment property refinance follows a different playbook.
Condominiums could qualify, but the condo project had to meet Fannie Mae’s eligibility rules. That means the HOA’s budget, insurance, and owner-occupancy ratios all matter. A condo mortgage refinance can be derailed by the building’s paperwork even when your personal finances are solid.
Borrower Benefit and Payment History
Fannie Mae required the new loan to provide a tangible benefit. You had to meet at least one of these tests:
- Reduce your monthly principal and interest payment by at least $50.
- Lower your interest rate by at least 0.5 percentage points.
- Reduce your remaining loan term, such as moving from a 30-year to a 20-year mortgage.
Your payment history also mattered. Borrowers generally needed a clean record for the past 12 months, with no 30-day late payments. A recent bankruptcy or foreclosure could disqualify you, though waiting periods applied. Fannie Mae did not set a minimum credit score for the High LTV Refinance Option, but individual lenders often added their own overlays. That meant a 580 score might work at one bank and get rejected at another.
How the Process Worked, Step by Step
The application flow looked a lot like a standard refinance, with a few extra checkpoints.
- Confirm ownership. Use Fannie Mae’s lookup tool or ask your current servicer.
- Check your LTV. Divide your unpaid principal balance by the home’s appraised value. If it’s above 80% and up to 97%, you were in the target zone.
- Get quotes from multiple lenders. Not every bank advertised the High LTV option, even if they sold Fannie Mae loans.
- Document income and assets. W-2s, pay stubs, bank statements, and tax returns for self-employed borrowers.
- Appraisal or waiver. Some loans qualified for an appraisal waiver, but high-LTV loans often required a full appraisal.
- Underwriting and closing. Expect title work, a new mortgage, and closing costs that could be rolled into the new loan if LTV allowed.
The closing costs are where a lot of borrowers got tripped up. A lower rate means nothing if you pay thousands in fees and then sell the home three years later. Run a break-even calculation: divide total closing costs by your monthly savings. If the result is 36 months and you plan to stay for five years, it’s probably worth it. If you’ll move in two years, think harder. Our guide to a conventional refinance walks through how to compare offers and avoid junk fees.
Where the Savings Came From
The math on a high-LTV refinance is straightforward. Suppose you owe $280,000 on a home worth $300,000. Your LTV is 93%. On a standard refinance, you might pay $180 a month in PMI. The High LTV Refinance Option could eliminate that PMI. If you also dropped your rate from 5.25% to 4.25%, your principal and interest payment would fall by another $170 or so. That’s $350 a month in combined savings—$4,200 a year.
Not every borrower got both. Some had a low rate already and only wanted to remove mortgage insurance. Others had a high rate but no MI because they put 20% down and later saw values fall. The program’s flexibility was the point: it met borrowers where they were, as long as the new loan made their situation better.
Fannie Mae High LTV Refinance vs. Freddie Mac’s Version
Fannie Mae and Freddie Mac are different companies, and each ran its own high-LTV program. Freddie Mac’s version was called the Enhanced Relief Refinance, or FMERR. It launched around the same time and had similar goals: LTVs up to 97%, no cash out, no new mortgage insurance, and a borrower benefit requirement. The main difference was which entity owned your loan.
If you had a Fannie Mae loan, you used Fannie’s program. If you had a Freddie Mac loan, you used Freddie’s. Confusingly, some lenders offered both but only marketed one. That’s why checking your loan’s owner was step one. It still is today, even though both programs have evolved.
Why the Program Ended and What Replaced It
Fannie Mae retired the High LTV Refinance Option in 2021 and replaced it with RefiNow. The new program was designed for low- and moderate-income borrowers, with income limits set at 100% of the area median income. RefiNow keeps some of the best features: LTV up to 97%, no mortgage insurance requirement, and reduced closing costs. It also adds a $500 lender credit in many cases.
The trade-off is the income cap. If you earn more than the limit for your area, RefiNow may not be available. That leaves you with a few paths:
- A standard conventional refinance if you have at least 20% equity or can pay for mortgage insurance.
- An FHA streamline refinance if your current loan is FHA.
- A VA IRRRL if you have a VA loan.
- A USDA streamline if you have a USDA loan.
Freddie Mac’s replacement is called RefiPossible, with similar income limits and benefits. The lesson is that high-LTV refinance help still exists, but it’s more targeted than it was in the HARP era.
If You Need a High-LTV Refinance Today
Start by finding out who owns your loan. Fannie Mae and Freddie Mac both have online lookups. If you’re eligible for RefiNow or RefiPossible, compare at least three lenders that participate. Ask specifically about the income limit, the appraisal requirement, and whether the $500 credit applies to your loan. If you’re not eligible, don’t assume you’re stuck. A conventional lender may still approve a refinance at 90% or 95% LTV with mortgage insurance. The monthly savings might be smaller, but it can still make sense if you plan to stay long enough to break even.
If your goal is to fund a renovation, a rate-and-term refinance won’t help because it doesn’t provide cash. A home improvement refinance or a cash-out refinance is the better tool, though it will push your LTV higher and may trigger mortgage insurance. Keep the purpose of the loan separate from the rate. Mixing them often leads to a bigger loan than you need.
Finally, pay attention to your servicer’s mail and email. Fannie Mae and Freddie Mac sometimes require servicers to reach out to borrowers who look like good candidates for a high-LTV refinance. Those offers aren’t always the best deal, but they’re a starting point. Use them to shop around, not to sign on the first dotted line.