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Advice on Refinance For More Than 100% LTV

Advice on Refinance For More Than 100% LTV
Mark Cappel
UpdatedOct 31, 2007
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    2 min read
Key Takeaways:
  • Learn the basics of calculating an LTV.
  • Discover your options if you are underwater.
  • Look into FHA options.

How to Refinance if Your Mortgage Balance is Greater Than the Value of Your House

You face an uphill climb in finding a refinance loan if your mortgage balance is greater than the value of your home. Most lenders will not offer you a loan for more than 100% of the value of you property. (Editor’s Note: President Obama announced changes to the Home Affordable Refinance Program (HARP) that will help millions of underwater homeowners refinance at today’s low rates. If your loan is owned or insured by Fannie Mae or Freddie Mac, you can get a HARP mortgage, no matter how fall the value of your home has fallen. The program will go into effect in late 2011.)

Before we discuss your options, let us pause for a moment to define two terms some readers misunderstand. Mortgage lenders, like other professionals, use acronyms and jargon to express specific ideas. In the mortgage world, the relationship between the loan amount and the value of the property is known as the Loan to Value, or LTV. For example, if your loan is for $80,000 on a $100,000 home, your loan-to-value would be 80,000 divided by 100,000 or 80%. Mortgage experts would say, "The LTV on this property is 80%." Equity is another other way to express this idea. In this example, the homeowner has 20% equity in the home, or $20,000 of equity value.

Here is the bad news: Generally speaking, private lenders do not refinance when the LTV is greater than 80%. The good news: You may qualify for an FHA-backed refinance if your LTV is between 80 and 96.5%. If your LTV is above 100%, then you may qualify for an FHA Short Refinance. Refinancing when an LTV is greater than 100% is known as an underwater refinance. Government programs will allow homeowners to refinance a 120 percent mortgage.

Another alternative is the Home Affordable Refinance Program.

The only way to determine if you qualify for a refinance loan is to apply for a loan with several different lenders or brokers. makes it easy to compare mortgage offers and different loan types. Visit the refinance page and find a loan that meets your needs.

Not only will these mortgage professionals tell you whether you qualify, but if you do not qualify, they can tell you what aspects of your financial situation are causing you problems, and make suggestions about how to improve your chances of qualifying for a loan. If you would like to read more about mortgage refinance loans, I encourage you to visit the Home Refinance Resources page.


BBill, Jul, 2010
I surmise the essence of your question is, "Is there something better than HAMP or HARP available to me if I have a 100%+ loan-to-value on my residence?" If that is your question, my answer is no. See the links I just mentioned to learn more about both programs.
KKeith, Jun, 2010
What do you recommend? We are trying to move in Spring/Summer 2011, about 1 year from now. We have a 30-year fixed 1st (from Aug 04) at 6.375% with a balance of $265K and an interest only 2nd HELOC (from Apr 06) at 3.25% with a balance of $125K. Market research indicases our house would sell now for $379-389K, so we may be $10K underwater. We have very good credit (north of 700). If I refinance the 1st, my second lender will push rate to 5% to subbordinate. I qualify for VA-loans and Obama's Making Home Affordable Program. Any plans to help us save for our next home purchase next year? Would like for a lender to work with us for a refinance now and also be our lender a year from now on a larger home.
IIntegrity First Financial Grou, Jun, 2010
Great Post. Think everyone is really should be aware of everything before they attempt applying their own loan. There are also a variety of loans that is also competitive. Contact your mortgage company for more information.
CCorey, May, 2009
Being that your LTV is above 80% it will be difficult for you to get a good rate in the current housing market. If you can come up with additional downpayment, it could be possible.
DDF, May, 2009
Purchased home in 2005 for $615K w/ a 5yr ARM @ 5.75% interest only, w/ 20% down. Also have an ELOC maxed out at $60K. We have great credit (750+)but Housing market has increased LTV above 80%, and we're looking to refinance into a 30yr fixed. MHA only applies to FannieMae/FreddieMac...our loan is not...what are our options?
BBill, Mar, 2009
I am not sure about the LTV requirements, but the loan limit will increase up to $729K in some parts of CA. See here: The Obama Mortgage Relief Plan includes "Making Home Affordable" which is a program to allow lenders to let homeowners with good credit refinance their homes with LTV's up to 105%. Most lenders should be offering this by April 1st.
rrobert, Mar, 2009
I'm in CA wanting to refinance with $623k loan at 84% LTV and going up every month. I'm told that by April 2009 the LTV requirement (without PMI) for refinance is likely to increase from 80% now to 90-95% and possibly higher. Also, that super conforming loan amounts will increase from $625k (current) to over $700k. Is this true/possible?
BBill, Jan, 2009
100% LTV will be real difficult in this market. Suggest you wait till you accumulate some more equity.
mmarian yildiz, Jan, 2009
I have a first with BOFA $417,000 @6.75 interest only, 2nd at $100,000 @7.75 P&I. Appraisal is now at $517,00 since the prices dropped. We want to get a new loan at a fixed lower rate. Is this possible and if so how much would it cost?Thank you.P.S. excellent credit score
BBill, Jan, 2009
Seems like you are upside down on your loan. Refinancing is not going to be an option for you in this current market, quite simply because your LTV is going to be in excess of 120%. Even if a lender agreed to lend you the money, you would be paying more by way of interest than you are now, so it would not make sense, financially.