Affordable refinancing programs: RefiNow™ and Refi Possible®

This article is for informational purposes only and is not intended to provide, and should not be relied on for, medical, legal, financial, or tax advice. You should consult with a qualified professional for advice specific to your situation. Consumers should independently verify that any services, products, or programs referenced meet their needs and comply with applicable requirements.

Traditionally, there have been few avenues for homeowners struggling with high debt and limited income to get approved for a refinance. RefiNow™ and Refi Possible^® programs are aimed at low- and middle-income homeowners as affordable programs to take advantage of refinance rates lower than those for their existing mortgage. ¹

Key takeaways:

• RefiNow™ and Refi Possible^® support affordability: These refinance programs from Fannie Mae and Freddie Mac are designed to help low- to middle‑income homeowners access more affordable refinance options.
• Flexible qualification requirements help more homeowners qualify: Borrowers may be eligible with higher debt‑to‑income ratios (up to 65%) and as little as 3% equity, making refinancing more accessible.
• Programs reduce costs and paperwork: Eligible homeowners may receive a $500 credit toward their appraisal and benefit from simplified income verification requirements.

What are RefiNow™ and Refi Possible^®?

RefiNow™ from Fannie Mae and Refi Possible^® from Freddie Mac are the same program offered under different names by the nation’s most prominent conventional mortgage backers.

These programs were originally mandated by the Federal Housing Finance Agency (FHFA), the regulator for the government-sponsored entities (GSEs). The goal is to make refinancing possible for low- to median-income homeowners struggling with debt to lower monthly mortgage costs and try to improve their financial picture.

Understanding government refinancing programs

As part of the government conservatorship that resulted from the 2008 housing crisis, the GSEs have an implied government guarantee. Because the GSEs are in conservatorship, they can offer programs that expand refinance access for eligible borrowers.

This isn’t the first time, either. From 2009 – 2018, the Home Affordable Refinance Program (HARP) opened up refinancing to those who lacked equity based on falling property values. While RefiNow™ and Refi Possible^® aren’t direct government loans, the backing allows for higher DTI limits and increased eligibility for clients.

RefiNow™ and Refi Possible^® benefits

For those who qualify, there are several benefits to both RefiNow™ and Refi Possible^®:

• Borrowers with higher debt-to-income ratios (DTI) can qualify. These loan products allow homeowners with higher DTIs to qualify. Even with a big car loan or other debt, you may still qualify to refinance at a lower rate due to looser DTI rules.
• You need minimal equity to refinance. You could refinance even if you’re early in the process of paying off your loan.
• You may qualify for an appraisal credit. If you end up needing an appraisal to place a value on your home, you can get a credit to pay for at least a portion of the cost.
• There’s less paperwork required from your end. You can verify your income with a pay stub and/or W-2. If you’re self-employed, you may just need 1 year of your personal tax returns and business tax returns. The Rocket Mortgage refinance calculator can come in handy here to help get your financial situation in order.

Checking eligibility for RefiNow™ or Refi Possible^®

The first requirement for these programs is that your mortgage investor must be Fannie Mae or Freddie Mac. You can determine whether your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following websites:

• Freddie Mac Loan Lookup Tool

• Fannie Mae Mortgage Lookup Tool

Refi Possible^® and RefiNow™ guidelines

Now that you know whether your loan is eligible for these programs, let’s run through some of the major qualifying factors.

Borrower eligibility

• To qualify for this loan option, borrowers must meet the following criteria:
• You have to make 100% or less of the area median income where you’re looking to buy.
• Your DTI must be 65% or less.
• While neither program requires a minimum credit score, lenders may set their own.

Both programs require no late mortgage payments in the last 6 months and no more than one in the last year. Refi Possible^® specifically requires that you have no payments that are 60 or more days late in the last year.

Loan requirements

When it comes to the loan terms themselves, here’s what you need to know:

• Fannie Mae or Freddie Mac must own your home loan.
• You need at least 3% existing equity in your home.
• You need to have been in your existing mortgage for at least a year.
• This refinance must lower your rate or change your term, with cash back limited to $250.

Property eligibility

Here are the basic property requirements you should be familiar with:

• You must be refinancing a one-unit primary residence.
• Co-ops are ineligible.
• If you’re refinancing a condo, there are reduced review requirements under this program.
• If an appraisal is necessary to verify your home value, you’ll receive a $500 credit toward the cost.

What types of refinance loans does Rocket Mortgage offer?

If Refi Possible^® and RefiNow™ aren’t right for you, there are other options you can look at. Rocket Mortgage can help you refinance several types of loans:

• Fixed-rate refinance loans: The interest rate remains the same for the life of the loan. In addition to rate-and-term refinances, you can take cash out by refinancing your primary mortgage with a fixed-rate loan.
• Adjustable-rate refinance loans: Also called adjustable-rate mortgages (ARMs), these are rates that adjust after an initial fixed-rate period at the beginning of the loan. Adjustments are based on an index added to a margin, subject to caps and floors.
• FHA refinance loans: Instead of being backed by Fannie Mae or Freddie Mac, these are guaranteed by the Federal Housing Administration. ² FHA loans are known for similarly low equity requirements and more flexible credit guidelines.
• VA refinance loans: VA loans are available for eligible service members, veterans, and surviving spouses. ³ In addition to flexible credit requirements, the main selling point here is that they typically don’t require equity, so you can potentially turn your full existing home value into cash.

The bottom line: RefiNow™ and Refi Possible^® might make your mortgage payments more affordable

RefiNow™ and Refi Possible® are programs from Fannie Mae and Freddie Mac enabling homeowners with low and moderate incomes to refinance for the purpose of lowering their rate and payment, even if their level of debt would disqualify them for other offerings.

To qualify, your existing loan must be backed by Fannie Mae or Freddie Mac. You also can’t make more than the median income in the area where you live. Finally, your DTI should be no higher than 65%. If this program isn’t right for you, there may be alternatives, including FHA or VA loans. You can see current refinance rates here.

Whether you’re interested in this or another refinancing path, you can apply online at Rocket Mortgage.

¹ Refinancing may increase finance charges over the life of the loan.

² Rocket Mortgage is not acting on behalf of FHA or HUD

³ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.