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Making Home Affordable An official program of the Departments of the Treasury & Housing and Urban Development


 FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)

If you're not behind on your mortgage payments but owe more than your home is worth, FHA Short Refinance may be an option that your mortgage servicer will consider. FHA Short Refinance is designed to help homeowners refinance into more affordable, more stable FHA-insured mortgage. If your current lender agrees to participate in this refinance, they will be required to reduce the amount you owe on your first mortgage to no more than 97.75 percent of your home's current value.

+ Eligibility

You may be eligible for FHA Short Refinance if you meet the following criteria:

  • Your mortgage is not owned or guaranteed by FHA, VA or USDA.
  • You owe more than your home is worth.
  • You are current on your mortgage payments.
  • You occupy the house as your primary residence.
  • You are eligible for the new loan under standard FHA underwriting requirements.
  • Your total debt does not exceed 50 percent of your monthly gross income.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

*Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you are eligible for FHA Short Refinance and FHA2LP.


+ Program Availability
  • Participation of mortgage servicers is voluntary.
  • Contact your mortgage servicer and ask whether they participate in FHA Short Refinance.
+ For More Information

With questions about FHA Short Refinance, contact the FHA National Servicing Center​ at (877) 622-8525.

If you have additional questions about getting mortgage help, contact one of our housing experts at 888-995-HOPE (4673). These HUD-approved housing counselors will help you understand your options, design a plan to suit your individual situation, and prepare your application. Research shows that homeowners who work with housing experts like these are more successful and have better long-term outcomes. There is no cost to you for this valuable, around-the-clock service. Help is available in more than 170 languages.


    Last Updated: 3/4/2015 4:15 PM

    Help is a Phone Call Away

    888-995-HOPE (4673)
    Hearing impaired: 877-304-9709 TTY

    As you enter a process that can sometimes be overwhelming, it would be in your best interest to engage a housing expert to help you along the way. Let a HUD-approved housing counselor help you understand your options, prepare your application, and work with your mortgage company.

    Hear it from Homeowners

    Curtis and Darlene, Chicago IL

    Curtis and Darlene of Chicago, IL

    Curtis and Darlene had lived in their home for 35 years when Curtis lost his job. That’s when MHA helped them cut their mortgage payments in half.

    Beware of Scams


    Unfortunately, and far too often, homeowners looking for mortgage help end up victimized by scam artists. Know the warning signs to protect yourself, your money, and your home.

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