It’s a common misconception that HARP 2.0 can only be used for your primary residence. But it can also be used to refinance a rental property, otherwise known as an investment property, or a second home.
It’s true that HARP 2.0 is most commonly used on primary residences. Yet since its inception, 10.6% of HARP refinances have been used for investment properties and 3.2% were for second homes according to a recent FHFA report.
Did you purchase a home, then move out and convert it to a second home or rental? Luckily, there’s no rule saying the occupancy has to be the same as the original loan. Your new HARP 2.0 loan will be subject to guidelines based on the home’s current occupancy.
If you have a rental agreement on the investment property, you may be able to use it toward qualifying for the refinance. You’ll have to supply two years’ worth of tax returns proving income and expense on the property.
If you haven’t been renting it out for 2 years, you may be able to use rental income with 1 year of rental history.
For second homes, you must qualify with the entire payment, since second homes are not allowed to be rented according to lending rules. If it is rented, the home will be subject to rental property interest rates.
Have a 2-, 3-, or 4-unit rental property? It may also be eligible for HARP.
The guidelines to qualify for HARP 2.0 investment property and second home refinances is much the same as qualifying for an owner occupied HARP refinance.
The mortgage must have been opened prior to June 1, 2009, the loan has to be currently owned by Fannie Mae or Freddie Mac, and it must have a loan-to-value over 80%.
Not sure if you or your property will qualify? Contact a knowledgeable HARP 2.0 lender with all your questions.