Home Affordable Modification Program (HAMP) Eligibility Requirements

The home affordable modification program (HAMP) is part of the federal government's response to the housing crisis that occurred in 2007 and thereafter. The program aims to assist qualified homeowners in modifying their mortgages to a more affordable interest rate, keeping them away from possible foreclosure. The program's official title is "Making Home Affordable;" it is run through the Department of Housing and Urban Development (HUD). The key thing to remember is this program is not for everyone. Only a limited number of people will meet the specific requirements set forth.

Primary Residence

The first essential requirement is you must be using the home as your primary residence. You cannot qualify for an HUD refinance on a vacation home or second home. If you are facing foreclosure on a second home, you should speak with your lender directly about your options. Those may include short sale options or direct modification with the lender.

Maximum Mortgage Amount

You must not owe more than $729,750 on your current mortgage. This is a mortgage maximum, similar to the maximum "jumbo loan" amount set by the HUD each year. Mortgage maximums are determined for every area of the country based on various factors. If a borrower decides to exceed the maximum, he or she will not be qualified for any HUD guarantees or support. In the case of a modification, the maximum amount only pertains to the remaining sum, not to the initial mortgage amount.

Qualifying Event

The qualifying event is perhaps the most important regulations set forth in the HAMP program. If you simply took a bad loan, you will not be eligible for the assistant. You have to be able to show that you were paying your debts prior to a certain, definitive event that rendered you unable to pay. There are three primary events:

  • Job loss that significantly reduced your income and persisted for a long period of time
  • Unforeseen expenses associated with a specific event, such as medical bills or a divorce
  • High interest rates on a variable rate mortgage that reset, rendering your payments too high 

Date of Mortgage Origination

To qualify for HAMP assistance, you must have taken your loan prior to January 1, 2009. The program is specifically looking to help victims of the housing crisis. Those victims include individuals who were subject to predatory lending and those who lost their jobs as a result of the economic collapse. Individuals who took loans after these events occurred are not the intended recipients of the assistance. 

Relative Cost of Mortgage

The cost of your mortgage must exceed 31 percent of your income. This part is critical. If your mortgage payments are burdening you, but they are less than 31 percent of your monthly income, you are likely making poor financial decisions. On the whole, an individual should easily be able to afford a mortgage payment under this level. Consider other areas where you may cut back in order to afford your payments. If you have to sell additional assets, the tough decision to do so can help you avoid default on your mortgage.