What Are the Qualifications for a Loan Modification?

by Don Rafner ; Updated July 27, 2017

If you're hoping to earn a mortgage modification through the federal government's Home Affordable Modification Program, you'll have to meet certain requirements regarding everything from the type of loan you want to modify to the date on which you took out your mortgage loan. You must meet all the requirements of the program; if you miss even one, your mortgage lender won't be able to lower your loan amount through the federal program.

Your Loan

To qualify for a home loan modification through the government's Home Affordable Modification Program -- a program in which the federal government provides financial bonuses to lenders to encourage them to reduce the monthly mortgage bills of homeowners struggling to pay back their home loans -- you must first be seeking a modification of a home loan for your primary residence. This means that you can't modify home loans through this program for second or vacation residences.

Home Loan Size

You also must owe $729,750 or less on your principal mortgage loan to qualify for a loan modification through the government's modification assistance program. If your home loan balance is higher than this figure, though, you still might have hope. Just because your lender can't modify your loan through the government program doesn't mean it can't find a way to lower your monthly mortgage payments on its own, without the financial incentives from the government.

Timing

The government's loan modification program is open only to homeowners who took out their mortgage loans on or before Jan. 1, 2009. Again, if you took out your mortgage loan after this date, you'll have to convince your mortgage lender to modify your loan without the promise of government financial incentives as a reward.

Struggling

The government also requires that you be struggling to make your mortgage payments to qualify for a federally assisted loan modification. This is to prevent homeowners from seeking modifications only because they'd like lower monthly mortgage payments. The government states that your home loan payment each month must equal 31 percent or more of your gross monthly income.

About the Author

Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.