Originating & Underwriting

HomeStyle Renovation

On September 16, Fannie Mae launched a new education course called HomeStyle® Mortgages Unlocked. Take this course to learn more about how to originate, sell, and service both HomeStyle Renovation and HomeStyle Energy mortgages. Click here to get started.

 

Make “move-in ready” a reality for homebuyers

HomeStyle® Renovation unlocks financing options that help borrowers tap into a home’s true potential. Lenders can take advantage of resources that help borrower’s meet their needs as they consider purchasing fixer-uppers.

Whether your borrowers are just starting their homebuying search or ready to refinance and remodel, HomeStyle Renovation can pave a new way to home.

Covering projects and possibilities

saw and hammer

Repairs and Restoration

roofing, plumbing, painting

house outline

Accessory Dwelling Units

mudrooms, in-law suites, basement apartments

shovel

Landscaping

trees, retaining wall, patios

Benefits that deliver

Flexible

Borrowers can renovate any part of their home, including bathrooms, roofs, or adding accessory dwelling units like an in-law suite. No minimum dollar amount. Choose any contractor or subcontractor (pending lender review).

Affordable

HomeStyle Renovation interest rates may be lower than HELOCs, personal loans, and other more costly financing options. Plus, the home improvements borrowers invest in today help support the ability to age in place or expand future living space.

Simple

We know an easy and upfront loan delivery is crucial for lenders and borrowers. With standard pricing and conventional execution, loan funds can be delivered even before the project starts (subject to lender approval).

Details that add clarity and confidence

For a more detailed look into the HomeStyle Renovation loan process, check out our HomeStyle Mortgages Unlocked education course.

HomeStyle Renovation Loan Process

Phase 1 – Preparation

  • Borrower selects a contractor* and submits renovation plans to the lender.
  • Lender reviews borrower’s documents to ensure the project meets all requirements.
  • Lender orders an as-completed appraisal to assess maximum mortgage amount, check loan-to-value ratio, and calculate the loan amount.

Phase 2 – Renovation

  • Lender prepares to close by checking whether improvement funds need to be escrowed or require a contingency reserve.
  • Lender and borrower execute required documents at loan closing, including a Renovation Loan Agreement.
  • Funds are placed into custodial account, and lender delivers the loan to Fannie Mae®.
  • Lender services the loan, managing all project draws and overseeing the renovation process.

Phase 3 – Completion

  • Lender receives the final draw request, initiating the last phase of lender oversight.
  • Lender orders a final inspection, appraiser signs completion certificate, and lender provides it to Fannie Mae.
  • Before funds are issued, lender must ensure a clear title and make sure no additional liens remain on the property.
  • After project is completed, lenders can submit required documents to remove recourse.
  • Lender closes the renovation escrow account and uses any remaining funds towards reducing the unpaid principal balance (UPB).

*Contractor subject to lender review. For DIY requirements, visit the Fannie Mae Selling Guide.

One of the best parts about being an approved HomeStyle Renovation lender is the ability to deliver a loan to Fannie Mae before a project is complete.*

Get the lender approval process started by completing Form 1000A or contact your Fannie Mae customer account team to learn more.

*Delivering loans post-completion does not require special approval.

  • Maximum LTV up to 97%.
  • For purchase transactions, total loan amount can be up to 75% of either the purchase price plus renovation costs or the “as-completed” appraised value, whichever is lower.
  • For manufactured housing, eligible renovation funds cap at the lesser of $50,000 or 50% of the “as-completed” appraised value.
  • To qualify for purchase loans with an LTV greater than 95%, homeownership education will be required for at least one borrower when all occupying borrowers are first-time homebuyers. Fannie Mae HomeView® can be used to satisfy this requirement. Learn more about homeownership education.

See Fannie Mae’s Product Eligibility Matrix for specific product details based on the loan transaction

Combine HomeStyle Renovation with other Fannie Mae offerings to give borrowers more benefits:

HomeStyle Energy: If your borrower is planning on ENERGY STAR®-certified improvements or resiliency, water, or other energy upgrades, then the HomeStyle Renovation loan may be bundled with HomeStyle Energy to qualify for a $500 LLPA credit.

HomeReady®: Our low down payment mortgage has lower rates and cancellable mortgage insurance (restrictions apply). When combined with HomeStyle Renovation, HomeReady can make financing renovation projects even more affordable.

Note: HomeStyle Renovation loans that finance energy efficiency improvements or renovations in rural areas may qualify for an LLPA waiver for Duty to Serve. See Duty to Serve eligibility requirements for details.

HomeStyle Mortgages Unlocked Course
HomeStyle Loan Lender Playbook
HomeStyle Renovation Eligibility Matrix
HomeStyle Renovation Fact Sheet
Maximum Mortgage Worksheet
Special Lender Approval Form

 

Form 1035 HomeStyle Renovation “Maximum Mortgage” worksheet 

Form 1202 Contractor Profile Report

Form 1204 HomeStyle Renovation consumer tips

Form 3730 Renovation Contract

Form 3731 Renovation Loan Agreement

Form 3739 Lien Waiver

Riders and Addenda
A list of model riders and addenda to the security instrument. Model documents relevant to HomeStyle Renovation include Forms 3732 and 3733.

Answers to frequently asked questions about HomeStyle Renovation

No, Fannie Mae does not require the property to be habitable at the time of closing. If the home is not habitable, the borrower may finance up to six months of principal, interest, tax, and insurance payments to cover these costs while the home is uninhabitable.

If your borrower is planning on ENERGY STAR®- certified improvements, resiliency, water, or other energy upgrades, then the HomeStyle Renovation loan may be bundled with HomeStyle Energy. When combining these loans, lenders will qualify for a $500 LLPA credit. If ENERGY STAR-certified improvements are financed with HomeStyle Renovation, then the loan must be delivered with Special Feature Codes 773 and SFC 375 to receive the $500 LLPA Credit.

No, the borrower may complete renovations themselves on one-unit properties. This option is not available for manufactured homes. “Do It Yourself” renovations may not represent more than 10% of the “as completed” value of the property. The lender must review and approve the renovations in advance and must inspect the completion of all items that cost more than $5,000.

A borrower may request reimbursement for their payments for the cost of materials or for the cost of properly documented contract labor, but not for the cost of their sweat equity (labor).

I have seen the incredible benefits that these loans offer to both buyers and homeowners. HomeStyle Renovation loans make it possible for buyers to purchase fixer-uppers and for homeowners to refinance and make necessary improvements to their aging homes.

Brad Smith, SVP, Director of Renovation Lending, CrossCountry Mortgage, LLC

Did you know HomeStyle also covers energy-related home improvements?

HomeStyle Energy provides financing for wide variety of sustainable updates—perfect for borrowers looking to conserve energy, make their home more resilient, or add comfort and peace of mind.

Explore HomeStyle Energy

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