Fannie Mae’s HomeStyle Renovation Program is exactly what it sounds like: a mortgage option that allows you to finance both the purchase (or refinance) of a home and the cost of renovations, repairs, or upgrades—all in one loan.
Whether you’re buying a new place that needs work, fixing up your current home, investing in a second home, or upgrading an investment property, this program could be a great fit.
How the HomeStyle Renovation Program Works
Purpose: The HomeStyle Renovation loan helps you purchase or refinance a property and roll in the cost of renovations.
Eligible Properties: Primary residences, second homes, and even investment properties can qualify.
Renovation Limits: The total cost of renovations can’t exceed 75% of the home’s future appraised value (the “after-completion” value). This ensures it’s a true renovation loan, not a full construction loan.
In other words, they don’t want someone buying a property, tearing it down to the studs, and rebuilding from scratch. It’s meant for renovating and improving an existing structure, not starting over.
Loan-to-Value (LTV) Guidelines
Primary Residence: Up to 95% LTV (5% down).
Second Home: Up to 90% LTV. (However, consider putting 20% down to avoid expensive mortgage insurance and higher rates.)
Investment Property: Up to 85% LTV, though 80% or lower is often more cost-effective.
How Much Can You Renovate?
Your maximum renovation amount depends on your down payment and the home’s after-completion value:
- 5% Down (Primary Residence): Up to roughly $100,000 in renovations.
- 10% Down: Up to roughly $200,000 in renovations.
- 20% Down (or More): Renovations up to 75% of the after-completion value, which can be a substantial amount depending on the property.
Credit Score & Approval
There’s no hard-and-fast minimum credit score here—your loan will go through Fannie Mae’s automated underwriting system. If the system approves, great! If not, even a good credit score may not qualify, depending on factors like income, debt-to-income ratio, and overall financial strength.
The Renovation Process & Contractor Requirements
Under $50,000 in Renovations: The process is simpler. You’ll still need a qualified contractor, but the documentation and approvals are less intensive.
Over $50,000 in Renovations: Expect a more thorough verification process. Lenders will want to see contractor references, work history, and possibly additional inspections.
Rates & Costs
Interest Rates: Renovation loans generally come with slightly higher rates—often about a quarter to a half a percentage point higher than standard mortgages. This reflects the added complexity and risk involved.
Additional Costs: Expect extra fees for draws, inspections, and contractor vetting. These can vary by state, project size, and contractor requirements. A rough estimate might be an additional $1,500 to $2,500 beyond your normal closing costs.
Other Options to Consider
Fannie Mae’s HomeStyle is a standout choice, but it’s not the only renovation program out there. Freddie Mac offers the CHOICERenovation loan, and FHA has the 203(k) program. Each has its own pros, cons, and guidelines. We’ll cover these options separately if you’d like a deeper dive.
Ready to Get Started?
Fannie Mae’s HomeStyle Renovation Program is flexible, robust, and can be a perfect fit if you’re looking to transform a home without juggling multiple loans. If you have questions or want to see if this option makes sense for you, the Mortgage Mark team is here to help.
When you think mortgage, think Mark. Reach out anytime—we’re happy to walk you through the details and help you find the best loan for your situation.
Mark Pfeiffer
Branch Manager
Loan Officer, NMLS # 729612
(972) 829-8639
MortgageMark@MortgageMark.com