HomeStyle® Renovation Mortgage: Finance Repairs and Improvements with One Loan
HomeStyle® Renovation is a mortgage product that lets home buyers and renovating households fix up a home and include the renovation costs in their main mortgage loan. HomeStyle® Renovation is a conventional mortgage offered via Fannie Mae.
What Is The HomeStyle® Renovation Mortgage?
The HomeStyle® Renovation mortgage is a conventional mortgage program that lets homeowners add their home renovation costs directly to their mortgage loan. It can be used for almost any permanent improvement to a home, including cosmetic updates, kitchen remodels, and structural additions.
HomeStyle® Renovation can be used to finance labor, materials, permits, architect fees, and a contingency reserve on any eligible 1-4 unit home including single-family residences, condos, and townhomes; for any occupancy type including primary, second home, or rental; and, is available as a fixed-rate or adjustable mortgage.
The main rule with HomeStyle® Renovation is that renovations must be completed within 15 months of closing.
HomeStyle® Renovation - Key Facts at a Glance
| Requirement | HomeStyle® Renovation Mortgage Details |
|---|---|
| Minimum Down Payment | 3% |
| Eligible Properties | 1–4 unit homes, condos, co-ops, PUDs, and manufactured homes |
| Renovation Limit | Up to 75% of the home's value after renovations |
| Completion Timeline | Renovations must finish within 15 months |
| Mortgage Insurance | Required when the loan is over 80% LTV |
Key Definitions
- As-Completed Value
- The appraised value of the home after planned renovations are finished. Determines maximum loan amount.
- Contingency Reserve
- A reserve fund set aside to cover unexpected renovation expenses.
- Do-It-Yourself (DIY) Work
- Renovations performed by the borrower. Limited to 10% of the as-completed value. Only permitted for one-unit owner-occupied homes.
- Accessory Dwelling Unit (ADU)
- A separate living unit on the property, including in-law suites and basement apartments. Eligible under HomeStyle® Renovation guidelines.
- HomeStyle® Energy
- A companion program offering incentives for energy-efficient upgrades. Combining with HomeStyle® Renovation may provide a $500 LLPA credit.
Who Is the HomeStyle® Renovation Program For?
Fannie Mae's HomeStyle® Renovation loan aimed at people who want to buy and fix up a home without a construction loan, or want to refinance their renovations directly into a mortgage. Because it’s a conventional mortgage, HomeStyle® Renovation is more widely available than one-off construction loans from a local bank.
| Who Uses This Program | Typical Reasons for Use |
|---|---|
| Home buyers who want to renovate | Finance the home and renovations with one loan |
| Homeowners planning upgrades | Add renovation costs to your refinance |
| Buyers of fixer-uppers | Make repairs and updates with one mortgage |
| DIY enthusiasts | Do some work yourself (up to 10% of project value) |
| Energy-conscious buyers | Get a $500 credit with HomeStyle® Energy improvements |
HomeStyle® Renovation Loan Benefits
HomeStyle® Renovation rolls a home buyer's renovation costs into their upcoming mortgage, offering financial flexibility and (often) much lower rates than a personal loan or credit card. And because the program is flexible, it has options for almost every home renovation project.
| Benefit | How It Helps |
|---|---|
| One Loan, One Closing | Combines purchase/refinance and renovation into a single mortgage. |
| Broad Renovation Eligibility | Covers almost any permanent improvement, including structural and cosmetic work. |
| ADU & Manufactured Home Ready | Supports financing for accessory units and certain manufactured homes. |
| Energy Upgrade Incentives | $500 LLPA credit when bundled with HomeStyle® Energy. |
| Lower Cost Than Alternatives | Rates often lower than personal loans or HELOCs, plus PMI can be cancelled. |
| DIY Work Allowed | Borrowers can complete some of the work themselves. |
HomeStyle® Renovation Loan Requirements for 2025
- Down payment: 3% minimum for one-unit primary homes with fixed rates.
- Property types: 1–4 unit primary, 1-unit second homes, 1-unit investment, condos, co-ops, PUDs.
- Renovation limit: Up to 75% of as-completed value; manufactured homes capped at $50,000 or 50%.
- Completion: Finish all work within 15 months of closing.
- Contractors/DIY: Lender must review contractors; DIY limited to 10% of as-completed value.
- Reserves: Up to 6 months PITI if home is uninhabitable during work.
HomeStyle® Renovation vs Other Renovation Loans
The HomeStyle® Renovation is a mortgage that lets home buyers purchase a home and finance their renovation costs with one loan. The FHA has a similar construction loan program called the FHA 203(k), and Freddie Mac offers the CHOICERenovation® program.
All three programs are suitable for purchasing a fixer-upper and financing home improvements, however, their rules are different.
The Fannie Mae renovation loan follows Fannie Mae mortgage guidelines. The FHA renovation loan follows FHA mortgage guidelines. Freddie Mac's CHOICERenovation® follows Freddie Mac guidelines. Down payment rules, credit score requirements, and renovation limits vary.
Compare Features: HomeStyle® Renovation vs CHOICERenovation® vs FHA 203(k)
| Feature | HomeStyle® Renovation | CHOICERenovation® | FHA 203(k) |
|---|---|---|---|
| Minimum Down Payment | 3% | 3% | 3.5% |
| Credit Score Minimum | 620 | 620 | 580 + |
| Renovation Limit | Up to 75% of as-completed value | 75% of finished value | Up to 110% of after-improved value |
| DIY Work | Allowed, limited | Allowed, limited | Not allowed |
| PMI / MIP | PMI, cancellable at 20% equity | PMI, cancellable at 20% equity | MIP, often for life of the loan |
| Eligible Properties | 1–4 unit, condos, co-ops, manufactured homes | 1–4 unit, condos, manufactured | 1–4 unit, condos |
| Occupancy | Primary, second, investment | Primary, second, investment | Primary only |
| Energy Incentives | $500 LLPA credit with HomeStyle® Energy | None | None |
Comparing HomeStyle® Renovation and HELOCs
The HomeStyle® Renovation loan isn't a direct competitor with products like the home equity line of credit (HELOC) or home equity loan (HELOAN), but the programs draw from a similar customer set. The main difference between HomeStyle® Renovation and HELOCs and HELOANs is that HomeStyle® Renovation lets homeowners tap into equity they haven't built yet.
| Feature | HomeStyle® Renovation | HELOC / Home Equity Loan |
|---|---|---|
| When Funds Are Available | At purchase or refinance | After you own the home and have equity |
| Interest Rate | Conventional fixed or adjustable rates | Variable or fixed market rates |
| Mortgage Insurance | PMI if LTV over 80%, can be canceled | Not required |
| Loan Structure | Single loan, single closing | Second loan or line of credit |
| Renovation Limit | Up to 75% of as-completed value | Limited by available home equity |
What To Do If...
I want to finance energy-efficient improvements
Bundle HomeStyle® Renovation with HomeStyle® Energy to qualify for a $500 LLPA credit. Eligible improvements include ENERGY STAR® appliances, solar panels, radon remediation.
I want to do the renovations myself
HomeStyle® Renovation allows for DIY work so long as your home is a one-unit property and you live there. Costs may not exceed 10% of the home's as-completed value, and only material or contract labor costs can be financed. Sweat equity cannot be reimbursed.
The home will be uninhabitable during renovations
You may finance up to six months of PITI into the loan as a payment reserve, provided the appraised value supports it.
HomeStyle® Renovation: Common Limiting Beliefs
"I need a construction loan to buy and renovate a home."
HomeStyle® Renovation combines both into one conventional mortgage, making it easier and more affordable than separate loans.
"Only contractors can do renovation work."
DIY work is allowed for one-unit owner-occupied homes, letting you save money by doing some work yourself.
"Renovation loans have sky-high interest rates."
HomeStyle® Renovation uses standard conventional mortgage rates, often lower than personal loans or credit cards.
"I can't finance energy improvements with renovations."
Combining with HomeStyle® Energy gives you a $500 credit and better financing for energy-efficient upgrades.
"Renovation loans are only for major structural work."
HomeStyle® Renovation covers everything from cosmetic updates to major additions and ADUs.
"I need perfect credit for a renovation loan."
HomeStyle® Renovation follows standard conventional credit guidelines, not stricter construction loan requirements.
"Renovation loans take forever to close."
HomeStyle® Renovation closes like a standard mortgage, typically in 30-45 days.
"I can't use gift funds for renovation costs."
Gift funds are allowed for both the home purchase and renovation portions of your HomeStyle® Renovation loan.
Frequently Asked Questions
What is the maximum renovation amount for a HomeStyle® Renovation mortgage?
Borrowers can finance up to 75% of the as-completed appraised value for most homes. For manufactured housing, the limit is the lesser of $50,000 or 50% of the as-completed value.
Can borrowers do the renovation work themselves?
Yes, "Do-It-Yourself" work is permitted, but only on one-unit owner-occupied homes (not manufactured housing). DIY costs are capped at 10% of the as-completed value, and inspections are required for work items over $5,000.
How long do I have to complete renovations?
All renovations must be completed within 15 months of loan closing.
Can HomeStyle® Renovation be combined with HomeStyle® Energy?
Yes. If renovations include eligible energy-efficient improvements (such as ENERGY STAR® products), the loan may qualify as a HomeStyle® Energy mortgage with a $500 loan-level price adjustment (LLPA) credit.
Can HomeStyle® Renovation be used for tear-downs or rebuilding a home?
No. Tear downs that remove the dwelling to the foundation are not eligible. However, major additions and multi-room remodels are allowed.
How is HomeStyle® Renovation different from FHA 203(k)?
HomeStyle® Renovation is a conventional loan with cancellable PMI and broader renovation flexibility, while FHA 203(k) requires government-backed mortgage insurance and limits certain project types. See comparison below.
