What HomeStyle Renovation Covers
HomeStyle Renovation mortgages let you roll renovation costs into your home loan, whether you're buying a property or refinancing your current mortgage. The program covers repairs, remodeling, renovations, or energy improvements to the property.
Say you want to buy a $300,000 house that needs $50,000 in kitchen and bathroom updates. Instead of getting a separate construction loan or personal loan for the renovations, you can finance the entire $350,000 through one HomeStyle Renovation mortgage.
The program has no minimum dollar amount for renovations. You could use it for a $5,000 flooring project or a $100,000 addition. There are also no required improvements or restrictions on renovation types.
Improvements must be permanently attached to the property, with some exceptions for appliances installed as part of kitchen or utility room remodels. You can purchase appliances through the program only when they're part of a larger remodeling project that includes substantial changes to the rooms where the appliances will be placed.
What Renovations Qualify
HomeStyle Renovation covers most improvements you can imagine. Interior work like new kitchens, bathrooms, flooring, and electrical updates all qualify. Exterior improvements like roofing, siding, windows, and landscaping are eligible too.
The program can finance outdoor structures like accessory dwelling units, garages, recreation rooms, and swimming pools, as long as local zoning allows them and they meet building codes. For accessory dwelling units, additional requirements apply under B2-3-04: Special Property Eligibility Considerations.
You can use HomeStyle Renovation to complete final work on newly built homes that are at least 90% complete. This covers non-structural finishing touches the original builder couldn't complete, such as buyer-selected flooring, cabinets, kitchen appliances, fixtures, and trim.
The one thing you cannot do is complete tear-down and reconstruction of the entire dwelling. The existing structure must remain as the foundation for your improvements.
Timeline and Completion Requirements
All renovation work must be finished within 15 months of your loan closing date. This timeline is firm, and lenders monitor progress throughout the renovation period.
If your project runs longer than 15 months, your lender must contact Fannie Mae through Loan Quality Connect to explain the delay and explore solutions. Options might include a limited extension up to 18 months, reducing the scope of work, loan repurchase, or other remedies. Fannie Mae has sole discretion in determining which remedy applies.
During the renovation period, your lender cannot transfer servicing of your loan to another company. This ensures continuity in oversight and communication throughout your project.
How Lenders Handle These Loans
Lenders need special approval from Fannie Mae to deliver HomeStyle Renovation loans before the renovation work is complete. If they wait until all work is finished, no special approval is required.
Your lender is responsible for monitoring your renovation progress and ensuring all work meets requirements. They must exercise the same oversight responsibilities required by state laws and ensure clear title to your property is maintained throughout the process.
Many lenders use specialized vendors to manage the operational, escrow, and completion requirements for these loans. Even when using vendors, the lender remains responsible for adequate oversight to ensure all requirements are met.
If the lender's actions or failures affect Fannie Mae's ability to acquire clear title to your property, the lender may be required to repurchase the loan.
Required Documentation
Your lender must maintain comprehensive documentation supporting the renovation work in your loan file. This includes renovation plans and specifications, the renovation contract, renovation loan agreement, and certificate of completion when work is finished.
An "as completed" appraisal is required to document the property's value after renovations. Title insurance endorsements or updates ensure clear title throughout the process.
For the specialized legal documentation required for HomeStyle Renovation mortgages, lenders must follow the requirements in Subpart B8 of the Fannie Mae Selling Guide.
Delivery and Recourse Rules
Lenders can deliver your HomeStyle Renovation loan to Fannie Mae as soon as it closes, even before renovation work begins. However, loans delivered before completion carry recourse requirements.
Under recourse, if you default on the loan before work is complete and that default continues for at least 120 days, the lender may be required to repurchase the loan from Fannie Mae. This protects Fannie Mae from the additional risk of incomplete renovations.
The lender must use specific Special Feature Codes when delivering the loan, depending on whether renovation work is complete or ongoing.
Removing Recourse After Completion
Once your renovation is complete, your lender can request removal of the recourse obligation. However, certain payment history requirements apply.
Recourse will not be removed if your loan is delinquent when the lender requests removal. If you were 30 days late once during the renovation but are current when removal is requested, recourse may still be removed.
If you had multiple 30-day delinquencies or were ever 60-90 days late, the lender must wait until you've made 36 consecutive payments with no delinquencies before requesting recourse removal.
To request recourse removal, the lender must submit a complete Appraisal Update and/or Completion Report (Form 1004D) to Fannie Mae through Loan Quality Connect. The submission must include the Fannie Mae loan number and clear documentation, including photos of completed renovations.
Common Challenges and Considerations
The 15-month completion timeline can be challenging for larger projects. Plan your renovation carefully and build in buffer time for potential delays like permit issues, weather, or material shortages.
Lender oversight requirements mean you'll have less flexibility than with a traditional construction loan. Your lender or their vendor will monitor progress and may require inspections at various stages.
The recourse requirement creates additional risk for lenders, which may result in stricter qualification standards or higher interest rates compared to standard mortgages.
If you're buying a property that needs extensive work, ensure your purchase contract allows sufficient time for renovation planning and contractor selection before closing.
References
For the official guidelines, see B5-3.2-01: HomeStyle Renovation Mortgages in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
Fannie Mae and Freddie Mac update their rules several times a year. Get notified when changes affect your mortgage eligibility, required documents, or loan terms.
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Original Fannie Mae Guideline Text
B5-3.2-01, HomeStyle Renovation Mortgages (12/10/2025)
Removal of Recourse
Uniform Appraisal Dataset (UAD) 3.6 Policy
Overview
The HomeStyle Renovation mortgage enables a borrower to purchase a property or refinance an existing loan and include funds in the loan amount to cover the costs of repairs, remodeling, renovations, or energy improvements to the property. The loan may be delivered to Fannie Mae prior to completion of the renovation, subject to limited recourse as described below.
Note: For loan casefiles underwritten through DU, DU will determine that the transaction is a HomeStyle Renovation loan if the Renovation indicator in Property and Loan Information (L1) is selected and there is an amount entered in Line B (L4) of the online loan application.
Allowable Improvements
There are no required improvements or restrictions on the types of renovations allowed, nor is there a minimum dollar amount for renovations.
Generally, improvements should be permanently affixed to the real property (either dwelling or land), with the exception of certain appliances installed with kitchen and utility room remodels. The borrower may use HomeStyle Renovation to purchase appliances as part of an overall remodeling project that includes substantial changes or upgrades to the rooms in which the appliances are placed.
HomeStyle Renovation may be used to complete the final work on a newly built home when the home is at least 90% complete. The remaining improvements must be related to completing non-structural items the original builder was unable to finish. Such work may include installation of buyer-selected items such as flooring, cabinets, kitchen appliances, fixtures, and trim.
HomeStyle Renovation may be used to construct various outdoor buildings and structures when allowed by local zoning regulations. These buildings or structures must be in compliance with any applicable building codes for the local area. Examples of acceptable structures include, but are not limited to, accessory units, garages, recreation rooms, and swimming pools. See Accessory Dwelling Units in B2-3-04, Special Property Eligibility Considerations for additional information about eligible ADUs.
HomeStyle Renovation may not be used for complete tear-down and reconstruction of the dwelling.
Lender Eligibility
HomeStyle Renovation mortgage loans have specific product requirements and guidelines for which lenders must ensure detailed compliance. Lenders must obtain special approval to deliver these types of loans to Fannie Mae prior to completion of the renovation work. See A2-1-01, Contractual Obligations for Sellers/Servicers for additional information. If a lender delivers HomeStyle Renovation loans to Fannie Mae after all renovation work is complete, no special approval is required.
Lender Responsibilities
Renovation work must be completed no later than 15 months from date the loan is closed. In the rare circumstance a renovation project exceeds 15 months, the lender must submit this information to Loan Quality Connect to describe the circumstances resulting in the delay and determine potential remedies. These options may include
a limited extension of the timeframe (not to exceed 18 months from the date the loan was closed),
curtailment of the work to be completed,
repurchase of the loan, or
other remedies applicable to the specific circumstance.
Fannie Mae has sole discretion in determining which remedy is acceptable when renovation timeframe exceeds 15 months.
Lenders may not transfer servicing on HomeStyle Renovation loans during the renovation period.
The lender is responsible for monitoring completion of the renovation work and must exercise all approval and oversight responsibilities that are customary and required to comply with specific state laws and to ensure that clear title to the property is maintained.
Lenders may use vendors to manage the operational, escrow, and completion requirements for HomeStyle Renovation loans; but when a vendor is used, the lender is responsible for adequate vendor oversight to ensure all requirements are met.
If any action the lender takes or fails to take in overseeing the renovation work affects Fannie Mae’s ability to acquire clear title to the property, the lender may be required to repurchase the loan.
The lender must maintain a copy of all of the documentation that supports the renovation work, including plans and specifications, “as completed” appraisal, renovation contract, renovation loan agreement, certificate of completion, title insurance endorsements or updates, and any other related documentation in the loan file. For more information about the specialized legal documentation Fannie Mae requires for a HomeStyle Renovation mortgage, see Subpart B8, Closing: Legal Documents.
Delivery and Recourse Requirements
A lender may deliver a HomeStyle Renovation loan as soon as it is closed; the renovation does not need to have been completed when the loan is delivered as long as the lender delivers that loan with recourse. If the borrower defaults under the terms of the loan before the work is completed, and that default continues for at least 120 days, the lender may be required to repurchase the loan. One of the following SFCs is required when the loan is delivered.
If the HomeStyle Renovation mortgage is delivered...
Then...
And the lender must deliver...
Removal of Recourse
For loans delivered with recourse, the lender may request the recourse obligation be removed when the renovation is complete. The following criteria will be applicable to the removal of recourse:
Recourse will not be removed if the loan is delinquent when the lender requests removal.
If the borrower was 1 x 30 days delinquent at any point during the renovation work, but is current when removal is requested, the recourse may be removed.
If the borrower had more than one 30 day delinquency or was ever 60 - 90 days delinquent, the lender may request recourse removal after the borrower has made 36 payments with no delinquencies.
To request removal of recourse, the lender must submit a complete Appraisal Update and/or Completion Report ( Form 1004D) to Loan Quality Connect. Submissions must meet the following requirements:
The Fannie Mae loan number(s) must be identified in the request and attached documents must have the loan numbers in the title.
Documents must be clear and complete. For example, it is a best practice to include photos of completed renovations with all submissions.
See B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certification, for additional information.
HomeStyle Renovation mortgages are eligible for enforcement relief of underwriting and eligibility representations and warranties as described in A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility. To be eligible for relief, the renovation must be complete and recourse removed.
Uniform Appraisal Dataset (UAD) 3.6 Policy
Lenders using UAD 3.6 must follow the requirements in the UAD 3.6 Policy Supplement.
