7 Things to Know About the HomeStyle® Renovation Loan

TV shows like Fixer Upper and Rehab Addict can inspire homebuyers to purchase a home in need of renovations or rehab and make it into their own, but they leave out a very technical part of the process: financing the renovations. Fannie Mae’s HomeStyle® Renovation Mortgage allows purchase and refinance borrowers to include financing for home improvements into the transaction of an existing home. Here’s what you need to know about this renovation loan.


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What are the benefits?

  • As little as 3 percent down payment for owner-occupied homes; 15 percent down for investment properties and second homes.
  • As-complete appraisal allows no or low equity homeowners to obtain a renovation refinance.
  • Updates may include luxury items, such as in-ground pools, tennis courts, hot tubs and basketball courts.
  • No minimum amount in repairs required.
  • No upfront mortgage insurance.
  • Available in fixed-rate mortgages or ARMS, fully amortizing with terms between 15 and 30 years.

What kind of home is eligible for HomeStyle®?

HomeStyle® is available for financing primary and secondary homes, as well as investment properties.

Financing a primary home with HomeStyle® allows for single family homes, condos, manufacture homes, PUDs, and up to a 4-unit multi-family home.

Eligible propertires for second or investment homes include single family, approved condominiums, and PUDs. Manufactured homes are eligible second homes, but not investment financing.

Financing of single family homes, condo units, co-ops and PUDs are eligible when financing secondary homes or investment properties. Manufactured homes are not eligible for HomeStyle® financing.

How much do I have to put down?

The chart below explains the equity and minimum down payment requirements. With a HomeStyle® Renovation, equity is based on the value of the home after the renovations are complete.

Owner Occupied

Purchase or Refinance



Two-Unit Multiple Family


3-4 Unit Multiple Family

Fixed Rate: 5% Down/Equity

ARM: 10% Down/Equity

Fixed Rate: 15% Down/Equity

ARM: 25% Down/Equity

Fixed Rate: 25% Down/Equity

ARM: 35% Down/Equity

Secondary Home

Purchase or Refinance


One Unit

Fixed Rate: 10% Down/Equity

ARM: 20% Down/Equity

Investment Purchase One Unit Fixed Rate: 10% Down/Equity

ARM: 20% Down/Equity

Investment Refinance One Unit Fixed Rate: 10% Down/Equity

ARM: 20% Down/Equity

What types of renovations are allowed with HomeStyle®?

Repairs or renovations made under a HomeStyle® loan must add value to the home and be permanently affixed. As mentioned above, HomeStyle® does allow “luxury items”.

How much money is allowed for renovation costs?

Renovation costs with HomeStyle® are limited to 50 percent of the “as completed” appraised value. Renovation costs may include items such as:

  • Labor
  • Materials
  • Architect fees
  • Building permits and licenses
  • Inspection
  • Title update
  • Appraisals
  • Renovation plan review costs

Can I do any of the work myself or are all renovations to be made by a contractor?

You will need to hire a licensed contractor with the approval of your lender. The contractor must be qualified, experience and abide by all state licensing and insurance standards.

HomeStyle® does allow borrowers to take advantage of sweat equity (at their lender’s discretion) provided that:

  • The DIY financing does not exceed 10% of the as completed value.
  • The property is a one-unit owner-occupied home.
  • The reimbursement is limited to the cost of materials or the cost of properly documented contract labor (sweat equity can not be reimbursed).

Your lender needs to review and approve all DIY projects in advance and inspect any work costing over $5,000.

When will my rehab/renovation plans need to be completed?

Plans, drawings, specifications, etc. used for the purpose of your home’s renovation must be completed by a registered, licensed or certified professional, such as a general contractor, renovation consultant or architect.

Your plans are needed for your lender to establish necessary financing and help your appraiser determine as completed value prior to renovations.

For more information about rehab and construction loans available, download our free Rehab & Construction Guide.

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