How to Use a Fannie Mae HomeStyle Loan for Renovations?

Renovating your home can boost comfort, value, and equity, but even a kitchen upgrade or roof replacement doesn’t come cheap. Many homeowners hit a wall trying to finance repairs or upgrades. Maybe you don’t have enough cash on hand. Maybe a personal loan doesn’t stretch far enough. Here’s where the Fannie Mae HomeStyle Loan shines.

With one streamlined mortgage, you can fund your home's purchase or refinance and roll renovation costs into the loan. That means fewer closings, one monthly payment, and more flexibility to design your space.

Let’s break down exactly how it works, when it makes sense, and how to apply for it.

Key Takeaways:

• HomeStyle Loans allow renovation and purchase/refinance in a single mortgage.
• Ideal for primary residences, second homes, and investment properties.
• Loan funds can cover structural and cosmetic improvements.
• Borrowers must meet standard underwriting guidelines.
• Requires detailed renovation plans and licensed contractors.

What Is a HomeStyle Renovation Loan?

The Fannie Mae HomeStyle Loan is a conventional mortgage that lets you finance home renovations with the loan for either a purchase or a refinance. It's available for:

• Primary residences
• Second homes
• Investment properties

The best part? You can use the funds for both structural and cosmetic improvements. Think:

• Kitchens and baths
• New roof or HVAC
• Energy-efficient upgrades
• Landscaping
  ADUs (Accessory Dwelling Units)

Loan Features:

• Loan-to-value (LTV) limits up to 97% for primary residences
• A minimum credit score is usually around 620
• Renovation funds disbursed via escrow
• Work must be completed by licensed contractors

Heads up: You must submit contractor bids and project plans with your application.

Why Use HomeStyle Over Other Renovation Loans?

HomeStyle stands out because it's flexible and affordable compared to other options like:

203(k) Loans (FHA)

• Only for primary residences
• Strict guidelines and mortgage insurance

Personal Loans or HELOCs

• Often higher interest rates
  Not tied to home value/appreciation

With HomeStyle, the improvements increase your home’s value, which can offset the cost over time.

Who Is a Good Fit for a HomeStyle Loan?

This program is ideal if you:

• Want to buy a fixer-upper
• Plan to stay in your home long-term
• Need funds for major upgrades or code compliance
• Have decent credit and stable income

Pro Tip: If you're eyeing an investment property, HomeStyle might be one of the only renovation loans available to you.

How to Apply: Step-by-Step

1. Talk to a mortgage expert: A licensed mortgage loan originator can help assess your eligibility.
2. Get contractor bids: You'll need itemized estimates.
3. Order an appraisal: The appraiser will assess the "after renovation value."
4. Submit your loan application: This includes income verification, credit check, etc.
5. Close and fund: Renovation funds go into escrow and are released as work progresses.

Make sure your lender is familiar with HomeStyle loans specifically—not all are.

Real Examples: How Homeowners Use HomeStyle Loans?

• A couple bought a 1980s home, added solar panels, and a new kitchen.
• An investor refinanced a duplex, added new units via garage conversion.
• A retiree updated plumbing, accessibility, and insulation for aging in place.

In each case, the improvements boosted property value and quality of life.

Conclusion: Ready to Renovate Smarter?

The Fannie Mae HomeStyle Loan offers a powerful, flexible way to transform your home—without juggling multiple loans or wiping out your savings. It’s a smart move whether you're buying or refinancing.

If you want a commission-free buying experience, check out realpha — a platform designed to simplify homeownership while saving you thousands.

Want help comparing rates and exploring your options? Visit Be My Neighbor (NMLS #1743790), where licensed mortgage experts guide you through your renovation journey.

FAQs

What is the minimum down payment for a HomeStyle loan?

For primary residences, you can put down as little as 3% if you meet eligibility criteria.

Can I do the renovation work myself?

No. HomeStyle loans require licensed contractors to perform the work.

How are renovation funds disbursed?

They're placed in an escrow account and paid out in stages as the work progresses.

Is mortgage insurance required?

Yes, if your down payment is under 20%, you’ll need private mortgage insurance (PMI).

Can I use HomeStyle for luxury upgrades?

Yes, but they must be permanently affixed and add value to the property.

Disclosures:

• NMLS #1743790 – Be My Neighbor is a licensed mortgage company.
• This blog is informational and not a loan offer or commitment.
• All financing is subject to credit approval and program guidelines.
• HomeStyle® is a registered trademark of Fannie Mae.
• Equal Housing Lender.
• Rates and guidelines are subject to change.
• Always consult a licensed mortgage advisor for personalized recommendations.