Fannie Mae HomeStyle Renovation Loan

Fannie Mae HomeStyle Renovation is great for MN Investment properties, MN first time homebuyers, and MN homeowners looking to remodel.

With the growing number of MN foreclosures and MN fixer uppers on the market, MN rehab loans have become more popular than ever. The Federal Housing Administration (FHA) offers home buyers and homeowners the FHA 203K (steamline) rehab loan. To learn more, click here.

In addition to the FHA rehab loan, the Fannie Mae HomeStyle Renovation Mortgage also lets you buy a MN home and repair/improve it with just one loan. You can also use it as a refinancing tool to refinance an existing mortgage and borrow funds for the improvement/repairs to your MN. Both loan programs provide a great opportunity for home buyers to buy a more affordable house that needs work and improve the home up to their standards.  The HomeStyle Renovation loan is rising in popularity due to a few main differences from the FHA 203k.

Key differences:  HomeStyle Renovation Loan vs. FHA 203k

  • HomeStyle has NO upfront Fee vs 1.75% of loan amount with FHA 203k
  • HomeStyle does NOT need MI if LTV is 80% or below vs. FHA ALWAYS has MI
  • MI factor is LOWER with HomeStyle (.67%) vs FHA 203k (1.25%)
  • For Refinances:  HomeStyle is ONLY Future Value appraisal vs. FHA 203k taking into account for current value & future value — if you are underwater, this is HUGE!

The Fannie Mae HomeStyle Renovation mortgage borrowers can be individual home buyers, homeowners, and investors.

Fannie Mae HomeStyle Renovation


–One to four unit Owner Occupied units

–One unit second homes or investment properties are permitted.

–Approved (Fannie Mae-warrantable) Condominium, Cooperative, and PUD units are eligible.

–Manufactured housing is not permitted.



LTV greater than 80%: 700 minimum credit score.

LTV less than or equal to 80%: 680 minimum credit score.


Salaried borrowers: 720 minimum credit score

Self-employed/commissioned borrowers: 740 minimum credit score


Loan amounts must be within the following limits:

Minimum: $50,000.

Maximum: Maximum conforming loan limit.



Loan amount is based on LTV derived from the lesser of: 1) “as-is” purchase price, renovation costs,

contingency costs (if financed), eligible soft costs and interest reserve or 2) the “as-completed” value of the



LTV is based off appraised value (subject to). Loan amount not to exceed 100% of costs (total of liens on property plus costs of improvements and closing costs). Cash out it not allowed.


15 or 30 years..

Fannie Mae HomeStyle Renovation

Other things to know:

All loans must have an appraisal obtained from the Lender’s approved appraisal management companies.

A contingency reserve is required for a 2-unit, second home or 1-unit investment property. The contingency reserve is equal to ten percent (10%) of the cost of the renovations. Contingency reserves

must be deposited in the renovation escrow account, to cover unforeseen problems.

Borrower will make a full PITI payment (based on full mortgage amount) both during and after


Soft costs are limited to three percent (3%) of loan amount or $5,000.

PUDs and condominiums: renovation project must be permissible under the bylaws of the owners

association (or have written approval from owners association). In addition, condominium renovation is limited to the interior of the unit (includes installation of attic fire wall).

Second homes/investment property: Borrower is limited to four additional financed properties.

Construction is to be completed within six months from closing date.

Homebuyer education is not required.

Soft costs such as architectural services, engineering and permit fees may be financed.


Divide the new loan amount by the after-improved value amount. If the resulting LTV is over 80.0%, mortgage insurance is required.