HomeStyle Renovation

What Is a HomeStyle Renovation Mortgage?

A HomeStyle Renovation Mortgage is a unique loan option that lets you buy a home and finance renovations using a single mortgage. It’s backed by Fannie Mae and designed to help homeowners create functional, modern, and personalized living spaces without the need for multiple loans.

This mortgage wraps your purchase price (or refinance balance) together with renovation costs, making it one of the most flexible financing tools available today.

How the HomeStyle Renovation Mortgage Works

This mortgage combines your renovation budget with your primary mortgage. Here’s how:

1. You choose a home or refinance your current one.

2. You work with a licensed contractor to outline the renovation plan.

3. An appraiser estimates the home’s after-improved value.

4. Your lender approves the loan with renovation funds built in.

5. Renovation funds are held in an escrow account and released in phases during construction.

Who Qualifies for This Mortgage?

You may qualify if you:

• Have a stable income

• Meet Fannie Mae’s credit score minimums (usually 620+)

• Select eligible property types (single-family, multi-family, condos, and some investment properties)

• Work with a licensed contractor

• Choose renovations that increase the home’s value or safety

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Advantages of Choosing a HomeStyle Renovation Mortgage

This loan stands out for its flexibility and affordability.

Combine Purchase + Renovation Into One Loan

Instead of juggling multiple loans or high-interest credit cards, the HomeStyle Renovation Mortgage simplifies everything into a single, predictable monthly payment.

Flexible Renovation Options

Unlike other renovation loans, this mortgage lets you upgrade nearly anything—structural or cosmetic. Whether you want new flooring, a modern kitchen, or an additional bedroom, you’re covered.

Higher Loan Limits & Low Down Payments

With competitive down payments (as low as 3% for primary residences) and the ability to borrow based on your home’s projected improved value, financing becomes more accessible and powerful.

APPLY NOW!

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Comparing the HomeStyle Renovation Mortgage to Other Renovation Loans

Before choosing, it helps to understand how this loan differs from other financing options.

HomeStyle vs. FHA 203(k)

HomeStyle vs. HELOC or Home Equity Loan

• HELOCs rely heavily on existing equity.

• HomeStyle lets you borrow based on future value—not current equity.

• Home equity loans may have higher interest rates than first mortgages.

The HomeStyle Renovation Mortgage is ideal if you don’t yet have equity or want a single consolidated payment.

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Step-by-Step Guide to Applying for a HomeStyle Renovation Mortgage

Budgeting & Getting Preapproved

Start by knowing how much you can borrow. A preapproval helps determine your loan amount based on income, credit, and financial history.

Choosing a Licensed Contractor

Fannie Mae requires contractors to be licensed and insured. Your lender must review the contractor’s credentials before approving the renovation package.

Submitting Renovation Plans for Approval

You’ll work with your contractor to create:

• A written proposal

• Cost estimates

• A timeline

• Design sketches if needed

Your lender will send these to an appraiser to determine the home’s future value.

APPLY NOW!

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What Renovations Qualify Under the HomeStyle Renovation Mortgage?

One of the biggest benefits is that almost all improvements are permitted.

Structural Upgrades

• Roof replacements

• Foundation repair

• Room additions

• Decks and porches

Interior Improvements

• Full kitchen remodels

• Bathroom upgrades

• Flooring

• Plumbing and electrical updates

Energy-Efficient Enhancements

• Solar panels

• High-efficiency HVAC systems

• New insulation

• Energy-saving windows and doors

Luxury Upgrades Allowed

Unlike other programs, HomeStyle allows:

• Swimming pools

• Outdoor kitchens

• High-end appliances

• Spa rooms

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Costs, Fees & Loan Terms Explained

Down Payment Requirements

Depending on the property:

• As low as 3% for owner-occupied homes

• 15–20% for investment properties

Appraisals & Draw Schedules

The lender will order:

• An appraisal based on after-renovation value

• Inspections during construction

• Draw releases for contractor payments

This keeps your project on track and ensures funds are used properly.

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Common Mistakes to Avoid When Using a HomeStyle Renovation Mortgage

• Underestimating renovation costs

• Choosing an inexperienced contractor

• Starting work before lender approval

• Forgetting to include a contingency reserve

• Ignoring building permits

• Choosing upgrades that don’t increase value

Avoiding these mistakes saves money and reduces delays.

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Frequently Asked Questions (FAQs)

Q. What is a HomeStyle Renovation Mortgage?

A. It’s a single mortgage that covers both the purchase (or refinance) and renovation of a home.

Q. Can I use this mortgage on an investment property?

A. Yes—HomeStyle allows upgrades on primary, secondary, and investment properties.

Q. What credit score is required?

A. Most lenders require a minimum score of 620, though higher scores help secure better rates.

Q. Are luxury renovations allowed?

A. Yes—HomeStyle permits amenities like pools and outdoor living areas.

Q. How long do renovations take?

A. Projects must typically be completed within 12 months of closing.

Q. Where can I find official HomeStyle Renovation guidelines?

A. You can visit the official Fannie Mae website for detailed program requirements.

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Conclusion

A HomeStyle Renovation Mortgage is one of the most flexible and cost-effective ways to transform your home in today’s market. By combining your purchase or refinance with renovation costs, you unlock the power to design a space that truly fits your lifestyle—without juggling multiple loans. With thoughtful planning, the right contractor, and clear renovation goals, you can turn your dream home into a reality.

Written by: Chris Luis, owner/loan officer for Mortgage-World.com

• Chris Luis covers mortgages and the housing market. He has over 20 years experience in the mortgage industry.