Renovation Loan

Renovation Mortgage Loan – Fannie Mae HomeStyle

Not every home is perfect. If you come across a home during your search that may need a little TLC, that doesn’t mean that it should be passed by. Speak to Texas Premier Mortgage about the Fannie Mae HomeStyle Renovation mortgage, which allows you to combine the cost of the home with renovation or remodeling into one loan. We’ll make the process as simple as possible.

A renovation loan will combine the improved value of both the cost of the repairs and the home purchase (or refinance) all into one combined loan. This process allows contractors to do the work after closing. At closing, all funds for your renovation are escrowed into an account. And after your finished renovating, any remaining funds will be used to pay down the principal balance of the loan.

Take advantage of all this loan has to o­ffer:

  •  Finance your home and renovation costs with one low down payment
  • Fixed-rate, ARM, and high-balance loans available
  •  Escrow your renovation funds in an interest-bearing account
  •  Finance your soft costs, such as architectural and engineering services, permit fees, etc.
  •  Refinance options also available

Features and benefits

  • Combine with a Purchase or Refinance with renovation costs
  • Renovation costs cannot exceed the lesser of 50% of estimated completed value of home or purchase price plus repairs
  • Conventional loan limits up to $484,350
  • Max LTV up to 95%
  • Owner occupied
  • 2nd homes and investment properties

renovation loan

Eligible property types

  • 1 to 4-unit site-built homes
  • Planned unit developments (Fannie Mae-warrantable)
  • Condominium (Fannie Mae-warrantable)


The Fannie Mae HomeStyle Renovation program allows borrowers to combine the purchase or refinance of a home with the costs to renovate or extensively remodel the property. At closing all funds for renovation will be escrowed in an interest earning account. After all renovation work is complete, any remaining funds in the renovation escrow account will be used to pay down the principal balance of the mortgage. Soft costs such as architectural services, engineering and permit fees may be financed. Full builder third-party contracts only


Loan amount is based on LTV derived from the lesser of:

  • The as-is purchase price, renovation costs, contingency costs (if financed), eligible soft costs, interest reserve
  • The as-completed value of the home RATE/TERM REFINANCE LTV is subject to appraised value. Loan amount not to exceed 100% of costs (total of liens on property, plus costs of improvements and closing costs).

Existing subordinate financing may be included in the new loan amount if the funds were used to acquire the property. Cash-out is not eligible.


Renovation-related costs that may be considered as part of the total renovation costs include:

  • Property inspection fees;
  • Costs and fees for the title update;
  • Architectural and engineering fees;
  • Independent consultant fees;
  • Costs for required permits;
  • Other documented charges, such as fees for energy reports, appraisals, review of renovation plans, and fees charged for processing renovation draws; and
  • Up to six months payments (piti) if a principal residence property cannot be occupied during renovation.

The costs of the renovations will be based on the plans and specifications for the work and on the contractor’s bids for all of the work requested by the borrower. The renovation costs may include a contingency reserve, renovation-related costs, and an escrow for mortgage payments that come due during the renovation period, if the borrower is unable to occupy the property during the renovation.

The maximum cost for renovations are described below:

Transaction Type The cost of renovations must not exceed Purchase 75% of the lesser of

  • The sum of the purchase price of the property plus renovation costs, or
  • The “as completed” appraised value of the property. Refinance 75% of the “as completed” appraised value of the property.


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.

HomeStyle Renovation may not be used for complete tear-down and reconstruction of the dwelling.

For more information about renovation loans, their benefits and loan options and how it may apply to you, please contact us direct at 281-627-4222 or submit the quick quote form on this page.