Fannie Mae

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HomeStyle® Renovation and Energy Loans

You have powerful products to help more borrowers.

With HomeStyle loans, you can provide funds for a wide range of projects, from simple energy upgrades to whole-house renovations. Plus, as an approved HomeStyle Renovation lender, loans can be delivered to Fannie Mae prior to completion of the renovation work.

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HomeStyle Loan Options

Bundle HomeStyle loans for increased savings

Combine HomeStyle Renovation with HomeStyle Energy to get a $500 LLPA credit when borrowers are making energy upgrades along with other improvements to the home.

HomeStyle Renovation has been somewhat of a secret weapon for us. — Landy Garcia, AnnieMac


Phase 1

Review Plans and Prep Loan

  • Borrower works with contractor to submit renovation plans to lender.
  • Appraiser reviews plans and determines “as-completed” value.
  • Lender uses Maximum Mortgage Worksheet (form 1035) to determine mortgage amount.

Phase 2

Manage Funds Through Renovation

  • Lender sells loan to Fannie Mae.*
  • Lender places funds in a custodial account.
  • Contractor begins work and submits requests for funds.
  • Lender manages draws based on inspections.

Phase 3

Finalize Loan Completion

  • Lender confirms improvements are complete by obtaining a Certification of Completion (Form 1004D) from the appraiser. An appraisal update or "re-appraisal" is not required.
  • Title company updates title policy (completion materials).
  • Lender finalizes and submits completion materials and certificate of occupancy to Fannie Mae.
  • Fannie Mae removes the recourse if loan is sold prior to completion of construction.

*Must be an approved HomeStyle Renovation Lender to sell loan prior to project completion.


Phase 1

Loan Prep

  • Borrower obtains eligible energy report (if applicable) identifying effective improvements to be made to the home.
  • Borrower works with contractor to develop plans and specifications for improvement work recommended.
  • Appraiser reviews plans and specifications and determines “as completed” value after improvements are completed.

Phase 2

Manage Funds Through Improvements

  • Loan is closed and sold to Fannie Mae.
  • Funds for improvement are placed in escrow account.
  • Contractor begins work and requests funding. Work must be completed within 180 days from Mortgage Note date.

Phase 3

Finalize Loan Completion

  • Contractor completes work.
  • Lender confirms work is completed and there is a clear title, and hazard and MI coverages are appropriate.
  • Lender provides funding for completed work. Any funds remaining in escrow account must be used to pay down UPB.
  • Lender obtains completion certificate (Form 1004D) and keeps in loan file.

Note: Eligible improvements do not have to be complete when mortgage delivered to Fannie Mae. Lender does NOT have recourse for HomeStyle Energy loans.

Did You Know?

HomeStyle Renovation allows for general Fannie Mae underwriting and eligibility standards.

HomeStyle Renovation supports the following property types:

  • 1- to 4-unit principal residence
  • 1-unit second home
  • 1-unit investment property
  • New or existing properties
  • Manufactured homes
  • Condos, co-ops and PUDS

With HomeStyle Renovation funds are available for 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.

Contractors and subcontractors must be licensed, unless contractor licensing is not applicable under state or local law for the specific trade or type of renovations being performed.

If the borrower is paying off a PACE loan, documentation must be provided showing that the funds are solely being used to pay off the PACE loan obtained for improvements on the subject property. A pay-off statement from the PACE program is sufficient to document the outstanding balance to be paid off. If the payoff is for other secured or unsecured debt that was used to finance energy-related improvements, the borrower must provide copies of invoices or receipts documenting the cost of the related expenses.

Energy-related improvements may include improvements that reduce a home’s energy or water usage or that improve its efficiency, provide renewable sources of energy for the home, or that create greater home resiliency against natural disasters. Energy-related improvements may also include repairs made to a home damaged by a natural disaster.

Additional details on these types of improvements can be found in Selling Guide section B5-3.3-01.

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