A complete guide to the Fannie Mae HomeStyle loans for renovations

A Fannie Mae HomeStyle renovation loan allows you to buy or refinance a home and the cost of repairs in a single mortgage. Here’s a closer look at how a HomeStyle loan works, what renovations are covered, and how the process unfolds, to help you determine whether this unique financing option is the right fit for you.

How does a Fannie Mae HomeStyle loan work?

A Fannie Mae HomeStyle renovation loan works by combining your primary purchase or refinance loan and your anticipated renovation expenses into one mortgage. This approach streamlines the borrowing process so that you have only one monthly payment.

During underwriting, your lender will order a home appraisal based on the property's after-repair value (ARV). The appraiser reviews your contractor's architectural blueprints and cost estimates to determine the home's fair market value once all renovations are complete. Basing your loan amount on this future value lets you borrow enough to buy or refinance the home and pay for upgrades.

However, there are important tradeoffs to keep in mind. To protect its investment, the lender will put the renovation funds in an escrow account and pay them out in stages known as draws.

Typically, a project will have up to five draws, meaning the lender pays your construction team as specific milestones are completed and inspected.

You also are required to work with a licensed and insured contractor.

What is the HomeStyle Renovation loan process?

Securing a renovation mortgage is slightly more complex than securing a standard purchase mortgage. Here is a breakdown of the three main stages.

Phase 1: Application contractor approval

First, you will apply for the mortgage and select a licensed contractor. Your contractor must provide an itemized bid detailing the scope of the work, materials, and labor costs. Your lender must approve your contractor to ensure they are qualified and insured to complete the project.

The lender then orders a home appraisal to determine the property's value. The lender considers the home’s loan-to-value (LTV) ratio, which is the loan amount compared to the home value. You can have a maximum LTV of up to 97%. The lender uses the “as-completed” appraisal to determine the after-repair value of the home, which is the maximum amount you’ll be able to borrow.

Phase 2: Renovations

Once your loan clears underwriting, you will sign your final paperwork and close on the house.

Compared with a standard mortgage process, which might take 30 to 45 days, preparing a renovation loan often adds a few extra weeks due to the additional documentation required.

After closing, your renovation funds are placed in an escrow account, and construction can begin. As your contractor completes specific phases of the project, an inspector will visit the property to verify the work. Once verified, the lender releases a draw from the escrow account directly to the contractor.

Phase 3: Completion

After the final draw request, the lender orders a final inspection, and the appraiser signs a completion certificate for submission to Fannie Mae.

Before the funds are released, the lender checks for a clear title to verify legal ownership of the property and ensure there are no existing liens.

Once construction is completed, the lender submits the required documents to remove recourse on the property. The lender then closes the escrow account and applies any remaining funds to reduce your principal balance.

How do you find a Fannie Mae HomeStyle loan?

You can only access a Fannie Mae HomeStyle renovation loan through an approved Fannie Mae lender. You can use Fannie Mae’s Find a Lender tool.

Take time to compare approved lenders. Working with an experienced Fannie Mae lender makes your renovation journey smoother, as they will be prepared to guide you and your contractor through the draw and inspection processes.

What types of properties are eligible?

Eligible properties include:

• 1- to 4-unit primary residences. This loan option works well for standard single-family homes. It also works for those looking to live in one unit while renting out the others to help pay the mortgage.
• 1-unit second homes. This is helpful if you want to buy and fix up a vacation home.
• 1-unit investment properties. This is ideal for real estate investors buying a single-family home to rent out for profit. It allows you to boost the home's value and rental potential.
• Condos, co-ops, and manufactured homes. These are eligible as long as the property meets Fannie Mae's standard guidelines. Make sure your planned renovations are approved by the homeowners association (HOA) before you begin.

For more questions about the types of real estate investments that qualify for a HomeStyle loan, check with your lender.

Down payment requirements

A down payment is the money you pay up front toward the purchase price of your property.

Fixed-rate conventional loans require a minimum down payment of 3%. However, you'll need a down payment of at least 20% to avoid paying for mortgage insurance.

HomeStyle renovation loan requirements are accommodating for primary residences, often allowing down payments as low as 3%.¹

However, if you are planning to renovate a second home or an investment property, you will need to prepare for a much higher down payment requirement to offset the lender's increased risk.

You can also borrow up to 75% of the home’s ARV.

Using a Fannie Mae HomeStyle loan: An example

Let’s say Sadie wants to purchase a fixer-upper that needs $100,000 in renovations. She selects a contractor and submits renovation plans to her lender, which checks to ensure the contractor is qualified. Her lender appraises the home and evaluates the maximum mortgage and loan amount, as well as Sadie's LTV.

Sadie’s lender approves her for a $300,000 HomeStyle loan for a single-family home that costs $200,000 and $100,000 in renovations.

Her lender oversees the renovation process and approves all draws on the account. Once the renovation is complete, the lender orders a final inspection and title inspection, the appraiser signs a completion certificate, and the lender provides the loan to Fannie Mae. Satisfied with her renovations, Sadie makes her monthly mortgage payments in accordance with her loan agreement.

What kinds of renovations does a Fannie Mae HomeStyle loan cover?

You can use HomeStyle loans for just about anything as long as repairs are completed within 12 months of the loan origination.

There is no minimum dollar amount you can borrow for renovations, which can include, but are not limited to:

• New flooring
• A second, smaller home on the property, such as an accessory dwelling unit (ADU)
• New landscaping, windows, doors, siding, or roofing
• Kitchen or bathroom remodel
• New appliances
• Smart energy devices
• Mechanical upgrades and improvements, such as electrical, or a heating, ventilation, and air conditioning (HVAC) system
• Swimming pool and other luxury add-ons
• Recreation room addition
• Backup power generator
• Natural disaster resiliency projects.
• Changes to address mobility or aging in place

The renovations do not necessarily have to increase home value or make the home habitable at closing. If you can’t live in the home during renovations, you may finance up to 6 months of principal, interest, tax, and insurance payments to cover costs during this time.

What’s not covered by a Fannie Mae HomeStyle loan?

A HomeStyle loan cannot be used to finance any of the following:

• Demolition of a home
• Making structural changes to more than 50% of a manufactured home
• Building another second residential dwelling on the property
• Making improvements that are not permanent to the property, such as furniture, certain types of landscaping, light fixtures, or a movable storage shed or unit

Your lender will tell you whether a HomeStyle loan can cover your plans for your property. If not, you can look into other types of loans to help you achieve your goals.

What you can roll into your HomeStyle Renovation loan

Your loan doesn't just cover the raw materials for your renovations – it also accounts for the full cost of completing a construction project. Here is what you can roll into your financing:

• Materials and labor. This covers the actual supplies, like lumber and drywall. It also pays the wages of the construction crew performing the work.
• Architectural and engineering fees. If your project requires professional blueprints or structural engineering assessments, those expert fees are fully covered to ensure your project is designed safely and to code.
• Permit fees. This covers the necessary costs paid to your local municipal government to legally authorize the construction.
• Contingency reserve. Your lender will require you to set aside 10% to 15% of the project cost to cover unexpected emergencies or price fluctuations.
• Up to 6 months of mortgage payments. If the extensive renovations make the home temporarily uninhabitable, you can roll up to 6 months of mortgage payments into the loan, so you don’t have to pay for a mortgage and a rental simultaneously.

How can you qualify for a Fannie Mae HomeStyle loan?

To qualify for a Fannie Mae HomeStyle loan, standard conventional loan requirements apply.

Lenders will review your income, credit history, and existing assets, and ensure that both the property and the lender meet eligibility standards.

Keep in mind, this loan type typically features stricter underwriting than FHA loans because of the added construction risk.

What credit score do you need for a Fannie Mae HomeStyle loan?

Effective November 2025, Fannie Mae dropped its minimum credit score criteria. Fannie Mae now relies primarily on its automated Desktop Underwriter (DU) system to assess your overall risk profile, rather than automatically disqualifying you based on a single number.

This can be helpful for applicants who may have a slightly lower score but have strong income and assets.

However, that doesn't mean you'll be able to get approved for a mortgage with poor credit. While there's technically no hard minimum score that's required by Fannie Mae anymore, individual lenders can still impose their own credit criteria. Many lenders require a credit score of 620 or higher for approval.²

What debt-to-income ratio do you need for a Fannie Mae HomeStyle loan?

To get a Fannie Mae HomeStyle loan, you’ll typically need a debt-to-income (DTI) ratio of 45% or lower. You can calculate your DTI by adding up your minimum monthly debt payments and dividing the total by your gross monthly income.

What are the current loan limits for a Fannie Mae HomeStyle loan?

To qualify for a Fannie Mae loan, you must also adhere to conforming loan limits published by the Federal Housing Finance Agency (FHFA). The 2026 loan limits are the same for all conforming loans that follow Fannie Mae and Freddie Mac guidelines. If your renovation and home will cost more than these limits, check with your lender to learn more about your options:

Fannie Mae HomeStyle loan interest rates

HomeStyle renovation loan rates are typically slightly higher than conventional 30-year fixed rates due to the added risk of funding a home in disrepair.

However, you can expect Fannie Mae HomeStyle rates to be lower than other types of financing, like a Home Equity Loan,³ HELOC, or personal loan.

Your individual mortgage rate will be heavily influenced by factors such as your personal credit score, your down payment size, and the broader economic market conditions at the time you lock your rate.

Fannie Mae HomeStyle loan alternatives

If you’re not sure a Fannie Mae HomeStyle Renovation loan is the right option for you, you can tap into several other types of loans worth considering. Let’s look at the key differences between FHA 203(k) loans, home equity loans, and HELOCs. 

Federal Housing Administration (FHA) 203(k) loan

Borrowers searching for an FHA HomeStyle renovation loan are actually looking for the FHA 203(k) loan. This government-backed alternative works similarly to the HomeStyle loan, but borrowing requirements are more flexible. For instance, the FHA 203(k) loan features a lower credit score requirement, often accepting scores as low as 500, depending on down payment and lender overlays.

There are also tradeoffs with FHA 203(k) loans. You can only use it for a primary residence, not an investment property or second home. You also won't be able to use it for luxury renovations, such as swimming pools. This loan is best for buyers with less-than-perfect credit who want to update their main family home to safe, livable conditions.

Home equity loans

If you already own your home and have built up equity, a Home Equity Loan allows you to borrow against that value. Equity is the amount your property is worth, minus your existing mortgage. The funds are disbursed as a lump sum, giving you immediate access to cash with a fixed, predictable interest rate.

Your borrowing limit is dictated by your combined LTV. Most lenders allow you to borrow up to 80% or 85% of your home's total equity. This option is ideal for homeowners tackling a specific, large project with a definitive, known budget who want the stability of a fixed interest rate.

It’s important to keep in mind that a home equity loan is a second mortgage that uses your home as collateral to secure the debt. If you’re unable to keep up with a second mortgage payment each month, you could lose your home to foreclosure.

HELOCs

A home equity line of credit (HELOC) is similar to a home equity loan in that it’s a second mortgage that uses your home as collateral. While a home equity loan comes as a lump sum, a HELOC acts like a credit card tied to your home's equity. You can draw from the line of credit as you need it, pay it back, and draw from it again. This is best for homeowners tackling ongoing, multi-stage projects where the final cost might fluctuate over time. Rocket Mortgage currently doesn’t offer HELOCs.

FAQ

Here are answers to common questions about Fannie Mae HomeStyle loans.

Is it hard to get a home renovation loan?

It can be slightly more complex to get a home renovation loan because of the added risk for the lender. Renovation loan programs may have specific eligibility criteria that vary by program, lender, and the borrower's unique situation. Compared to standard conventional mortgages, expect more paperwork to vet the contractor and a slightly longer timeline to approval.

Can you bundle HomeStyle loans with other Fannie Mae programs?

Yes. You can combine a HomeStyle renovation loan with other Fannie Mae affordability programs to take advantage of lower down payment requirements.

Can you do the renovations yourself and still qualify for this kind of loan?

Fannie Mae strongly requires you to use licensed, insured contractors to ensure the quality of the work.

The bottom line: A Fannie Mae HomeStyle loan might be right for you

A Fannie Mae HomeStyle renovation loan can be the financing solution you've been looking for to help you transform a fixer-upper. This kind of all-in-one loan means one mortgage payment without having to front the money for renovations. You can also use Fannie Mae HomeStyle loans for whatever kind of renovations you wish, as long as you use a licensed, approved contractor for most of the work. This solution is best for borrowers with good credit who want to tackle larger renovations without draining their personal savings.

If you already own your home and would rather borrow against your equity to finance renovations, you can apply for a Home Equity Loan with Rocket Mortgage today.

¹The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

²To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

³Home Equity Loan Product is a second standalone lien and may not be used for piggyback transactions. Valid for loan amounts between $45,000.00 and $500,000.00 (minimum loan amount for properties located in Michigan is $10,000.00). Not available on Ameriprise products. Additional restrictions, terms, and conditions apply. Must meet qualification requirements. This is not a commitment to lend.