A renovation mortgage allows a home buyer to purchase a property and roll the cost of certain home improvements directly into the mortgage loan. This is not a second mortgage or separate line of credit.  This is one mortgage, one (low and tax deductible) interest rate and one monthly payment.

A renovation mortgage allows the home buyer to amortize the cost of renovations over the “life of the loan.” You get to spread the cost of a $20,000 kitchen remodel over your 30-year mortgage. The nice thing about doing it this way rather than a credit card or HELOC is that the work is tied to the equity of the home, so it becomes part of the future sale price if you’re considering moving someday.

There are two basic renovation mortgages available to home buyers and home owners, the HomeStyle Renovation Mortgage and the FHA 203k Renovation Mortgage. Other options include Home Equity Lines of Credit, Second Mortgages, and Cash Out Refinances. Learn more about the FHA 203k Renovation Mortgage!



The HomeStyle Renovation Home Loan is a financing option offered through Fannie Mae. According to Fannie Mae:The HomeStyle Renovation mortgage enables a borrower to obtain a purchase transaction mortgage or a limited cash-out refinance mortgage and receive funds to cover the costs of repairs, remodeling, renovations or energy efficient improvements to the property.

 There are no required improvements or restrictions on the types of repairs allowed or a minimum dollar amount for the repairs. Repairs or improvements, however, must be permanently affixed to the real property and add value to the property.

When HomeStyle is used for energy- related improvements, borrowers are required to obtain an energy report to identify recommended energy improvements to the property and the estimated cost savings associated with those improvements.

Essentially, HomeStyle Renovation is a solution to the current problem in housing that home buyers often see:
finding houses that aren’t yet “home.” You can buy a house with potential and turn it into your home with your style, without breaking the bank. With a minimum of 3% down*, you can finance the purchase and remodeling of your dream home.

HOMESTYLE Highlights:
With as little as a 5% down payment you can add your taste & style to a house to make it your home with remodeling projects like a new kitchen, bathroom, room addition or energy efficient upgrades. HomeStyle Renovation allows you to buy a home and fix it up, or refinance and remodel your current home. 

  • Purchase or Refinance
  • 3% Minimum Down Payment for primary, single family homes, 10% for second homes
  • You can use gift funds for down payment and closing costs
  • 3% Seller Concessions allowed
  • Cosmetic and Structural renovations allowed
  • Other allowable improvements can include; landscaping, appliances, in-ground swimming pools, and more 

HOMESTYLE Renovation Property Requirements:
the subject property for a HomeStyle Renovation mortgage must be:

  • A one to four unit principal residence
  • A one unit second home
  • A one unit investment property
  • Manufactured homes and Co-Ops are NOT permitted



HOW TO GET STARTED: the first thing I would tell you if your are considering any renovation mortgage program is that you do your homework first, read as much as possible, and then call me to ask all your questions and get on the right path. Having a lender that truly knows the ins and outs of all renovation mortgages is crucial to saving you from delays, headaches, and possibly much worse.

When buying a home the process should always start with a mortgage pre-qualification maybe even a pre-approval. Getting Pre-Qualified ensures that your budget and your credit are ready for a home loan. Most Lenders, myself especially, will look at your situation closely and let you know whether you qualify for a mortgage and how much you should consider in your home search.

You are now pre-qualified, the next step BEFORE you go looking for a new home is to secure an approved General Contractor. This is crucial to the process and key to making the entire home buying to mortgage application to closing on your new home flow easily and quickly.

I recommend that you only have one General Contractor involved, the GC can have multiple sub-contractors working for them to get necessary work done. On occasion it is necessary to have multiple General Contractors but no more than two.

All General Contractors will have to go through an approval process if they are not already approved by your lender. The process ensures you have a financially stable and capable contractor working for you.

NOW YOU CAN START YOUR HOME SEARCH! When you are considering purchasing a new home with a HomeStyle or FHA 203k Renovation Mortgage as you begin your search for the next new home keep in mind that if you are qualified for a set amount, say $230,000 you could actually look for homes as low as say in and around the $100,000 price range knowing you have $130,000 in renovation costs available to you.

If you are qualified for a $200,000 sales price and find that home located in the perfect neighborhood, has the yard you want, a great school district, close to work, has the number of rooms you need, but it needs more fixing up than you would want for a move in ready house......but it is priced at $150,000. This may be the house for you because you did your homework and have $50,000 available to you to make this house your home. Through better negotiations you may have more money available to you for fixing up this home!

When you find that house, allow Me or your mortgage Lender to know about the house, show them the pictures, get them involved. Let them work up a monthly payment for you to know that you are within your budget. If this is really the house for you then make your offer! Once you are under contract the next step I recommend is holding a SUMMIT MEETING as quickly as possible at your soon to be new home.

The Summit Meeting will be held at the house you are purchasing, you will attend, your General Contractor will be there (you MUST have a General Contractor by this stage of the game), a HUD Consultant will be involved, your lender should attend, I go to every one of my local Summit Meetings, and your real estate agent should be there.

At the Summit Meeting, introductions to all the players are made, this helps to keep all the moving parts of this process on path and moving forward. At the meeting you will be discussing the scope of work to be done to your new home and the cost of that work will develop. Since EVERYONE is there this is the perfect opportunity to ask questions, make changes, and have all the others ask questions too.

The Summit Meeting is crucial to making the process flow easily and quickly, I have been holding these meeting for years and at the rare times they are not held I have regretted that decision. Many lenders who don't do a lot of renovation mortgages do not place this extra step into the process, don't let that happen.

Once we have held the Summit Meeting the cost of your home remodeling project is determined, after you have agreed to the cost of the project, that cost is added to the sales price, less your down payment and we now have what is considered a normal mortgage application process.

As you can see there are some extra steps involve before we can move on to the mortgage application approval process. I have heard the stories told about how long other lenders have taken to complete a renovation mortgage, you may have heard them, many real estate agents have heard them and love to tell the story to their home buyers!

I generally ask my well prepare home buyers who have done their homework, having an approved General Contractor onboard is key, I ask them give me about 15 extra days to make it all happen. From the time you go under contract for the new house until the day we go to closing if you and your lender (ME) have worked together you don't need to worry about closing in a timely manner, most times I will get it all done in 45 days or less.












Renovation Guide and Information

One of the KEYS to a successful, on time, and stress free (well at least less stress) renovation mortgage is the mortgage loan officer. Make sure you do you HOMEWORK and you have the right renovation mortgage person working for you. Fill out the entire form for a quick and easy Pre-Qualification it will only take 5 to 10 minutes to complete and I will have answers for you in 1 to 2 business days. Thank you and I hope that I will soon be working for you and your 'NEW' home soon.