16 Major Updates to Fannie Mae’s HomeStyle Renovation Program


Today, Fannie Mae announced significant changes to their HomeStyle Renovation loan program.

Fannie Mae’s HomeStyle Renovation mortgage program enables a borrower to purchase a property or refinance an existing loan and include funds in the loan amount to cover the costs of repairs, remodeling, renovations, or energy improvements to the property. Lenders have the option to sell loans to Fannie Mae before completion of the renovation, subject to limited recourse and additional requirements the lender (or servicer) must comply with.

Fannie Mae states that the opportunity to support their Duty to Serve objectives along with an increased interest in renovation financing has led them to enhance many aspects of HomeStyle Renovation program.

With 16 major updates to the program we wanted to highlight our top four major updates here:

1. Manufactured homes are now eligible provided the improvements do not require structural changes. The current LTV ratio requirements in place for manufactured housing will apply. The total funds for renovation are limited to the lesser of 50% of the “as-completed” appraised value, or $50,000.

2. The limit on eligible renovation funds for a purchase transaction has been increased to 75% of the lesser of acquisition plus renovation costs, or the “as-completed” appraised value.

3. Lenders may release material draws at the beginning of the project for the purpose of acquiring materials that are identified in the project estimate – up to 50% of the total up-front material costs. A portion of this 50% may be used to pay expenses associated with architect fees, design, and permits.

4. The HomeStyle Completion Certificate (Form 1036) has been retired. The Appraisal Update and/or Completion Report (Form 1004D) is required to document the completion of renovation work (and must be submitted when requesting removal of recourse).

We see these changes as a major upgrade to the existing program that will provide greater lender participation, simplify the existing guidelines, and increase consumers access to renovation financing.

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