The HomeStyle Renovation loan is Fannie Mae’s answer to the FHA 203(k): one conventional mortgage that covers both the purchase price and the cost of fixing the place up. If your credit is reasonably solid, it is usually the cheaper of the two over the life of the loan, and it lets you do things FHA flatly refuses to finance.
Here is what it offers, where it beats a 203(k), and where it does not.
The basics
HomeStyle rolls renovation costs into a conventional mortgage underwritten against the home’s “as completed” appraised value. Like a 203(k), the renovation money sits in an escrow account and is released to contractors in draws as work gets done.
Down payment starts at 3% for a one-unit primary residence, but that lowest tier comes with a condition: you generally need to be a first-time buyer, or qualify under HomeReady (income at or below 80% of area median). Everyone else starts at 5% down. Two-to-four unit primary residences are 5% down, second homes are 10%, and investment properties are 15%.
That last point deserves emphasis, because it is a hard line FHA will not cross: HomeStyle works on second homes and rental properties. A 203(k) is owner-occupant only.
How much renovation you can finance
The cap is a percentage rather than a flat dollar figure. On a purchase, renovation costs can be up to 75% of the lesser of the purchase price plus renovation costs, or the “as completed” appraised value. On a refinance, it is 75% of the as-completed value. Manufactured homes are limited to 50%.
Read that formula carefully, because the “lesser of” is doing real work. If you buy a $200,000 house and plan $100,000 of renovations, your basis is $300,000 — but only if the finished home actually appraises for $300,000 or more. If the appraiser comes back at $270,000, your renovation budget is measured against that lower number instead. Ambitious renovation plans in a modest neighborhood run into this ceiling regularly.
There is no minimum renovation amount.
What you can renovate — including the things FHA won’t touch
Fannie’s standard is refreshingly simple: any renovation or repair qualifies as long as it is permanently affixed to the property. Notably, Fannie also updated its guidance so that improvements no longer have to add value — older versions of the rule required it, and some sites still quote the old language.
In practice this means HomeStyle finances things a 203(k) will not: swimming pools, landscaping, retaining walls, patios, outdoor structures, and accessory dwelling units, including detached ADUs. Additions and full multi-room gut renovations are fine.
The exclusions are narrow: you cannot tear the house down and rebuild it, you cannot add a whole additional dwelling (as distinct from an ADU), and anything not permanently affixed does not qualify.
The mortgage insurance advantage
This is usually where HomeStyle wins on total cost, and it is worth understanding precisely.
With less than 20% down you pay private mortgage insurance, same as any conventional loan. Unlike FHA’s premium, conventional PMI is cancellable — and there are three routes off it. Two are the standard federal ones: you can request cancellation at 80% of the home’s original value, and it terminates automatically at 78%.
The third route is the one that matters for a renovation borrower. Fannie allows PMI termination based on the home’s current value, not its original value. Normally that requires two to five years of seasoning at 75% loan-to-value, or over five years at 80%. But Fannie explicitly waives the two-year seasoning requirement when borrower-made improvements increased the property value — in which case you need to be at 80% LTV or better on a new appraisal. The improvements have to be substantial ones that improve marketability and extend the home’s useful life, like a kitchen or bathroom renovation or added square footage. Routine maintenance does not count.
Put plainly: if your renovation meaningfully raised what the house is worth, you may be able to drop PMI within a couple of years. On a 203(k) with 3.5% down, mortgage insurance never goes away at all unless you refinance out of FHA entirely. Over a 30-year loan that gap can be worth tens of thousands of dollars.
Credit, timelines, and doing some of the work yourself
Fannie removed its published 620 minimum credit score for loans underwritten through Desktop Underwriter in late 2025 — DU now runs its own risk analysis instead. Do not read too much into that, though. Lender overlays are close to universal on renovation loans, and 620 to 660 remains the practical floor at most lenders who actually offer HomeStyle.
You have 15 months from closing to complete the work, which is more generous than either flavor of 203(k). Your lender can advance up to 50% of the renovation budget at closing, with the rest released in draws. A contingency reserve of 10% is required on two-to-four unit properties and optional on single-family.
DIY is allowed, within limits, and this is unusual — it is worth knowing if you have real skills. The property has to be a one-unit home you occupy, self-performed work is capped at 10% of the as-completed value, anything over $5,000 needs lender pre-approval and inspection, and you can only be reimbursed for materials or documented contract labor. You cannot pay yourself for your own labor.
HomeStyle vs. CHOICERenovation vs. the small-project options
Freddie Mac offers a near-twin called CHOICERenovation with the same 75% cap and a similar structure. The meaningful differences: Freddie explicitly names swimming pools, decking, porches, and patios as eligible, and it specifically covers resilience and disaster-mitigation work — storm surge barriers, foundation retrofitting, retaining walls — which is genuinely useful if you are buying in a flood or wildfire zone. On the other hand, Freddie appears to prohibit borrower self-help entirely, so if DIY matters to you, HomeStyle is the one.
For smaller projects, both agencies have streamlined versions. Freddie’s CHOICEReno eXPress covers renovations up to 10% of value (15% in designated high-needs areas) with a lighter process and a 180-day completion window. Fannie launched a comparable product, HomeStyle Refresh, in August 2026, allowing up to 15% of the as-completed value with no minimum and a 180-day clock. Both are designed for the “new windows, new roof, minor remodel” tier where a full renovation loan is overkill.
Frequently asked questions
How much can I borrow with a HomeStyle Renovation loan?
Renovation costs can reach 75% of the lesser of your purchase price plus renovation costs, or the home’s “as completed” appraised value. On a refinance it is 75% of the as-completed value. Manufactured homes are capped at 50%.
Is HomeStyle better than an FHA 203(k)?
For most borrowers with credit around 620 or above, yes — mainly because conventional PMI can be cancelled while FHA mortgage insurance at low down payments lasts the life of the loan. HomeStyle also allows luxury work like pools, and works on second homes and rentals. FHA 203(k) wins if your credit is below about 620, where conventional lenders will not go.
Can I use a HomeStyle loan on a rental property?
Yes. One-unit investment properties are eligible at 85% loan-to-value on a purchase, meaning 15% down. Second homes are eligible at 10% down. This is a significant advantage over the FHA 203(k), which is restricted to owner-occupants.
Can I do the renovation work myself?
Partly. Fannie allows self-performed work on a one-unit home you occupy, capped at 10% of the as-completed appraised value, with lender approval and inspection required above $5,000. You can be reimbursed for materials and documented contract labor but not for your own labor.
How long do I have to finish the renovation?
Fifteen months from the date the loan closes. If you have seen a “12 months from delivery” figure, that comes from a superseded Fannie Mae fact sheet.