— ABOUT THE HOMESTYLE® RENOVATION LOAN

The Fannie Mae HomeStyle® Renovation Loan is a conventional mortgage program that combines the financing of a property acquisition or refinance with the cost of planned improvements into a single loan. Rather than purchasing a property and arranging separate financing for renovations – or drawing on personal savings or home equity lines after closing – the HomeStyle® program establishes a single loan amount based on the property’s projected value after the improvements are complete.

This structure has meaningful practical implications. The renovation budget is determined at closing, funds are held in a managed escrow account and disbursed to contractors in stages as work is completed, and the borrower makes one monthly payment covering both the property financing and the renovation costs throughout the life of the loan.

HomeStyle® is a conventional program, which distinguishes it from government-insured renovation options such as the FHA 203(k). As a conventional loan, it follows Fannie Mae guidelines, is available across a wider range of property types and occupancy categories, and does not carry FHA mortgage insurance requirements. For borrowers who qualify under conventional underwriting standards, HomeStyle® frequently offers greater program flexibility than its government-backed counterparts.

Pacific Home Loans offers HomeStyle® Renovation financing for eligible primary residences, second homes, and investment properties, subject to Fannie Mae guidelines and underwriting approval.

→ Renovation & Construction Loan Options

— HOW IT WORKS

— ELIGIBLE RENOVATIONS

HomeStyle® accommodates a broad range of renovation types, including both cosmetic updates and structural improvements. All work must be performed by licensed contractors, and the renovation plan and cost estimates must be reviewed and approved prior to closing.

Eligible renovation categories include:

• Kitchen and bathroom remodels
• Roof repair or full replacement
• Structural repairs, including foundation work
• HVAC system replacement or upgrades
• Plumbing and electrical system work
• Flooring, windows, and interior finishes
• Room additions, subject to program guidelines
• Energy efficiency upgrades and solar installations
• Landscape improvements and exterior enhancements
• Accessory dwelling unit (ADU) construction or renovation

Luxury Improvements
Unlike the FHA 203(k) program, HomeStyle® does not categorically exclude luxury improvements. Pools, outdoor kitchens, high-end finishes, and similar enhancements may be eligible within overall program loan limits and subject to underwriting approval. This is one of the program features that makes HomeStyle® particularly relevant for second home and investment property renovation scenarios.

— OCCUPANCY AND PROPERTY TYPES

HomeStyle® is one of the few renovation financing programs that extends beyond primary residence purchases. This breadth of occupancy eligibility is among its most significant advantages relative to government-insured renovation programs.

Primary Residences
All conventional primary residence property types are eligible, including single-family homes, eligible condominiums, planned unit developments, and 1–4 unit owner-occupied properties, subject to Fannie Mae guidelines and project warrantability requirements where applicable.

Second Homes
HomeStyle® may be used to purchase or refinance a qualifying second home and finance improvements to that property within the same transaction. This is a meaningful distinction from the FHA 203(k) program, which is limited to primary residences. For buyers acquiring or improving a vacation property, mountain home, or resort-area second residence, HomeStyle® is frequently the most appropriate renovation financing vehicle available.

Investment Properties
HomeStyle® extends to eligible investment properties, subject to conventional investment property guidelines including applicable down payment requirements, reserve requirements, and loan-to-value limitations. For investors acquiring properties that require renovation prior to rental or resale, the ability to finance both the acquisition and improvements in a single loan structure represents a meaningful operational and financial advantage.

— CONTRACTOR REQUIREMENTS

All renovation work financed under the HomeStyle® program must be performed by licensed general contractors. Self-performed or owner-completed work is not permitted. Prior to closing, the borrower is required to provide a complete renovation plan and contractor bids for lender review. Required documentation generally includes:

• Executed contractor agreement with scope of work and cost breakdown
• Contractor license verification and proof of insurance
• Detailed renovation plans and specifications where applicable
• Draw schedule tied to defined completion milestones
• Any required permits for the planned scope of work

The quality and completeness of the renovation package submitted at the time of loan application directly affects how efficiently the approval process proceeds. Incomplete contractor documentation is one of the most common sources of delay in renovation loan underwriting, and borrowers are encouraged to work with contractors experienced in renovation loan draw processes.

— COMPARING OPTIONS

HomeStyle® vs. FHA 203(k)
Both programs combine property financing and renovation costs into a single loan based on after-improved value. The meaningful differences lie in occupancy eligibility, credit and income requirements, mortgage insurance, and the scope of eligible improvements.

HomeStyle® is a conventional loan – it does not carry FHA mortgage insurance, is available for second homes and investment properties, and permits luxury improvements within program limits. It requires conventional credit qualification, which generally means a higher minimum credit score than FHA guidelines.
The FHA 203(k) is government-insured, carries FHA mortgage insurance, and is limited to primary residences. It offers more accommodating credit guidelines and a lower down payment threshold for eligible buyers, and includes a Streamline version designed for non-structural renovation projects. For borrowers whose credit profile benefits from FHA’s more flexible standards, or who are purchasing a primary residence with limited down payment resources, the FHA 203(k) may be the more appropriate choice.

→ FHA 203(k) Renovation Loan

HomeStyle® vs. VA Renovation Loan
The VA Renovation Loan provides eligible veterans with renovation financing backed by the VA guarantee, with zero down payment available. For eligible borrowers, the VA renovation program offers superior terms in most respects. HomeStyle® is the appropriate alternative for borrowers who do not qualify for VA financing, or for renovation transactions involving second homes or investment properties, which the VA program does not accommodate.

→ VA Renovation Loan

HomeStyle® vs. Construction-to-Permanent Loan
HomeStyle® is a renovation financing tool – it requires an existing structure on the property. For transactions involving ground-up construction, major structural rebuilds that extend to or beyond the foundation, or land acquisition without an existing structure, a Construction-to-Permanent loan is the appropriate financing vehicle.

→ Construction-to-Permanent Loan

— COMMON QUESTIONS