HomeStyle Renovation Program for PA Home Buyers

Contractor visualizing the kitchen remodelThe HomeStyle Renovation mortgage program is a loan that lets you buy a home and provides renovation funds. This program also allows you to buy a four-unit property or investment property. Using this program, you can live in the Home while using the renovation funds for upgrades. 

The payment is only 3% down, making it an excellent option for those who can't afford costly repairs upfront. Additionally, refinancing is an option once the renovations are complete, and the Home will be worth even more. Homeowners can benefit from working with renovation lenders specializing in this financing type.

What is the HomeStyle Renovation Program?

The HomeStyle Loan Program is a mortgage loan that allows borrowers to finance renovation plans based on the Home's expected appraisal value. With this program, you can borrow one loan that includes the purchase price plus the cost of renovations.

To qualify for this financing, you'll need a credit score that meets the Fannie Mae score requirement and comply with borrower requirements. Also, mortgage insurance may be required depending on the Home's loan-to-value ratio. The HomeStyle Renovation Program is an excellent option for homeowners looking to improve their property's value and make significant repairs without needing a second mortgage.

How Does it Work?

One way to complete the renovation or restoration of your Home is through Fannie Mae loans. These loans allow homeowners to borrow up to 75% of their Home's value after the renovation, including the cost of repairs and renovation works and the equity of the existing property. To qualify for the Home Ready program, homeowners must meet Fannie Mae's requirements, such as having a minimum credit score of 620 and a debt-to-income ratio below 45%.

Additionally, homeowners must have enough cash to make a 10% down payment and cover renovation costs not financed by the loan. A licensed contractor is necessary to carry out the renovation work, which must add value equal to or greater than the amount borrowed. One of the pros of this type of loan is that homeowners can borrow much more than they could with a second mortgage. However, a potential con is that homeowners could pay more in interest over time.

Benefits of the HomeStyle Renovation Program

This financing program benefits homeowners seeking to finance costly repairs and upgrades. They include:

  1. Borrowing up to 75% of the Home's value
  2. Financing any repairs or upgrades needed
  3. Amortizing the loan over 30 years
  4. Paying off the loan balance without penalty
  5. Qualifying for the loan with a lower credit score and smaller down payment than other renovation loan programs

Drawbacks of the HomeStyle Renovation Program

Despite the numerous benefits, the program has some disadvantages homeowners should consider before applying for a loan. These include:

  1. Having to provide a 10% down payment
  2. Having to hire a licensed contractor
  3. Paying for two mortgages if the renovations are not completed on time

Renovation Limit

The loan amount for the HomeStyle Renovation program is calculated based on 75% of the lesser of two values: the purchase price of the property plus the cost of the renovations or the "as-completed" appraised value of the property. The loan amount cannot exceed 75% of the property's value after the renovations are completed, as determined by an appraiser.

Examples of Maximum Loan Amounts Here are some examples of how the maximum loan amount is calculated for a Fannie Mae HomeStyle Renovation loan:

  • Example 1: Purchase Transaction If John wants to buy a house for $200,000 and plans to do $50,000 worth of renovations, the project's total cost would be $250,000. Suppose the as-completed appraised value of the property is estimated to be $350,000. In that case, the loan amount would be based on 75% of the lesser value, which is $262,500 (75% of $350,000).

  • Example 2: Refinance Transaction If Jane owns a house worth $300,000 and owes $150,000 on her current mortgage, she could refinance and borrow up to $281,250 (75% of $375,000), assuming she plans to do $75,000 worth of renovations that increase her property's value to $375,000.


The HomeStyle Renovation loan program is an excellent option for homeowners seeking to renovate or refurbish their homes. The loan amount is based on the lesser of the Home's appraised value or the renovation costs and can be used for various remodeling or renovation projects. Homeowners must meet specific HomeStyle Renovation loan requirements, including having a good credit score for a Fannie Mae conventional loan. 

One advantage of the HomeStyle Renovation loan is that it allows homeowners to roll the refurbishment cost into their monthly mortgage payments. This can be a more affordable option compared to other loan alternatives. Additionally, the loan is based on the Home's value after the renovation project is complete, potentially increasing the property's overall value. 

However, homeowners should be aware of some drawbacks to the HomeStyle Renovation loan. One primary concern is that the loan requires a thorough appraisal of the property and a detailed cost estimate of the renovation project, which can be time-consuming and expensive. Additionally, if the homeowner fails to make their monthly mortgage payments, they could risk losing their Home. 

In conclusion, the HomeStyle Renovation loan program can be an excellent financing option for homeowners looking to renovate or upgrade their property. However, it's essential to carefully consider the Homestyle loans and weigh the pros and cons before applying.

PHFA Sellers Guide

Recommended Reading
PHFA: Keystone Forgivable in Ten Years Loan Program (K-fit)
Debt to Income Ratio for a Mortgage Calculator
Use the Extra Payment Calculator for a Mortgage to Save Money
What is Underwriting in the Mortgage Process?

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