Fannie Mae Homestyle


The Fannie Mae Homestyle streamline product enables homebuyers to finance the costs of renovations through a single mortgage. The program does not allow any structural related items in the scope of work being performed, but does allow landscaping and site amenities.  The loan is fully disbursed at closing, all renovation funds are placed into escrow and the borrower is required to make the full PITI payment throughout renovations. “Self Help” is not permitted with this program.
 Maximum rehabilitation amount (including contingency and fees) is 50% of the “as completed” value.

Occupancy Type:

Primary residence, second homes and 1 unit investment properties. (3-4 family O/O properties must be self sufficient).
Condo’s and PUD’s must be FNMA eligible (for condo’s, unit interior rehab only).

Ineligible Properties:

 2-4 unit investment and Cooperatives
 Multi-Family conversions for increase/decrease in unit count
 Mixed use properties
 New construction-Must have Certificate of Occupancy for a minimum of one year
 Partially completed projects

Mortgage Insurance:

Mortgage insurance is required for all loans with less than 20% down payment.
MI is based on the lesser of “as completed” value or acquisition cost (purchase price + total rehab)

Non-Occupant Co-borrower is allowed.  The owner occupant borrower must make the first 5% of the down payment from his/her own funds.


Condominiums and PUDs have to be verified as to meeting Fannie Mae’s project eligibility criteria. Verification of
adequate hazard, flood, liability and fidelity insurance coverage is required.
Note: It is important that all household members are identified as part of the loan application.


 Minimum 620 FICO score (with approve/eligible findings). Higher FICO requirements for multi’s with MI.
 Single family investment properties cannot use rental income to qualify.
 Automated Underwritingis require; must have Fannie Mae DU Approve/Eligible findings
 No Bankruptcy in the past 4 years.
 If there was a foreclosure, deed-in-lieu, pre-foreclosure or short sale in the past 7 years then financing available for
primary residences only with a minimum of 10% down
 No 30 days lates on rent or mortgage in last 12 months.
 If subject is second home or investment, max number of financed properties limited to four.

Pre-Funding Review:

 All files require a pre-funding underwriting review by a third party vendor prior to closing.
 Additional prior to closing conditions from this pre-funding review may apply.
 Please allow a minimum of 4-5 days in the process to accommodate this requirement, and 48 hours for followup conditions to be reviewed.


Primary Residence 2-4 unit – 6 months (mortgage payment) reserves must be verified (needs to show this money in the bank after closing)
Second Homes – 2 months reserves
Investment 1 Unit – 6 months reserves

Contingency Reserves:

 10% minimum
 15% required if utilities are not on, subject is vacant or if deemed necessary based on the scope of work.
 Unused funds must be applied to principal reduction

Seller Contributions:

Primary Residences and Second Homes:
 If 5% down then seller can pay up to 3% of the sales price toward closing
 If 10% down then seller can pay up to 6% of the sales price toward closing
 Investment Properties: seller can pay up to 2% of the sales price toward closing
All seller contributions must be negotiated and be included in the sales agreement

Hazard Insurance:

The property must be insured for wind damage. If the base hazard insurance policy excludes wind coverage, an endorsement or separate policy evidencing wind coverage must be obtained.


 A conventional appraisal must be obtained and cannot be ordered until we have both the sales agreement and contractor’s proposal.
 Appraisal to be completed subject to the repairs/renovations as per quotes provided.

Eligible Improvements:

 Repair/replace roofs, gutters and downspouts
 Repair/replace/upgrade of existing HVAC systems
 Repair/replace/upgrade of plumbing and electrical systems
 Repair/replace existing flooring
 Minor remodeling, such as, kitchens, which does not involve structural repairs
 Exterior and interior painting
 Weatherization: including storm windows and doors, insulation, weather stripping, etc.
 Purchase and installation of built-in appliances only. No free-standing appliances including ranges, refrigerators, washers, dryers, dishwashers and microwaves
 Improvements for accessibility for person with disabilities
 Lead based paint stabilization or abatement of lead based paint hazards
 Repair/replace exterior decks, patios, porches
 Basement refinishing and remodeling, which does not involve structural repairs
 Basement waterproofing
 Window and door replacements (same sizes) and exterior wall re-siding
 Septic system and or well repair or replacement
 Landscaping and site amenities allowed as long as they are permanently affixed to property and add value.

Not Allowed

 No barns, sheds, storage or other out building
 Detached garages are permitted when they are the only garage on the property.
Eligible Contractor/Borrower

Required Documents:

 FNMA Homestyle Maximum Mortgage Worksheet
 Contractor Credit Authorization
 FNMA Contractor Profile
 FNMA Homestyle Contractor’s Resume
 FNMA Homestyle Homeowner/Contractor Agreement
 Contractor(s) Proposal(s)
 Rehabilitation Loan Permit Certification
 Copies of all permits (if applicable)
 FNMA Homestyle Borrower’s Acknowledgement
 FNMA Homestyle Renovation Consumer Tips
 All work performed must be completed by a qualified contractor(s)
 No more than 3 contractors allowed or a general contractor is required
 Borrower may not act as a general contractor as “self help” is not permitted
 A contractor acceptance checklist will be performed by MMC underwriters on all contractors
 Contractor License (including all subs)
 Contractor general liability insurance with minimum of $500,000 coverage.

Rehab Period: Work must begin within 30 days of closing and be completed within 6 months of closing.

Draw Disbursements:

 No disbursements at closing
 Appraiser inspects property and identifies the percentage of work completed to establish amount released
 No disbursements without an appraiser’s inspection
 Maximum of 2 disbursements per contractor, 3 contractors maximum
 10% hold back on each disbursement
 Loan Servicer handles all contractor disbursements

Additional Information:

 2 Appraiser Inspection fees max: $150 per inspection
 2 Title updates are required: 50% and 100% completion at $125 each
 Draw administration Fee of is $500 required
 All Contractor proposals must be pre-approved by Renovation Loan Coordinator
 Final contractor(s) proposals must be included in appraisal report.

Minimum Down Payment and Credit Scores:

1 Unit Property:  5% down and  620 score
2 Unit Property: 15% down and 660 score
3-4 Unity Property: 25% down and 680 score
1 Unit Property Only: 10% down and 620 score
1 Unit Property Only: 15% down and 620 score
* 1 Unit investment refinances are limited to 75% LTV/CLTV

Down Payment Calculations:

 Purchases: Use the lesser of “As completed value” or Acquisition cost (Purchase price + rehab costs + Contingency reserves) X required down payment
 Limited Cash-out Refinances: Loan amount divided by the “As Completed Value” determines the “Loan to Value”


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