Who Qualifies & What It Takes Down

• Primary residence, second homes, and 1-unit investment properties
• 2–4 family owner-occupied properties
• Condos (interior improvements only)

*1-unit investment refinances are limited to 75% LTV/CLTV.

• Purchases: Use the lesser of “as completed” value or acquisition cost (purchase price + rehab costs + contingency reserve) to determine the down payment.
• Refinances: Loan amount divided by the “as completed” value determines the loan-to-value (LTV).

Ineligible Properties

• 2–4 unit investment properties
• Multi-family conversions for increase/decrease in unit count
• Mixed-use properties
• New construction — must have a Certificate of Occupancy for a minimum of one year
• Partially completed projects

Eligible Improvements

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

Mortgage Insurance, Reserves & Contributions

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

• 10% of total project cost must be added to the loan as a contingency reserve
• 15% required if utilities are off, the subject property is vacant, or the scope of work warrants a larger reserve
• Unused contingency funds must be applied to lower the loan balance upon completion

Primary residences and second homes:

• 5% down → seller can pay up to 3% of sales price toward closing costsClosing costs are the fees and charges due at closing beyond the down payment itself — the collection of costs that pay for all the work, insurance, and government processes required to originate a loan and transfer (or refinance) a property. They... More
• 10% down → seller can pay up to 6% of sales price toward closing costsClosing costs are the fees and charges due at closing beyond the down payment itself — the collection of costs that pay for all the work, insurance, and government processes required to originate a loan and transfer (or refinance) a property. They... More

Investment properties: seller can pay up to 2% of sales price toward closing costsClosing costs are the fees and charges due at closing beyond the down payment itself — the collection of costs that pay for all the work, insurance, and government processes required to originate a loan and transfer (or refinance) a property. They... More.

All seller contributions must be negotiated and included in the sales agreement.

Underwriting

• Automated Underwriting approval is required
• Single-family investment properties cannot use rental income to qualify
• No bankruptcy in the past 4 years
• Foreclosure, deed-in-lieu, pre-foreclosure, or short sale in the past 7 years → financing available for primary residences only, with a minimum of 10% down
• No 30-day lates on rent or mortgage in the last 12 months
• If the property is a second home or investment, the max number of financed properties is limited to four

Allowed — but the owner-occupant borrower must make the first 5% of the down payment from their own funds.

Must meet Fannie Mae’s project standards. Verification of adequate master insurance and a review of the condo association’s financial statements is required.

The property must be insured for wind damage.

• A conventional appraisalAn appraisal is an independent, professional opinion of a property's value. It is completed by a licensed appraiser who examines the home, studies recent sales in the area, and applies established valuation methods to determine what the property is worth in the... More must be obtained and cannot be ordered until both the sales agreement and contractor’s proposal are in hand
• The appraisalAn appraisal is an independent, professional opinion of a property's value. It is completed by a licensed appraiser who examines the home, studies recent sales in the area, and applies established valuation methods to determine what the property is worth in the... More is completed subject to the repairs/renovations as outlined in the quotes provided

Pre-Funding Review & Timeline

Work must begin within 30 days of closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More and be completed within 6 months of closingClosing is the meeting — typically in person — where all parties sign the final loan and property paperwork and the transaction becomes official. It’s the last step in the process, the point where months of paperwork, verification, and waiting turn into... More.

• An appraiser inspects the property and identifies the percentage of work completed to establish the amount of funds released at each draw
• No disbursements are made without an appraiser’s inspection

Required Documents

• Contractor resume and references
• Homeowner/Contractor Agreement (Fannie Mae document)
• Detailed proposal(s) for work to be completed — must break out labor & materials separately
• Permit certification: the town/city must indicate what permits are required before work can start
• All required permits must be issued before renovation funds can be distributed
• FNMA HomeStyle Renovation Tips & Borrower’s Acknowledgement forms provided to the consumer
• Licenses where applicable/required, including all licensed subcontractors (plumber, electrician, etc.)
• Contractor general liability insurance with a minimum of $500,000 coverage

Contractors, Fees & Other Requirements

• No more than 3 contractors allowed, or a general contractor is required
• Borrower may not act as their own general contractor — “self help” is not permitted
• Contractor acceptance/approval is completed by the renovation team
• All contractor proposals must be pre-approved by the Renovation Loan Coordinator
• Final contractor proposal(s) must be included in the appraisalAn appraisal is an independent, professional opinion of a property's value. It is completed by a licensed appraiser who examines the home, studies recent sales in the area, and applies established valuation methods to determine what the property is worth in the... More report