What is a conventional renovation loan?

The conventional renovation loan is offered by FNMA, as the HomeStyle Renovation mortgage program, and Freddie Mac, as a CHOICERenovation program.

Whether you are looking at purchasing a home needing repairs or wanting to update your home, the HomeStyle or CHOICERenovation loan allows you to personalize the home to suit your taste.

Unlike other renovation loans, such as FHA 203(k) loans, a conventional renovation loan allows for luxury renovation projects such as installing an in-ground pool or backyard BBQ.

Your down payment could be as low as 3% of the total acquisition cost – perfect for renovation projects big and small.

Find the perfect fixer-upper? You can also use a renovation loan to buy a home below market value and make it your own. You can close on a home you can afford and possibly end up with instant equity, tapping into a market that cash investors typically dominate.

Drywall repairs financed by a conventional renovation loan

What are the benefits of conventional renovation loans?

Buying a house that needs rehabilitation can often be complicated and costly. Repairs can drain your savings or investments.

Interim acquisition and improvement loans often have:

  • Relatively high interest rates
  • Short repayment terms
  • A balloon payment

Coupling a conventional rehab loan with a lender with industry knowledge, you may benefit from lower interest rates and reduced costs associated with repairs and modernization.

You can customize the home to meet your needs. Improvements may also increase home value and resale marketability.

Unlike traditional home equity loans that base the loan amount on your home's current equity and can limit the available money for home repairs.

In a HomeStyle or CHOICERenovation refinance, the loan amount can be based on the home's future value once the renovations and repairs you have chosen are completed. You are borrowing on future equity to achieve the home of your dreams!

There's no need to worry about post-closing costs like inspections, permit fees, architectural or engineering drawings, and the supplemental origination fee.

These fees can be financed into your renovation loan. You'll also have the security of a contingency reserve. Once you start your project, we know you may uncover additional health or safety repairs that need to be done. We'll build an additional 10 to 20% of your bid cost as a contingency reserve to use as a safety net.

Another benefit of the Fannie Mae HomeStyle or Freddie Mac CHOICERenovation loan options is you can finance up to 6 months of mortgage payments into the loan if it's not possible to live in the home during renovations, to be determined by a HUD Consultant. That way, you can simultaneously avoid paying your mortgage and rent at a temporary residence.

Are you eligible or ineligible for a conventional renovation loan?

Eligible borrowers:

  • U.S. Citizens
  • Permanent resident aliens
  • Qualified non-profit organizations
  • Qualified non-permanent resident aliens
  • State and local government agencies

Ineligible borrowers:

  • Foreign nationals
  • Corporations or limited liability companies (LLC)

Eligible vs. Ineligible Properties


  • 1 to 4-unit attached and detached single-family residences and planned unit developments
  • Modular homes
  • 1-unit second or investment homes


  • Cooperatives
  • Manufactured homes
  • Properties with non-conforming construction that cannot be remedied
  • Leaseholds

What are the requirements for conventional renovation loans?

Homes occupied by the owner can be 1 to 4 units. Second homes and investment properties are eligible, but Single-Family Residences only. The transaction must be a purchase or refinance. Loans are subject to specific appraisal and renovation requirements.

Eligible repairs and renovations include:

  • Structural alterations
  • Chimneys and skylights
  • Construct an ADU
  • Additional bathroom installation
  • Termite damage repair
  • Existing detached garage repair
  • New, attached garages
  • Bathroom and kitchen modernization
  • Health and safety hazard removal
  • HVAC repair or replacement
  • Electrical and plumbing systems
  • Major landscaping improvements
  • Grading and drainage improvements
  • Swimming pool installation (in-ground only)
  • Roofs, gutters, and downspouts
  • Existing HVAC systems
  • Plumbing and electrical systems
  • Flooring and carpeting
  • Interior and exterior paint
  • Appliances (purchase and installation)
  • Accessibility improvements
  • Exterior decks, patios, and porches
  • Basement finishing
  • Basement waterproofing
  • Weatherization upgrades
  • Window and door replacements
  • Wall residing
  • Septic and well systems

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