Home renovation surely is an exciting and rewarding experience, but it often comes with a hefty price tag. And that’s why many people decide to take out homestyle renovation loans in order to finance a part or all of the improvements they have intended to make. But do you know what these loans are and more importantly who offers homestyle renovation loans?  

Well in case you are unfamiliar, we are here to catch you up. A HomeStyle loan is a type of financing specifically designed for homeowners who want to make modifications or repairs to their current residence.   

Assuming you have decent credit and enough equity in your home, a conventional homestyle loan can be a great option for financing your home improvements. With competitive rates and flexible terms, these loans are a great middle ground between a personal loan and a HELOC.  

And unlike a traditional mortgage, which is typically used just for the purchase or refinance of a property, a homestyle loan can be used for just about anything – from minor cosmetic upgrades to major structural repairs.  

What Are HomeStyle Loans?

The Fannie Mae HomeStyle loan is a mortgage that allows you to buy or refinance a home and roll both the loan closing costs and renovation expenses into one loan. They are typically used for renovations that cost more than $5,000.    

With the loan, you can include up to six months of mortgage payments in your renovation budget. This can be helpful if you’re planning on living in your home during the renovation process or even if you need to live somewhere else while work is being done.   

There are two different types of homestyle loans:  

  • Fannie Mae homestyle renovation loan. This one is intended for borrowers who are looking to finance both the purchase or refinance of their home, as well as the cost of renovations.  
  • Homestyle energy loan. While this one is for borrowers who are looking to make energy-efficient improvements to their homes.  

How Do HomeStyle Loans Work?

If you are considering applying for a Fannie Mae homestyle loan, it is important to be familiar with how it works.  

The first step is to find a Fannie Mae-approved lender that offers this loan type. Ideally, you should take some time and try to get preapproved with a few lenders so you can see how much you’re eligible to borrow and who offers the best terms.  

Once you know your price point, you can look for homes that you think could be purchased and fixed up for that amount or less. Or in case you already own a home, you can now plan the renovations accordingly.  

Keep in mind that you will need to come up with some sort of renovation plan and budget before you actually submit an application so the lender can see what they are getting themselves into. Once the loan is approved, the lender will give you a lump sum of money to use toward the renovations.  

You’ll then have to make monthly payments on the loan, which will go toward both the principal and the interest. Usually, the interest rates on these loans are fixed.  

HomeStyle Loans Requirements

Fannie Mae’s homestyle loan has some requirements you will first need to fulfill in order to be eligible and apply.  

You’ll need a credit score of at least 620, but a score of 680 or higher will give you more financing options and potentially better terms. You’ll also need a down payment of at least 3%, 

When it comes to income, in general, lenders will want to see that your monthly debt payments don’t exceed 28% of your pretax income. They’ll also look at your employment history and bank statements to get a sense of your financial stability.  

As for the property itself, it must be either a single-family home, townhome, condo, or 2-4 unit dwelling that’s been completed for at least 12 months.   

Who Can Qualify for a HomeStyle Loan?

HomeStyle loans are available to both owner-occupiers and investors. And they can be used for a variety of purposes, including home improvements, repairs, and renovations.   

All borrowers who have a credit score of 620 and good employment history can qualify for these loans. Borrowers also need to have DTI lower than 45% if they want to apply. As for the rest of the requirements you should check with a specific lender as they can vary a bit.  

Pros and Cons of HomeStyle Loans

Now that you know what a HomeStyle loan is, let’s dive into the pros and cons of this type of financing. As with any financial product, there are some things to consider before committing to the obligation.  

One of the biggest advantages is that you can use the loan for any type of renovation, including cosmetic upgrades, energy-efficient improvements, and more.  

But, on the downside, these HomeStyle loans are only available through Fannie Mae-approved lenders, which can limit your options. Additionally, these loans require a good credit score in order to apply.  


  • They are backed by the government.  
  • They can be used to finance both the purchase of a home and renovations, making them a convenient option for borrowers who want to do both at the same time.   
  • Can be used for more expensive projects that other types of loans may not be able to finance.  
  • They offer flexible repayment terms, so borrowers can choose a plan that fits their budget.   
  • Borrowers can shop around for the best rates since they are not tied to any particular lender.  


  • Available only through Fannie Mae-approved lenders.   
  • HomeStyle loans may also require mortgage insurance.   
  • They come with origination fees and closing costs, which can add up.   
  • If you’re planning to sell your home soon after completing renovations, you may not be able to recoup all of your costs with the added value to your home.  

HomeStyle Loans vs. Other Home Renovation Loans: What’s the Difference?

In case you’re a homeowner looking to finance a home renovation, there are several loan options available to you.   

HomeStyle loans are offered by Fannie Mae and can be used for both major renovations as well as most other upgrades.  

But, there are also several other types of home renovation loans available, including FHA 203(k) loans, VA loans, and private party loans. Each of these loan products has its own set of eligibility requirements and terms. For example, FHA 203(k) loans are only available to owner-occupied properties, while VA loans can only be used by veterans or active military members.  

Private-party loans may have more flexible eligibility requirements but usually come with higher interest rates than government-backed loans.  

Alternatives to HomeStyle Loans

If you’re looking for an alternative to HomeStyle loans, there are a few options available.  

One option is the FHA 203(k) loan, which is backed by the federal government and can be used for both purchase and renovation. We already mentioned this type, but it may not suit you if you are an investor.  

There are also private home improvement loans that can be used for renovations, though they typically have stricter eligibility requirements and higher rates.   

However, no matter the route you choose, be sure to compare both the fees and terms before making a final decision.  

Bottom Line

Taking out a HomeStyle loan to finance your home renovations is a big decision so it’s important to understand the ins and outs of the process. These loans are available through participating lenders and can be used for single-family homes, two-to-four-unit properties, condos, and co-ops.  

The biggest advantage of HomeStyle loans is that they allow borrowers to finance both the purchase price of the property and the cost of renovations into a single loan. However, you should keep in mind Fannie Mae homestyle loan rates which can vary year by year.  

And lastly, don’t forget that you will have a time limit for completion which is currently set for 15 months. 


But I must explain to you how all this mistaken idea of denouncing pleasure and praising pain was born and I will give you a complete account of the system, and expound the actual teachings of the great explorer of the truth, the master-builder of human happiness. No one rejects, dislikes, or avoids pleasure itself, because it is pleasure, but because those who do not know how to pursue pleasure rationally encounter consequences that are extremely painful.

Leave A Reply