Renovation lending requires matching the right program to the borrower and property. Fannie Mae HomeStyle, FHA 203(k), and Freddie Mac CHOICERenovation cover overlapping but distinct ground. Knowing the differences in renovation caps, eligible work, and borrower requirements lets you place the loan correctly the first time.
Fannie Mae HomeStyle
- ✦Eligible properties: 1-4 unit primary, second homes, and investment properties
- ✦Renovation cap: lesser of 75% of as-completed value or 50% of the original appraised value after improvements
- ✦Structural work allowed including additions and ADUs
- ✦Minimum FICO: 620 (lender overlays typically 640-680)
- ✦Luxury items allowed: pools, tennis courts, outdoor kitchens
- ✦Requires a licensed contractor; no DIY for primary financed improvements
FHA 203(k) Limited and Standard
- ✦Primary residence only, 1-4 units
- ✦Limited version caps repairs at $75,000, no structural work
- ✦Standard version allows structural work, requires HUD consultant on projects over $15,000
- ✦Minimum FICO: 580 for 3.5% down; 500 for 10% down
- ✦No luxury items (no pools, spa additions)
- ✦Property must be at least one year old
Freddie Mac CHOICERenovation
- ✦Eligible properties: 1-4 unit primary, second homes, and investment properties
- ✦Renovation costs up to 75% of the as-completed value
- ✦CHOICEReno eXPress is a streamlined version for smaller projects up to $35,000
- ✦Minimum FICO: 660 for most loan-to-value scenarios
- ✦Structural work allowed
- ✦Unique feature: allows renovations to improve energy efficiency and resilience against natural disasters
Choosing the Right Program
Use FHA 203(k) when the borrower has a sub-620 FICO or a limited down payment and the property is a primary residence. Use HomeStyle when the property is a second home or investment, or when the borrower wants luxury improvements. Use CHOICERenovation when running Freddie LP produces better pricing on a 660+ FICO borrower and investment property is involved.
Aria can compare all three renovation programs for a specific deal structure and tell you which AUS findings are most likely to approve. Ask at vicariointel.com.
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