B5-3.3-01, HomeStyle Refresh for Improvements on Existing Properties (12/10/2025)

HomeStyle Refresh provides borrowers with a financing option for smaller-scale home improvements, including:

• energy- or water-efficiency upgrades,
• environmental remediation,
• disaster preparedness or resiliency improvement, or
• repairs needed due to a natural or environmental disaster of an existing property.

A lender does not need special approval to deliver HomeStyle Refresh loans to Fannie Mae. These loans are delivered with recourse, which may be removed once the lender provides proof of completion and the loan remains current.

A lender may deliver a HomeStyle Refresh loan with eligible improvements as soon as the loan is closed. The eligible improvements do not have to be completed when the mortgage is delivered to Fannie Mae. 

Improvements are permitted on existing properties in conjunction with all standard Guide products and features including, but not limited to:

• high-balance loans,
• Community Seconds,
• loans with deed restrictions (including programs that allow below market rate mortgages),
• down payment assistance programs,
• HomeReady loans, and
• Community Land Trusts.

HomeStyle Refresh loans are subject to the applicable LTV, CLTV, and HCLTV ratios for purchase and limited cash-out refinance transactions found in the Eligibility Matrix . Improvements cannot be financed in the loan amount of a high LTV refinance loan.

Note: Improvements are permitted on a cash-out refinance, however the transaction is not considered a HomeStyle Refresh loan. All standard cash-out refinance policies apply.

All one- to four-unit existing properties are eligible for HomeStyle Refresh. All property types are eligible. Manufactured homes are eligible provided the improvements do not include structural changes.

All occupancy types are permitted.

The HomeStyle Refresh program may be used to make small-scale improvements and renovations to an existing property, such as:

• kitchen or bathroom updates;
• construction of outdoor buildings and structures when allowed by local zoning regulations, for example swimming pools, decking, screening and porch, and patio additions;
• adding or renovating an accessory dwelling unit;
• improvements or repairs related to disaster damage or improvements to protect the property from future disaster, such as
  • storm surge barriers,
  • foundation retrofitting for earthquakes,
  • hazardous brush and tree removal in fire zones, or  
  • retaining walls to address mud or water flows.
• environmental hazard damage repairs or resiliency improvements, including asbestos, lead, mold, and radon; or
• energy- or water-efficiency improvements.

Change Requests

Before approving any change request a borrower wants to make to the original plans and specifications, the lender must require the borrower to submit a HomeStyle Change Order Request (Form 1200) or a substantially similar document, that provides a detailed description of the 

• change(s),
• cost of the change(s), and
• estimated completion date(s).

Purchase Transactions: In a purchase transaction, the proceeds can be used to finance the acquisition of the property and the cost of the improvements or the amount to payoff PACE debt. The LTV ratio is determined by dividing the original loan amount by the lesser of

• the “as completed” appraised value of the property
• the sum of the purchase price of the property plus the cost of the improvements, or
• the sum of the purchase price plus the total amount of PACE debt to be paid off.

Limited Cash-out Refinance Transactions: When a loan is originated as a limited cash-out refinance, the loan must meet all of the standard requirements for limited cash-out refinances (as described in B2-1.3-02, Limited Cash-Out Refinance TransactionsB2-1.3-02, Limited Cash-Out Refinance Transactions).

Proceeds may also be used to pay off an existing PACE loan or other debt (secured or unsecured) that financed energy-related improvements. The standard cash back allowance of the greater of 1% of the loan amount or $2,000 is permitted on these loans.

For limited cash-out refinance transactions, the LTV ratio is determined by dividing the original loan amount by the “as completed” appraised value of the property when the mortgage is being delivered prior to the completion of the improvements. If the appraisal was completed after the completion of the improvements, then the LTV ratio is determined by dividing the original loan amount by the appraised value of the property.

There is no minimum dollar amount for the improvements; the maximum dollar amount depends on the type of HomeStyle Refresh activity and the transaction, described in the table below

The lender is responsible for

• ensuring that the appraiser has been provided with a copy of all plans and specifications proposed for the renovation project,
• managing the completion escrow account in which improvement funds are held, and
• monitoring the completion of the HomeStyle Refresh improvement work.

The lender must establish a completion escrow for incomplete improvements. The improvements must be completed no later than 180 days from the date of the mortgage note. For requirements related to the completion of the postponed improvements, including escrow accounts, disposition of funds after work completion, and title reports, see the applicable table in B4-1.2-05, Requirements for Verifying Completion and Postponed ImprovementsB4-1.2-05, Requirements for Verifying Completion and Postponed Improvements.

In the event a renovation project exceeds 180 days, the lender must submit this information to Loan Quality Connect to describe the circumstances resulting in the delay and determine potential remedies. Recourse shall remain until proof of completion has been provided. If a loan experiences a serious delinquency (120+ days) while under recourse, the loan will be subject to repurchase.

The lender may fund up to 50% of the total planned renovation costs at closing with an initial draw. A portion of the initial draw may be used to pay for permits, architect fees, and design or planning expenses that were incurred during the initial part of the project.

The lender must maintain a copy of all documentation in the individual loan file that supports the improvement work, such as the “as completed” appraisal, home improvement contract, certification of completion, and title insurance endorsements or updates (if applicable).

Note: Lenders may not transfer servicing on HomeStyle Refresh loans during the renovation period.

All HomeStyle Refresh loans require an appraisal based on an interior and exterior property inspection and must be completed on the appropriate form depending on the property type. When the loan is being delivered prior to the completion of the improvements, appraisers must determine the “as completed” value of the property subject to the improvements being completed. 

Following completion of the renovation work, the lender must obtain a certification of completion stating the renovation was completed in accordance with the submitted plans and specifications. The certification must be documented on the Appraisal Update and/or Completion Report (Form 1004D). The 1004D must confirm all "subject to" items listed on the appraisal were completed. If deviations have been made to the initial plans, the appraiser must note any impact to the appraised value. A copy of the Completion Report must be submitted through Loan Quality Connect to confirm completion.

The lender must obtain a title update with the renovation completion date before issuing the final funds to ensure that Fannie Mae's first lien priority remains in place and confirms that no mechanic's or materialmen's liens exist.

When the property is located in a state in which contractors', subcontractors', or materialmen's liens have priority over mortgage liens, the lender must obtain all necessary lien releases or take any other actions that may be required to ensure title to the property is clear of all liens and encumbrances.

The lender must also retain in the loan file a certification regarding the adequacy of the property insurance following completion of the renovation. The certification must confirm the coverage has been increased, if necessary, to comply with Fannie Mae's standard property and flood insurance requirements.

The lender must report Special Feature Code 892 when delivering a loan that meets the HomeStyle Refresh requirements. 

For loans involving improvements that are underwritten manually, a maximum debt-to-income ratio of 45% is allowed if the transaction satisfies all criteria in the Eligibility Matrix for a 45% DTI ratio on a manually underwritten loan. All other underwriting requirements, such as the down payment, credit score, and reserve requirements, are identical to those for a similar transaction with a maximum DTI ratio of 36%. 

Lenders using UAD 3.6 must follow the requirements in the UAD 3.6 Policy Supplement .