source:
  type: guide
  id: fnma-sel-b5-3.2-01
  authority: Fannie Mae Selling Guide B5-3.2-01 — HomeStyle Renovation Mortgages
  description: Fannie Mae Selling Guide B5-3.2-01 — HomeStyle Renovation Mortgages.
  coverage_tier: operative
obligations:
- id: fnma-sel-b5-3.2-01-full
  canonical_id: fnma-sel-b5-3.2-01-full
  section: Fannie Mae Selling Guide B5-3.2-01 — HomeStyle Renovation Mortgages
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B5-3.2-01 — HomeStyle Renovation Mortgages
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B5-3.2-01, HomeStyle Renovation Mortgages (12/10/2025) Introduction
      This topic contains information on HomeStyle Renovation mortgages, including:
      Overview Allowable Improvements Lender Eligibility Lender Responsibilities Delivery
      and Recourse Requirements Removal of Recourse Uniform Appraisal Dataset (UAD)
      3.6 Policy Overview The HomeStyle Renovation mortgage enables a borrower to
      purchase a property or reﬁnance an existing loan and include funds in the loan
      amount to cover the costs of repairs, remodeling, renovations, or energy improvements
      to the property. The loan may be delivered to Fannie Mae prior to completion
      of the renovation, subject to limited recourse as described below. Note: For
      loan caseﬁles underwritten through DU, DU will determine that the transaction
      is a HomeStyle Renovation loan if the Renovation indicator in Property and Loan
      Information (L1) is selected and there is an amount entered in Line B (L4) of
      the online loan application. Allowable Improvements There are no required improvements
      or restrictions on the types of renovations allowed, nor is there a minimum
      dollar amount for renovations. Published May 6, 2026 728 Generally, improvements
      should be permanently aﬃxed to the real property (either dwelling or land),
      with the exception of certain appliances installed with kitchen and utility
      room remodels. The borrower may use HomeStyle Renovation to purchase appliances
      as part of an overall remodeling project that includes substantial changes or
      upgrades to the rooms in which the appliances are placed. HomeStyle Renovation
      may be used to complete the ﬁnal work on a newly built home when the home is
      at least 90% complete. The remaining improvements must be related to completing
      non-structural items the original builder was unable to ﬁnish. Such work may
      include installation of buyer-selected items such as ﬂooring, cabinets, kitchen
      appliances, ﬁxtures, and trim. HomeStyle Renovation may be used to construct
      various outdoor buildings and structures when allowed by local zoning regulations.
      These buildings or structures must be in compliance with any applicable building
      codes for the local area. Examples of acceptable structures include, but are
      not limited to, accessory units, garages, recreation rooms, and swimming pools.
      See Accessory Dwelling Units in B2-3-04, Special Property Eligibility Considerations
      for additional information about eligible ADUs. HomeStyle Renovation may not
      be used for complete tear-down and reconstruction of the dwelling. Lender Eligibility
      HomeStyle Renovation mortgage loans have speciﬁc product requirements and guidelines
      for which lenders must ensure detailed compliance. Lenders must obtain special
      approval to deliver these types of loans to Fannie Mae prior to completion of
      the renovation work. See A2-1-01, Contractual Obligations for Sellers/Servicers
      for additional information. If a lender delivers HomeStyle Renovation loans
      to Fannie Mae after all renovation work is complete, no special approval is
      required. Lender Responsibilities Renovation work must be completed no later
      than 15 months from date the loan is closed. In the rare circumstance a renovation
      project exceeds 15 months, the lender must submit this information to Loan Quality
      Connect to describe the circumstances resulting in the delay and determine potential
      remedies. These options may include a limited extension of the timeframe (not
      to exceed 18 months from the date the loan was closed), curtailment of the work
      to be completed, repurchase of the loan, or other remedies applicable to the
      speciﬁc circumstance. Fannie Mae has sole discretion in determining which remedy
      is acceptable when renovation timeframe exceeds 15 months. Lenders may not transfer
      servicing on HomeStyle Renovation loans during the renovation period. The lender
      is responsible for monitoring completion of the renovation work and must exercise
      all approval and oversight responsibilities that are customary and required
      to comply with speciﬁc state laws and to ensure that clear title to the property
      is maintained. Lenders may use vendors to manage the operational, escrow, and
      completion requirements for HomeStyle Published May 6, 2026 729 Renovation loans;
      but when a vendor is used, the lender is responsible for adequate vendor oversight
      to ensure all requirements are met. If any action the lender takes or fails
      to take in overseeing the renovation work aﬀects Fannie Mae’s ability to acquire
      clear title to the property, the lender may be required to repurchase the loan.
      The lender must maintain a copy of all of the documentation that supports the
      renovation work, including plans and speciﬁcations, “as completed” appraisal,
      renovation contract, renovation loan agreement, certiﬁcate of completion, title
      insurance endorsements or updates, and any other related documentation in the
      loan ﬁle. For more information about the specialized legal documentation Fannie
      Mae requires for a HomeStyle Renovation mortgage, see Subpart B8, Closing: Legal
      Documents. Delivery and Recourse Requirements A lender may deliver a HomeStyle
      Renovation loan as soon as it is closed; the renovation does not need to have
      been completed when the loan is delivered as long as the lender delivers that
      loan with recourse. If the borrower defaults under the terms of the loan before
      the work is completed, and that default continues for at least 120 days, the
      lender may be required to repurchase the loan. One of the following SFCs is
      required when the loan is delivered. If the HomeStyle Renovation mortgage is
      delivered... Then... And the lender must deliver... • when the renovation is
      not complete • the loan is delivered with recourse • SFC 215 • when the renovation
      is complete • no recourse obligation applies • SFC 279 Removal of Recourse For
      loans delivered with recourse, the lender may request the recourse obligation
      be removed when the renovation is complete. The following criteria will be applicable
      to the removal of recourse: Recourse will not be removed if the loan is delinquent
      when the lender requests removal. If the borrower was 1 x 30 days delinquent
      at any point during the renovation work, but is current when removal is requested,
      the recourse may be removed. If the borrower had more than one 30 day delinquency
      or was ever 60 - 90 days delinquent, the lender may request recourse removal
      after the borrower has made 36 payments with no delinquencies. To request removal
      of recourse, the lender must submit a complete Appraisal Update and/or Completion
      Report ( Form 1004D) to Loan Quality Connect. Submissions must meet the following
      requirements: The Fannie Mae loan number(s) must be identiﬁed in the request
      and attached documents must have the Published May 6, 2026 730 loan numbers
      in the title. Documents must be clear and complete. For example, it is a best
      practice to include photos of completed renovations with all submissions. See
      B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certiﬁcation, for additional
      information. HomeStyle Renovation mortgages are eligible for enforcement relief
      of underwriting and eligibility representations and warranties as described
      in A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and
      Warranties Related to Underwriting and Eligibility. To be eligible for relief,
      the renovation must be complete and recourse removed. Uniform Appraisal Dataset
      (UAD) 3.6 Policy Lenders using UAD 3.6 must follow the requirements in the UAD
      3.6 Policy Supplement. Recent Related Announcements The table below provides
      references to recently issued Announcements that are related to this topic.
      Announcements Issue Date Announcement SEL-2025-10 December 10, 2025 Announcement
      SEL-2025-04 June 04, 2025 Announcement SEL-2023-02 March 01, 2023 Announcement
      SEL-2022-10 December 14, 2022 Announcement SEL-2022-05 June 01, 2022 Announcement
      SEL-2022-01 February 02, 2022'
  judgment: false
