source:
  type: guide
  id: fnma-sel-b5-3.3-01
  authority: Fannie Mae Selling Guide B5-3.3-01 — HomeStyle Refresh for Improvements
    on Existing Properties
  description: Fannie Mae Selling Guide B5-3.3-01 — HomeStyle Refresh for Improvements
    on Existing Properties.
  coverage_tier: operative
obligations:
- id: fnma-sel-b5-3.3-01-full
  canonical_id: fnma-sel-b5-3.3-01-full
  section: Fannie Mae Selling Guide B5-3.3-01 — HomeStyle Refresh for Improvements
    on Existing Properties
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B5-3.3-01 — HomeStyle Refresh for Improvements
      on Existing Properties
    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: 'B5-3.3-01, HomeStyle Refresh for Improvements on Existing Properties
      (12/10/2025) Introduction This topic contains information concerning mortgage
      loans on existing properties where renovation improvements are part of the transaction,
      including: Overview Product Eligibility Eligible Property and Occupancy Types
      Eligible Improvements Calculating LTV and Maximum Renovation Amount Lender Responsibilities
      Appraisal Requirements Title and Insurance Updates Published May 6, 2026 744
      Special Feature Code Manual Underwriting Uniform Appraisal Dataset (UAD) 3.6
      Policy Overview 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. Product Eligibility 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. Eligible Property and Occupancy
      Types 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.
      Published May 6, 2026 745 Eligible Improvements 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). Calculating LTV and Maximum Renovation Amount 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 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 Published May 6, 2026 746 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 HomeStyle Refresh Activity Maximum Amount to Finance Improvements
      Renovation of an existing property For purchases or limited cash-out reﬁnances
      up to 15% of the “as completed” appraised value of the property. Payoﬀ of non-PACE
      secured or unsecured debt that ﬁnanced energy-related improvements For limited
      cash-out reﬁnances up to 15% of the appraised value of the property. The improvement
      debt must be paid oﬀ in full. Partial payoﬀs are not permitted. Note: If a HomeStyle
      Refresh loan includes both new energy-related improvements and payoﬀ of previously
      acquired energy-related debt, the total of both cannot exceed 15%. Payoﬀ of
      existing PACE loan For purchases or limited cash-out reﬁnances: all outstanding
      PACE debt may be paid oﬀ up to the maximum allowable LTV for the transaction
      and occupancy type. The PACE loan must be paid oﬀ in full. Partial payoﬀs are
      not permitted. Lender Responsibilities 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 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 Published May 6, 2026 747 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. Appraisal Requirements 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. Title and Insurance Updates
      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. Special Feature Code
      The lender must report Special Feature Code 892 when delivering a loan that
      meets the HomeStyle Refresh requirements. Published May 6, 2026 748 Manual Underwriting
      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%. 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-2025-08 October 08, 2025 Announcement SEL-2025-04
      June 04, 2025 Announcement SEL-2024-08 December 11, 2024 Announcement SEL-2022-10
      December 14, 2022 Announcement SEL-2022-05 June 01, 2022 Announcement SEL-2020-07
      December 16, 2020 Announcement SEL-2020-03 June 03, 2020 Announcement SEL-2019-07
      August 07, 2019 Announcement SEL-2019-06 July 03, 2019 Published May 6, 2026
      749 Section B5-3.4, Property Assessed Clean Energy Loans'
  judgment: false
