A FannieMae Homestyle® Renovation loan is a single-close loan used to make renovations to a 1- to 4-unit primary residence or a 1-unit second home/1-unit investment without needing a second method of financing. The loan can be used either when purchasing without the need for a home equity loan or the additional burden of a second set of closing costs.
The borrower shares their planned home improvements with the lender so when the home is appraised as part of the mortgage approval process, the appraiser will base the value off the future worth of the finished house. This then ensures that borrowers have enough money to finance both the house and the construction costs without needing another loan. Borrower must choose their own licensed contractor. Also finances up to 6 months of mortgage payments if home cannot be occupied.