Fannie Mae Updates HomeStyle Renovation Program; Lowers Completion Threshold
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In another win for lenders and borrowers, Fannie Mae recently updated the HomeStyle Renovation mortgage program by improving upfront disbursement flexibility, allowing lenders to release up to 50% of renovation funds at closing.
Under Fannie Mae’s Dec. 10 Selling Guide Announcement SEL-2025-10, lenders may now disburse up to 50% of HomeStyle renovation funds at closing, providing greater flexibility to cover upfront contractor deposits, materials, and permitting costs. While the property eligibility completion standard remains unchanged, the revised disbursement guidance removes a key execution bottleneck that often delayed project starts.
The Selling Guide update also clarifies disbursement controls and documentation to improve execution certainly while maintaining strong risk management.
This change reflects sustained MBA engagement with Fannie Mae and the Federal Housing Finance Agency, informed by member feedback and recommendations to reduce barriers to construction financing, as seen in MBA’s July 15 comment letter. Fannie Mae recently extended the allowable age of borrower credit documents to 18 months for its Single-Close Construction-to-Permanent Loans, a previous MBA recommendation.
Mortgage Bankers Association Senior Policy Specialist John McMullen, AMP, called the update meaningful for lenders and borrowers. “Fannie Mae’s announcement reflects practical policy improvements that MBA has been advocating for in the renovation and construction space,” he said. “Building on its momentum, allowing up to 50% HomeStyle disbursement at closing better aligns the program with real-world renovation timelines, reduces friction for contractors and borrowers, and improves execution without increasing risk.”
In its July 15 letter to Fannie Mae Executive Vice President and Head of Single-Family Malloy Evans and Freddie Mac Executive Vice President and Head of Single-Family Acquisitions Sonu Mattal, MBA thanked the enterprises for their continued partnership in addressing housing supply and affordability challenges.
