How it works
Works like a 203(k) — purchase or refinance plus renovation in one loan sized against ARV — but under conventional guidelines. Any renovation is allowed including structural, luxury items like pools, and outbuildings. PMI applies above 80% LTV but comes off later, unlike FHA.
A buyer wants a conventional mortgage but the property needs substantial improvements. HomeStyle can combine acquisition and eligible renovation costs, letting the borrower finance the project instead of paying the entire renovation budget in cash.
Who it can work well for
Borrowers with credit in the 620s and up who want renovation financing without permanent mortgage insurance. The only strong renovation option for investors and second homes.
What lenders actually look at
The lender underwrites both the conventional borrower and the project: plans, contractor, budget, contingency, appraisal subject to improvements, draw process and completion timeline.
Illustrative lender guidelines
These are educational examples, not universal approval rules. Exact requirements and maximum leverage vary by lender and complete scenario.
| Scenario | Credit / qualifier | Illustrative leverage |
|---|---|---|
| Primary residence | 620+ | 97% of ARV |
| Second home | 620+ | 90% of ARV |
| Investment, 1 unit | 620+ | 85% of ARV |
| Renovation cost cap | — | 75% of ARV |
| Luxury items (pools) | — | Allowed |
What to watch for
Renovation costs are capped at 75% of the ARV, which is generous but not unlimited. Investment property caps leverage considerably lower than a primary residence.
Common misconception: renovation financing is only FHA. Conventional renovation programs can be an alternative, including scenarios FHA may not fit.
When this may not be the best choice
It may not be best when a normal conventional loan plus cash improvements is simpler, when the project cannot meet program controls, or when an investor-oriented rehab loan is more appropriate.
Common questions
Related programs
Want to see what may fit your scenario?
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