The HomeStyle Renovation Loan: Unlocking Fixer-Upper Potential and House Hacking Freedom
If you’ve been dreaming of living mortgage-free while building wealth through real estate, the HomeStyle Renovation Loan might just be your golden ticket. This unique loan program allows you to purchase undervalued, fixer-upper properties, renovate them to their highest potential, and even convert them into multi-unit cash-flowing homes.
For anyone interested in house hacking, building generational wealth, and designing their dream community, this loan offers unmatched flexibility and financial power.
Let’s dive into the benefits, strategies, and real-world applications of the HomeStyle Renovation Loan—including how we used it to build our 4-unit Felton Street Project in San Diego!
What is the HomeStyle Renovation Loan?
The HomeStyle Renovation Loan, offered by Fannie Mae, is a mortgage product that allows you to:
Purchase and renovate a property with a single loan.
Finance renovations, repairs, or even additions, including converting a home into a 4-unit multifamily property.
Borrow up to 75% of the appraised “after-renovation value” of the property.
Unlike the FHA 203k loan, which has tighter restrictions and lower loan limits, the HomeStyle loan offers higher borrowing caps and can support bigger renovation projects, making it ideal for multi-unit development in expensive markets like San Diego.
Key Benefits of the HomeStyle Renovation Loan
1. Purchase Fixer-Uppers and Build Your Dream Property
This loan is designed for buyers who see value and potential in distressed or undervalued properties. Whether it’s an old duplex, triplex, or single-family home, you can renovate and add units up to a 4-plex (zoning-permitting), increasing both rental income and property value.
Example: We purchased a rundown duplex in North San Diego for $570,000, financed renovations with a HomeStyle loan, and redeveloped it into a 4-unit property of our own design.
2. Low Down Payment
For owner-occupied properties, the HomeStyle Renovation Loan requires as little as 3% down for single-family homes and 5% for multi-unit homes. This makes it accessible for first-time homebuyers and investors alike.
3. House Hacking Potential
With house hacking, you live in one unit while renting out the others. The rental income helps cover your mortgage, often allowing you to live for free or very cheap.
Our Story: Post-renovation, our total mortgage was $6,700/month, but rental income from three units brought in $7,100/month. This effectively made our housing costs close to zero.
4. One Loan, One Payment
Unlike other financing options where you might need separate loans for purchase and renovation, the HomeStyle Loan combines both into a single, manageable mortgage.
5. Repeat the Process
Once you complete a project, you can refinance into a conventional loan, pull out equity, and repeat the process to build more wealth.
Our Plan: After completing our first project, we are leveraging the property’s equity to fund our next redevelopment project—continuing to grow wealth while providing new, solar-powered housing in communities we love.
How Does the HomeStyle Renovation Loan Work?
Find a Property with Potential Look for undervalued or distressed properties. Check zoning laws to ensure you can convert them into multifamily units.
Work with a Contractor and Architect Create a detailed renovation plan, including cost estimates and designs. Your lender will require these plans as part of the loan approval process.
Finance Up to 75% of the After-Renovation Value The loan amount is based on the future appraised value of the property after renovations are complete.
Close on the Loan Once approved, the loan funds both the purchase price and renovation costs.
Renovate the Property Renovations must be completed within 12 months, so it’s crucial to have a solid project timeline.
Live, Rent, and Repeat Move into one of the units, rent out the others, and enjoy the cash flow while building equity. When ready, refinance, pull equity, and repeat!
How We Used the HomeStyle Loan for House Hacking
Step 1: Purchase a Duplex
Purchase Price: $570,000 with 3% down.
Step 2: Redevelop into 4 Units
Renovation Cost: ~$700,000 financed through a HomeStyle Loan.
Step 3: Rent Out the Units
Total Rents: $7,100/month.
Mortgage: $6,700/month.
Step 4: Refinance and Scale
Refinanced into a conventional loan, pulled $100,000 equity, and now planning our next project.
Top HomeStyle Renovation Loan Lenders and Brokers
Finding the right loan broker can make the HomeStyle Renovation Loan process much smoother. Here are some top brokers and lenders who specialize in this unique financing:
Carl Spiteri, Benchmark Mortgage (San Diego)
Carl is incredibly knowledgeable and helped us navigate the complexities of the HomeStyle Loan for our 4-unit redevelopment project.
Movement Mortgage (National Broker)
A trusted lender offering HomeStyle Renovation Loans with strong customer support.
Guaranteed Rate (Nationwide)*
Known for their competitive rates and streamlined loan process.
Homespire Mortgage (Specializes in Renovation Loans)
Offers personalized service and guidance for buyers interested in fixer-uppers.
Additional Resources to Learn More About HomeStyle Loans and House Hacking
Final Thoughts: Build Wealth and Make a Difference
The HomeStyle Renovation Loan opens up opportunities to transform undervalued properties into vibrant multi-unit communities while helping you live inexpensively. For us, it was the key to building our Felton Street Project in San Diego—and we’re not stopping there.
Our vision at Village Redevelopment is to create sustainable, solar-powered, and socially engaging communities in towns we love, like San Diego, Mammoth Lakes, and Lake Tahoe. By leveraging tools like the HomeStyle Renovation Loan and the principles of house hacking, we’re proving that you can build wealth and make a positive impact at the same time.
If you’re ready to start your own house hacking journey or want guidance on using these loan programs, reach out to us. Let’s build something amazing together.
Contact Us:
Website: VillageRedevelopment.com
Instagram: @villageredevelopment
Stay Inspired and Get Started Today!
Start small, dream big, and leverage these powerful tools to achieve financial independence while creating meaningful, sustainable housing in the process.
Yours in building better communities,
Jeremy Curran
Founder, Village Redevelopment