The renovation market has grown more than 50% since the Great Recession ended in 2009. The U.S. market for home improvement and repairs is now over $400 billion annually, according to Harvard University’s Joint Center for Housing Studies (JCHS). Almost 80% of the nation’s 137 million homes are now at least 20 years old and 40% are at least 50 years old. Given the increasing age of existing housing stock, the growing number of millennials looking for more affordable home-buying options and the increase in retirees opting to downsize or age in place, there’s a gap in affordable ways to finance these fixer-uppers.

Freddie Mac is responding to this need by introducing a new renovation offering called CHOICERenovation. Our new offering allows lenders to finance the purchase price of the home and renovation costs all in one loan. CHOICERenovation will provide lenders and borrowers with another flexible choice for mortgage financing and home improvements with increased efficiency and cost savings.

The Right Choice

Lenders familiar with our construction conversion and renovation mortgages know that our current offerings provide permanent financing that replaces interim financing in either a single-close or two-closing transaction, but the construction or renovation must be completed prior to delivery of the mortgage. CHOICERenovation will allow lenders to sell loans to Freddie Mac where the borrower uses the loan proceeds to pay for renovations completed after loan closing.

Freddie Mac Sellers may deliver CHOICERenovation mortgages to Freddie Mac through two paths: (1.) without recourse after the renovations are complete, or (2.) with recourse before renovations are complete. Lenders who choose option two, will be required to apply for eligibility. 

CHOICERenovation, Freddie Mac’s latest renovation financing solution helps address the aging housing supply, supports the need for affordable housing, and offers a mortgage financing solution for the increasing demand for cost-effective, aging-in-place housing solutions. 

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