CHOICERenovation® Mortgages
CHOICERenovation allows lenders to deliver loans to Freddie Mac where the borrower uses the loan proceeds to pay for the renovations.
This solution addresses a gap in the market for lenders looking for a robust, conventional offering to support renovation financing and provide cost-effective solutions for borrowers.
Offer more flexibility to your borrowers through any of our eligible fixed rate and adjustable rate mortgages, in addition to Home Possible®, super conforming and HomeOne® mortgages.
Who are CHOICERenovation Mortgages for?
- Borrowers looking for convenience and cost savings by financing their home purchase and renovation costs in a single-closing transaction.
- Homeowners who need financing to make home improvements or repairs to their existing properties or a home they intend to purchase.
- First-time homebuyers, homeowners looking to age in place or multigenerational families in need of living space customization.
This Bulletin announces updates to affordable lending, desktop appraisals, property insurance, Credit Fees, age of tax return requirements, and more.
This Bulletin announces updates to CHOICERenovation® Mortgages, affordable lending and housing preservation, SOFR ARMs, income and asset requirements, postfunding quality control, and more.
The information on this page is not part of, and is not a replacement or substitute for, the requirements found in the Freddie Mac Single-Family Seller/Servicer Guide and your other Purchase Documents.
CHOICERenovation® – Our Solution for Financing Home Improvements
Product Features
- Eligible Mortgage Products
- Fixed rate and adjustable rate mortgages
- Freddie Mac Home Possible mortgages
- Freddie Mac HomeOne® mortgages
- Super conforming mortgages
- Delivery Requirements
- Final inspection (442)
- Delivered with IFI codes
- Proof of first lien position
- Property Type/Eligible Properties
- 1-4-unit primary residence
- Manufactured homes
- 1-unit second homes
- 1-unit investment property
- Units located in planned unit developments (PUDs), condominiums, cooperatives (if permitted under the Seller’s Purchase Documents) or leasehold estates are acceptable
- Maximum LTV Ratios
- 1-unit primary: 95% (FRM/ARM), FTHB if >95% HomeOne® only; 97% Home Possible® only
- 2-unit primary: 85% (FRM/ARM)
- 3- and 4-unit primary: 80% (FRM/ARM)
- 1-unit second home: 90% (FRM/ARM)
- 1-unit investment properties: 85% (FRM, 7/1, 10/1, 7/6-Month and, 10/6-Month ARMs)
- Manufactured home 95%/95%
TLTV to 105% with eligible Affordable Seconds (only with Home Possible and HomeOne®)
- Eligibility/Underwriting
- Limited to Loan Product Advisor℠ only
- Transaction Type
- Purchase
- No cash-out refinance (NCOR)
Growing Your Business
From valuable training and networking events to advanced tools and applications that help you work smarter, Freddie Mac has the resources you need to expand into new markets and grow your revenues.
- Expand your market opportunity. Allow borrowers to purchase homes and finance the cost of renovations with a single-close mortgage, saving them time and money.
- Expand your business by meeting a greater variety of client needs. Offer a mortgage financing solution to address the increasing demand for cost-effective, aging in place housing solutions, especially for those borrowers who rely less on savings to pay for improvements.
- Increase liquidity. Deliver loans prior to the completion of renovation projects through our CHOICERenovation Term of Business (TOB)*.
- Support the need for affordable housing and address the aging housing supply: According to Harvard Joint Center for Housing Studies, almost 80% of the nation’s 137 million homes are now at least 20 years old and 40% are at least 50 years old. Allow homeowners and homebuyers the opportunity to finance their renovations and increase the value of an older home.
*Lenders who choose to deliver CHOICERenovation mortgages prior to completion of the renovations must obtain prior written approval from Freddie Mac and deliver the mortgages with recourse that will remain in place during the renovation period.
Benefits to Your Borrowers
- Save time and money. Allow borrowers to purchase homes and finance the cost of renovations with a single-close mortgage.
- Package the benefits. Combine this offering with our low-down payment and higher LTV solutions to make financing renovation projects even more affordable.
- Increase home values. Whether borrowers are looking to improve a home they intend to purchase or upgrade their current living conditions, home improvements and repairs can increase the value of their homes.
Resources
CHOICERenovation Mortgage Requirements in the Single-Family Seller/Servicer Guide
Resources for Borrowers
Reaching and educating borrowers – and helping them find the right mortgage – is essential for your business. Freddie Mac provides an array of materials you can share with your clients and business prospects.