Freddie Mac CHOICERenovation®

What is CHOICERenovation®?

This loan allows borrowers to purchase a home that needs repairs, or refinance their existing home, and include the necessary funds for renovation in the balance of the new loan. The loan amount is based on the “as-completed” value of the home rather than the present value.

CHOICERenovation® is incredibly flexible and can be used in a wide variety of scenarios. If a homeowner has an eye on a fixer upper and wants to turn it into a dream home, it’s likely CHOICERenovation® can help make it happen.

  • Total renovation costs exceeding $200,000 require a second level project review prior to approval
  • There maybe a period during renovation where the home may be uninhabitable as determined by the HUD Consultant
  • Repairs may be structural or non-structural
  • Eligible property types:

    • 1-4 Unit Primary Residences
    • 1-Unit Second Homes
    • Approved Condos
    • PUDs
    • Multi-width Manufactured Homes
    • 1-unit Investment properties

Freddie Mac CHOICERenovation® Loan Basics

  • 620 minimum qualifying credit score
  • Repairs or improvements must be permanently affixed to the real property and add value to the property
  • 15 year and 30 year Fully Amortizing fixed term options
  • No minimum dollar amount required for repairs

What are the benefits?

Loan amount based on “as-completed” value

The CHOICERenovation® offers borrowers financing based on the value of the property after the renovations have been made. This allows borrowers to qualify for a higher mortgage based on the property value after renovations.

Can help save loans that have repair contingencies

Home purchases that may have otherwise been thwarted by costly repair contingencies can be saved with the CHOICERenovation® loan. With this program, borrowers can finance the cost of the repairs into the loan amount and ensure they still get the home they want.

Not just for owner occupied

Unlike many renovation loan options, the CHOICERenovation® can be used for 1-unit second homes. This can create an excellent opportunity for building instant equity in a vacation home.

Luxury Improvements Allowed

Most renovation loan programs don’t allow the financing of luxury items on the home – improvements such as swimming pools, hot tubs, tennis courts, and outdoor kitchens. These projects are all eligible through CHOICERenovation®!

Who is eligible for a CHOICERenovation®?

Eligibility will be determined by examining the borrowers’ income, assets, liabilities, and credit history and score, as well as the market value and condition of the property to be financed.

In which scenarios is CHOICERenovation® useful?

CHOICERenovation® is advantageous for borrowers who wish to refinance an existing mortgage and take on a substantial home improvement project. This may be a lower cost alternative to a home equity line with a variable interest rate or a second mortgage.

Buying a Home with a CHOICERenovation® Loan

By providing financing for repairs and improvements, this program can create home buying opportunities. It can be hard for house hunters to find a property that has everything they are looking for. Perhaps a home is too small, the chopped up floor plan is unappealing, or the dated kitchen just doesn’t suit today’s buyers.

With CHOICERenovation® it’s not necessary to find a perfect home on the market – buyers just need to have a vision for how great the home could be with a little work!

CHOICERenovation® Loan Refinancing

A CHOICERenovation® loan is often thought of for purchase transactions, but it can also be used to refinance an existing mortgage when homeowners want to make repairs or renovations to their property. There is also a limited cash-out refinance option for this program.

Other Programs to Consider

If a CHOICERenovation® loan is not an ideal fit for a particular scenario here are a few other products to explore:

  • Cover purchase and repairs or refinance the rehabilitation of an existing home: FHA 203(k) Renovation Loan
  • To finance projects on a HUD home that requires minimal or cosmetic repairs: FHA 203(b) Standard Loan with FHA Repair Escrow
  • For military and veteran borrowers looking to finance minor updates at a cost under $35,000: VA Renovation Loan