How the Freddie Mac CHOICER Renovation Mortgage Works: Tips for 2021

What is the Freddie Mac CHOICER Renovation Loan?

Freddie Mac's CHOICERenovation (sometimes referred to as Choice Renovation) mortgage gives borrowers the ability to buy and repair homes without the need for two separate loans.

It also allows current homeowners to refinance and include the renovation costs in the new loan amount.

The CHOICERenovation loan can save you thousands of dollars in additional closing costs by using a single mortgage to finance your home loan and repairs.

Check if your Freddie Mac CHOICER Renovation Loan is Eligible. Start here (29.10.2021)

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Is A CHOICER Renovation Loan Right For You?

Many borrowers want to buy and repair a new home, but traditionally it takes two loans – and two closings – to fund such deals.

There is a closing for the acquisition financing. Then later there is a second closing for options like a cash-out refinance, a second loan, a home equity loan, or a home equity line of credit (HELOC) to pay for renovations.

In all situations, such loans can require a full degree and that can add high costs for things like legal fees, title insurance, and taxes.

Freddie Mac's CHOICERenovation loan program eliminates the hassle and cost of getting two loans.

Instead, it allows borrowers to buy a home and complete necessary renovations with a single mortgage loan.

Suitable mortgage products

Fixed and Variable Rate MortgagesFreddie Mac Home Potential MortgagesFreddie Mac HomeOne MortgagesSuper Compliant Mortgages

Freddie Mac's CHOICERenovation loan shares some similarities with the FHA 203 (k) loan and Fannie Mae's HomeStyle Renovation loan.

All three loan products offer purchase and renovation financing with just one loan and deal. However, there are differences between these programs, which are discussed later in this article.

CHOICE renovation loan benefits

Finance a home purchase or a home renovation with a single loan with a fixed or variable interest rate home with just 3% down payment

How the Freddie Mac CHOICER Renovation Loan Works

A CHOICER renovation loan can be used to buy a new home or to finance renovation projects on an existing home.

To start with, apply for CHOICERenovation from a lender of your choice. The lender needs to review your finances, as well as your proposed renovation plans, and approve you for the mortgage.

After you are approved, the ChoiceRenovation program requires you to set up an escrow account.

The escrow account includes renovation funds, emergency funds and up to six months of mortgage capital, interest, taxes and insurance (PITI). All monies will be withheld until completion and your builder will be paid in "draws" after the work is completed.

The lender can pay out up to 50% of the material costs after completion.

For additional information and specifics, speak to lenders. Ask about prices and terms, how draws are handled, and which program best suits your needs and preferences.

Requirements for obtaining the CHOICER renovation loan

While a CHOICERenovation loan is available to all qualified buyers, Freddie Mac identifies several types of borrowers who can benefit most from this loan product.

First-time home buyers buying a built-up home looking for an existing property or a new home


With a CHOICERenovation mortgage, the minimum down payment may vary depending on the number of units and their use. As examples:

1-unit main residence: 5% lower * / 95% lending ratio (LTV). 2-unit main residence: 15% lower (85% LTV). 3-4-unit main residence: 20% lower (80% LTV) 1 -Unit second home: 10% lower (90% LTV) 1-unit investment property: 15% lower with 7/1 or 10/1 ARM (85% LTV) Prefabricated house: 5% lower (95%) LTV)

* Down payment from 3% in combination with Freddie Mac’s Home Possible mortgage for single-family homes.


There are no minimum credit requirements for the CHOICERenovation loan. Borrowers must meet their lender's normal mortgage requirements. Most lenders require a credit rating of 620-660 to qualify for a conventional mortgage.

Debt-Income Ratio

Similar to a borrower's credit score, Freddie Mac does not have any specific Debt-to-Income (DTI) requirements for the CHOICERenovation loan.

Property types suitable for CHOICERenovation

The CHOICERenovation program is open to a wide variety of properties.

1-4 units of main residencesHouses produced, 1-unit second homes, 1-unit investment property, Real estate in Planned Residential Units (PUDs), condominiums, cooperatives (if allowed in the seller's purchase documents) and leasehold properties.

Investment property

The government has long tried to understand real estate investors. HUD, the overseer of the FHA 203 (k) rehab loan program, wanted to "consult the industry … to investigate legislative and policy reforms that … provide the investor program's neighborhood rehabilitation benefits with no abuse and risk to the insurance" funds. "

These words were written in 1996. Since then, real estate investors have been banned from the FHA 203 (k) program.

Fannie Mae and Freddie Mac feel different. The HomeStyle and ChoiceRenovation programs offer investor financing for single-family homes with a minimum discount of 15%. This is higher than the 3% upfront required for owner occupants.

But it's still a very small down payment considering it's a rental property construction loan.

How To Use A CHOICER Renovation Loan

Home improvement loans are required to upgrade a property unless you have cash on hand. Buyers and owners alike benefit from these loans.

Home purchases

As the housing market continues its never-ending rise, well-maintained homes are harder to find.

The CHOICERenovation loan allows you to consider shabby homes that would not meet traditional funding requirements.

These houses are less expensive and often have less competition. As a first-time home buyer, you may stand a great chance of getting a quote on a fusing face that TLC needs.

Renovation projects

Is your kitchen shabby? Does the living room need a new carpet? Are your bathrooms in need of renovation?

These repairs and improvements can be in the mid five-digit range. With CHOICERenovation, you may be able to refinance yourself at a lower interest rate and finance improvements with a loan.

Build a "mother-in-law" suite for additional residential units (ADU)

It's hard to miss the new demand for accessory units – additions that can be used for guests, in-laws, and short term rentals.

Given the popularity of short term vacation rentals on platforms like Airbnb, many people want to renovate and take advantage of this growing source of income – renovations that need funding.

"Resilience items" aka disaster control upgrades

The CHOICERenovation program enables borrowers to finance so-called "resilience items".

Resistance objects are DIY work such as surge protection walls, retrofitting of foundations and retaining walls.

In other words, it is one way of getting funding for civil protection modernization. It is a recognition that fires, floods, cyclones, earthquakes, and other natural disasters are common and increasingly expensive.

Freddie Mac CHOICER Renovation Loans vs. Fannie Mae HomeStyle Loans

Fannie Mae's HomeStyle Renovation loan and Freddie Mac's CHOICERenovation program are quite similar.

Borrowers can finance a single primary residence with only 3% less (when combined with Home Possible), just like Fannie Mae's HomeStyle finance.

In addition, the creditworthiness requirements for HomeStyle and CHOICERenovation vary depending on the lender.

However, an important difference between these two loans is that the CHOICERenovation mortgage program allows you to fund resilient items – such as: B. the disaster control of your house – while HomeStyle does not.

Freddie Mac CHOICER Renovation Loan vs. FHA 203 (k)

The FHA 203 (k) Mortgage is a popular loan program that also allows borrowers to purchase a fixer upper and remodel it with a single mortgage. But there are a few differences between the loans.

Credit Scores: FHA allows credit scores of 580 or higher. CHOICERenovation does not have a minimum credit score. Instead, credit ratings are determined by the lender Down Payment: Minimum 3.5% Down Payment for FHA 203 (k) rehab funding. Freddie requires a minimum of 3% down payment when combined with a Home Possible loan – otherwise the minimum is 5% Advisors: The FHA 203 (k) program requires borrowers to use a 203k adviser . The advisor guides the homeowner through the construction process. Freddie, on the other hand, does not have this debt-to-income ratio requirement: FHA has a maximum DTI of 43%, while the DTI for a CHOICER renovation loan is determined by the individual lender

Freddie Mac CHOICER Renovation Loans FAQ

Are energy efficiency improvements eligible?

Yes sir. Freddie Mac regards energy efficient improvements as falling into the category of permissible real estate improvements.

Does CHOICERenovation need a consultant?

No. Freddie Mac does not require borrowers to use a home builder when using a CHOICERenovation loan.

What are the maximum renovation costs?

The maximum permissible renovation costs for a refinancing are up to 75% of the estimated value of the house after improvements and repairs. When buying a house, however, the renovation costs may not exceed 75% of the lower of the sum of the purchase price and renovation costs or the value of the house after the renovation.

Which drawing paths are allowed?

CHOICER Renovation Mortgages must be presented to the Loan Product Advisor for "Accept" risk classification. Manual underwriting is not allowed.

How do I apply for a CHOICER renovation loan?

The advantages of a renovation mortgage with a degree are many.

FHA 203 (k) and HomeStyle are two popular mortgage products and now Freddie Mac is joining these loans by offering a new range that allows for additional housing units and other bonuses.

Get your CHOICERenovation eligibility and tariff check and start your journey to a renovated house.

Confirm your new plan (October 29, 2021)

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