Freddie Mac CHOICERenovation Mortgage Guidelines

Freddie Mac CHOICERenovation Mortgage Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article covers the Freddie Mac CHOICERenovation Mortgage (aka Freddie Mac Choice Renovation program)

There’s a new program from Freddie Mac and Gustan Cho Associates: The Freddie Mac CHOICERenovation home loan.

Renovation lending is becoming more and more popular as the coronavirus pandemic triggered a surge in remodeling. For many, being stuck at home fueled the desire to improve their surroundings.  A recent Harvard study estimated that 80% of the nation’s 137 million homes are at least 20 years old, and 40% are over 50 years old. This is a great time to modernize older homes!

Freddie Mac’s CHOICERenovation mortgage might be the best home improvement loan for larger renovation projects.  You can use a Freddie Mac CHOICERenovation home to purchase or refinance a home.

See if you qualify in just five minutes. 

Freddie Mac CHOICERenovation: Advantages

There are plenty of options to pay for home improvements: home equity loans, personal loans, credit cards, home improvement loans, cash-out refinancing and the FHA 203(k) loan. But the Freddie Mac CHOICERenovation loan offers some unique advantages:

    • Like the FHA 203(k) home loan your maximum loan amount is based on the improved value of the property — not the purchase price or current value. But unlike the FHA loan, the Freddie Mac program does not require upfront mortgage insurance and monthly mortgage insurance for the life of the loan.


    • Even if you pull equity out of your home to pay for home improvements, this loan is not a cash-out refinance. That means you avoid the higher cost and stricter underwriting that comes with a cash-out refinance.


    • Interest rates are almost always lower than those of personal loans, home improvement loans, home equity loans or credit cards. And you only have to deal with a single loan application, closing,  and monthly payment. One loan to buy or refinance your home and improve it.


  • CHOICERenovation is a single close mortgage loan. Unlike a true construction loan, the borrower does not need to re-qualify after the renovations are completed. This allows buyers to renovate a home with a low-down payment and not worry about re-qualifying once the renovations are completed.

CHOICERenovation is available in both fixed-rate and adjustable-rate programs. This product can also be combined with other Freddie Mac products such as FREDDIE MAC HOME POSSIBLE, FREDDIE MAC HOMEONE, and FREDDIE MAC SUPER CONFORMING.

Freddie Mac CHOICERenovation Qualifications And Guidelines

The CHOICERenovation loan is more flexible and usually costs less than other programs. Here are the most important guidelines.

Eligible property types: 

  • 1-4 unit primary homes
  • Manufactured homes
  • 1-unit second homes
  • 1-unit investment properties
  • Condominiums

Maximum loan-to-value (LTV)

  • 1-unit primary homes – 95%
  • 1-unit primary homes – 97% for first time home buyers (HomeOne and HomePossible)
  • 2-unit primary – 85%
    3-4 -unit primary – 80%
    1-unit second home – 90%
  • 1-unit investment property – 85%
  • Manufactured homes – 90%

Max debt-to-income (DTI):

The maximum DTI is 50% for highly-qualified applicants. For most applicants, however, it’s 43%. And for applicants with the smallest down payments, it’s

All Freddie Mac Choice mortgage applications must go through automated underwriting systems (AUS). You cannot use a Choice renovation product if your application requires manual underwriting. You’d need manual underwriting if your credit report contains little data or incorrect information, or if you cannot get an Approve/Eligible decision from AUS.

Please see our AUS BLOG for more information.

Loans Above 80% Require Mortgage Insurance

However, the private mortgage insurance (PMI) required for this program is less costly than that of an FHA rehab loan and it can be canceled eventually. Unlike FHA, which requires mortgage insurance for the life of the loan, this program lets you request cancellation once you pay your loan down to 80% loan-to-value.

Your PMI company will automatically cancel your insurance once you pay your loan down to 78%.

Is There a Maximum Renovation Limit?

The short answer is yes. The max renovation costs cannot exceed75% of the “as-completed” appraised value.

  • For a refinance, that is cut and dried: 75% of the “as-completed” appraised value.
  • For purchases, that amount is the LESSER of 1) the sum of the purchase price PLUS the renovations costs OR 2) the “as-completed” appraised value after the improvements
  • Your loan amount will also be limited to the maximum conforming loan amount in your area. In most cases that’s $548,250. It’s higher for the more expensive housing markets, up to $822,375 in the most expensive locations.

Example provided

When Do You Start Renovations?

After closing on your mortgage, plan to start renovating as soon as possible. You must complete all renovations in 365 days from closing. If you won’t be finished in time, Freddie Mac may grant you an extension. It’s your responsibility to inform your lender. You or your builder will need to provide a detailed letter explaining why your renovations are running behind schedule.

Qualify Today With a Direct Lender and No Overlays

We have offered FANNIE MAE HOMESTYLE and FHA 203 K renovation mortgages for years now.  We are excited to now offer CHOICERenovation!

Gustan Cho Associates are experts in renovation lending. Our staff has completed numerous renovation mortgages, so we know the process. There are a lot of moving parts with the renovation loan and it is important to pick a team with the support you will need. Please call us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at The team at Gustan Cho Associates is available seven days a week!

See your Freddie Mac CHOICERenovation mortgage rate now.

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