By Frederick Blum, Blum Realty Group
You find a San Diego home in the neighborhood you want, with a layout that works—but the kitchen needs attention, the windows are tired, or repairs would eat up the money you planned to keep after closing. Do you pass, buy it and postpone the work, or see whether the purchase and improvements can be financed together?
Fannie Mae’s HomeStyle Refresh is one option worth asking your lender about. It allows eligible improvements to be included in a mortgage, but the details matter: the property, the work, the appraisal and the cash you need to keep available. Start with those numbers before you build an offer around the program, and confirm that your lender actually offers it.
Understand the product before selecting a property
Fannie Mae identifies kitchen and bathroom updates, roof repairs and window replacement among potential projects. Refresh is distinct from HomeStyle Renovation, which should not be treated as an interchangeable name. Review the official product overview with the lender handling the proposed transaction.
For an initial search, separate desired improvements from unresolved defects. Replacing dated finishes presents a different investigation from determining why a foundation moved or whether an addition was permitted. Obtain the relevant inspection findings before treating a contractor’s preliminary estimate as a complete project.
Apply the financing limits correctly
Under the current Selling Guide, dated August 5, 2026, financed improvements may reach 15% of the property’s as-completed appraised value. Work must be completed within 180 days of the mortgage note date. Neither limit guarantees a particular borrowing amount.
For a purchase, the loan-to-value calculation uses the lower of the as-completed appraisal or the purchase price plus improvement costs. The lender must still establish the permitted loan amount and required buyer funds. The contractor’s price does not determine the appraiser’s opinion.
Separate the project budget from cash to close
Consider an illustrative $700,000 purchase with a $50,000 improvement plan. The combined project cost is $750,000 before other purchase expenses. That calculation is not a $750,000 mortgage, an appraisal forecast or the amount the buyer must bring to closing.
Ask the lender to identify which proposed expenses are accepted, what must be paid separately, and how required reserves affect available cash. Keep a separate household allowance for moving, temporary accommodation if needed, and unexpected expenses. Compare the resulting commitment with a suitable home requiring less work; the lower purchase price is not automatically the less expensive choice.
A negotiated concession is another consideration, but it is not the same financing structure. BRG’s seller-credit and price-reduction comparison explains the separate offer decision.
Confirm the property, permits and contractor
Identify the permit authority for the actual address. A City of San Diego property follows that city’s building-permit process; a Chula Vista or unincorporated-county address requires its own jurisdictional review. Confirm whether the proposed scope needs permits, rather than assuming an interior project is exempt.
Check the contractor through the California Contractors State License Board. Obtain a written scope describing materials, exclusions, payment stages, permit responsibility and completion dates. CSLB’s contract guidance also addresses written changes. Coordinate that contract with the lender’s requirements before making commitments.
If the listing is advertised as cash-only, establish the reason. Do not assume improvement financing resolves it. The cash-only listing guide identifies questions that belong in the property investigation.
Understand escrow and the completion schedule
Improvement funds are controlled through a completion escrow, not provided as unrestricted spending money. Fannie Mae requires a written agreement governing disbursements; unused funds remaining after completion reduce mortgage principal. Its Refresh-specific completion requirements also limit postponed work to items that do not prevent an occupancy permit.
Ask who approves payments, what evidence each payment requires, and how scope changes are handled. Test the contractor’s schedule against permits, material availability and inspections. Do not remove purchase protections on the assumption that a preliminary contractor schedule is assured.
Review insurance and continuing ownership costs
Ask the insurance professional about coverage during the planned work and after completion. Disclose the proposed project and any expected vacancy. The lender’s insurance requirements also include updated evidence after the renovation; completing the work does not establish coverage automatically.
Evaluate the full monthly commitment, including applicable taxes, insurance, association charges, special assessments, utilities and maintenance. BRG’s San Diego ownership-cost checklist supports that comparison. Financing the project should not leave the household dependent on future appreciation to manage ordinary expenses.
Common questions
Does an eligible project guarantee a loan?
No. The lender must review the borrower, property and proposed transaction. Confirm product availability before relying on it in an offer.
Does the improvement budget guarantee the home’s value?
No. A contractor’s estimate is a cost proposal, not an appraisal. Do not assume every improvement adds its cost to market value.
Can unused improvement funds be retained as cash?
No. Under the completion rules discussed above, remaining escrow funds reduce the loan’s unpaid principal balance.
What should I prepare for an initial review?
Provide the address, proposed work, available budget and purchase timeline. Include inspection findings and contractor estimates when available; keep sensitive financial documents out of a general inquiry.
Sources and product review
Rules checked September 13, 2026. General educational information, not a loan commitment or assurance of product availability. Mortgage services are provided through Home Loan Advantage, Inc.; Frederick Blum NMLS #1914546, company NMLS #2468904.