Why Upfront Disbursements Matter for Renovation Projects

One of the most impactful and contractor-friendly updates to Fannie Mae’s renovation lending guidelines is the increase in allowed upfront disbursements, now reaching up to 50% of total renovation costs.

This change represents a major shift in how renovation projects are financed—and it brings meaningful benefits to borrowers, contractors, and suppliers alike.

What Are Upfront Disbursements?

Upfront disbursements are funds released at the beginning of a renovation project, rather than being reimbursed only after work is completed. Under Fannie Mae’s updated renovation loan guidelines, borrowers can now access up to half of the total renovation budget before construction begins.

These funds can be used to cover critical early-stage expenses such as:

• Construction materials and supplies

• Permit and inspection fees

• Architectural and engineering services

• Contractor mobilization costs

• Borrower or contractor deposits

This upfront access to capital helps ensure that projects start on time and progress smoothly from day one.

Cashflow has long been one of the biggest challenges in the renovation and construction industry.

Contractors are often required to purchase materials, secure permits, and schedule labor before receiving any reimbursement. This can strain finances, delay projects, or even limit which jobs contractors can accept.

By allowing up to 50% upfront disbursements, Fannie Mae is helping to:

• Reduce out-of-pocket expenses for contractors

• Improve project scheduling and efficiency

• Lower financial risk at the start of construction

• Strengthen contractor participation in renovation loans

For smaller contractors and specialty trades in particular, this update can be a game-changer.

With rising construction costs and tighter lending conditions, access to early funds can make or break a renovation project. Fannie Mae’s updated upfront disbursement policy supports:

• Faster renovation timelines

• Higher project completion rates

• Reduced financial stress for all parties involved

• Increased confidence in renovation lending programs

This policy update reinforces Fannie Mae’s commitment to making renovation financing more practical, efficient, and market-responsive.