How are Fannie Mae HomeStyle and FHA 203k Loans the same/different?
- HomeStyle is a Fannie Mae conventional loan while 203K is an FHA government insured product.
- Both are renovation loans with slight variations in guidelines and borrower qualifications.
- Both can be used to acquire and renovation existing properties, or refinance and renovate currently owned properties. Fannie Mae HomeStyle VS. FHA 203k Loans
- Both programs include 1 fixed-rate mortgage loan on a purchase or refinance to complete renovations
- Both require a licensed HUD consultant to oversee the renovations and repairs.
HomeStyle VS 203k – Type of Renovation Differences
HomeStyle
- “Repairs or improvements must be permanently affixed to the real property and add value to the property”
- Conform to local building code
- Luxury items
- Borrower desired repairs allowed
- No Minimum dollar amount for repairs
- Total alterations/renovations must be less than 50% of the after-improved value
203k
- Property must conform to HUD’s minimum property standards
- Conform to local building code
- Structural improvements allowed
- No Limit on dollar amount of repairs, as long as total loan amount is less than the FHA local county limit
- Borrower desired repairs allowed
- Minimum of $5000
- No luxury items
HomeStyle VS 203k – Financing Differences
HomeStyle
- Min FICO of 680
- Max DTI of 45%
- Self-sufficiency not required
- Private mortgage insurance with varying rates- usually lower
- After-improved value is used
- Seller paid closing costs max of 3% for owner-occupied properties
203k
- Min FICO of 640
- Max DTI of 50% with compensating factors
- Non-occupying cosigner allowed
- Up-Front mortgage insurance of 1.75% financed in loan amount
- Monthly mortgage insurance required
- Current value and after-improved value are a factor
- Seller paid closing costs max of 6%
- After-improved Loan-to-Value ratio of up to 110%
Not sure which program best fits your financial needs or the renovations to your property? Contact Christine DePaepe at renovationsloans@guaranteedrate.com to have your questions answered.