Fannie Mae HomeStyle VS. FHA 203k Loans

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.