What can I do with FNMA HomeStyle that I can't do with 203(k)?

November 22, 2017

There are a few major differences that are important to understand when choosing between a HomeStyle loan or a 203(k) loan. 


The first one would be from a qualifying standpoint.  FHA 203(k) loans allow for lower down payments (3.5%), while HomeStyle requires 5% down. FHA 203(k) also allows for a lower credit scores, higher debt-to-income ratios, and is more lenient with major credit derogatories in the past.  The mortgage insurance will also likely be more expensive with a FHA 203(k) loan.


When we begin to look at the rehab options and renovations that are available, the HomeStyle loan takes the prize. With HomeStyle you are able to do a few more renovations that would not be eligible for a 203(k) product.  These additional renovation options that you have access to are "luxury items". 


Some examples of what would be considered luxury items are outdoor living additions, outdoor kitchen, adding a pool, or renovating an existing pool.  The big word when it comes to HomeStyle renovation is VALUE.  Does the construction or rehab add value to the home, if so, it may be an eligible renovation.


If you're deciding between a 203(k) loan and a HomeStyle loan, we are happy to present both options to you and provide guidance as to which loan better suits your scenario.
















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