Fannie Mae HomeStyle Vs FHA 203K Renovation Loan

Dated: 08/31/2016

Views: 507

Johnson City Homes

Maybe you've heard of it, loans that lets you buy a home, and get funds to do some renovation. If you haven't heard of them, they're known as the Fannie Mae HomeStyle®, and  FHA 203K Loans. These kinds of loans  are perfect for  home buyers who want to save money and earn instant equity with a “fixer” home. How do they work? Read on.

Fannie Mae offers two kinds of renovation mortgages, the Homestyle® loan and the FHA 203K renovation mortgage to allow you to borrow based on theimprovedvalue of the property you want to purchase. That means a higher loan amount to cover renovation costs so you can pay less out-of-pocket. When examining costs, the 203K loans are just about the cheapest possible way to fund a major home renovation project. Both loans are “one-time-close” mortgages. That means you apply for a single loan, with one set of documents and closing costs. Some other renovation loan programs require a construction loan upfront, and a refinance later.

In looking at both loans, the FHA 203K program has more flexible guidelines for the borrower, but it does have more strict guidelines for the property. With the 203K,  borrowers can have lower FICO scores and higher debt-to-income ratios, a plus when you consider qualification requirements of conventional. If you opt for the 203K, the property must be a primary residence, and “luxury” improvements aren't allowed to be financed. On the other hand, HomeStyle® has more strict guidelines for the borrower, requiring higher credit scores and lower debt-to-income ratios and lesser restriction on the property type. HomeStyle®allows you to purchase primary, vacation, and rental properties.  

Mortgages are sometimes complicated processes, and we've just scratched the surface on these two Fannie Mae renovation mortgages. How about we sit down and talk a little more? Call us at(423) 433-6517, or just stop by our office inside Keller Williams Realty at 1033 Hamilton Place in Johnson City. We'll scratch off some more!

Blog author image

Wes Shields

Wes Shields, Team Owner and Listing Agent for The Shields Team at Keller Williams Realty of Johnson City Tennessee, has a long and very impressive list of accomplishments in his 10+ years in the real ....

Want to Advertise on this Site?

Latest Blog Posts

Is That Really A Bedroom

It seems kind of silly to have to ask the question, "is that a bedroom?" when you see what obviously looks like one. Our friend, you might just be surprised that what you see might NOT be a bedroom

Read More

Avoiding The ICK

Maybe you've seen The Property Brothers on HGTV. Actually, we should say we know you've seen. Drew and Jonathan Scott have one the hearts of millions of viewers in the HGTV television series, The

Read More

What Happen To Your Credit Score When You Buy A Home

You've become obsessed with your credit score, guarding it carefully, and keeping a close eye on it to have everything in order when you apply for a home loan. That score will will not only affect

Read More

Reasons To Buy A Home At The Holidays

It seems home buying is the last thing on our minds at this time of year, and especially this year, being an election year, and of course we're officially full speed into Thanksgiving and Christmas

Read More