The Difference between FHA 203K and Fannie Homestyle
There was a time not so long ago that if you needed a rehab loan you would simply turn to the FHA 203k
Rehab Loan. That is no longer the case. There are actually a few options out available when it comes to
rehabbing your home – for both purchase and refinance transactions. One of the challenges can be to
find that perfect rehab loan to fit your needs. It’s my goal to make that selection easier. Today, I’d like to
compare and contrast two of my favorites: The FHA 203k Rehab loan vs the Fannie Mae HomeStyle
Rehab loan. Both loans are essentially “one time close construction loans” but they do allow for different
repairs and carry different requirements.
Let’s begin with the FHA 203k Rehab Loan. For starters it is an FHA loan which means it is designed for
those wishing to purchase homes that will be owner occupied. Often the Underwriting process is a bit
easier with FHA. The current FICO requirement is only 640 which is less than a conventional loan.
Finally, the down payment is only 3.5%.
What’s nice about the FHA 203k loan is that there are two versions. Depending on the scope of the
project you may qualify for the FHA 203k streamlined version which eliminates a lot of the paperwork and
as the name implies “streamlines” the process. This version is useful for cosmetic updates and less
The full 203k is the one to use when you have structural issues, wish to add square footage, etc. This
one does tend to be the most widely used of the two simply because the options are wide open with the
full version. There will also be a 203k Consultant on site to monitor the progress, disburse the draws and
perform the final inspection.
After having said so much good about the FHA loan it’s important to note, there will be a limit to how much
we can lend on this loan product. This is due to the FHA loan limits in your area. If you have a Condo in
mind and it’s not FHA approved this loan could not be used. Finally, if you wish to rehab a home that isn’t
completed (no Certificate of Occupancy) once again this loan would not be an option.
With all of that being said let’s discuss the Fannie Mae Home Style loan because some of it’s features
may come in handy if you are not eligible for an FHA rehab loan. Since this loan is issued by Fannie Mae
it’s a conventional loan which means the loan amount may reach $417,000.
Also keeping in mind this is a conventional loan the down payment may vary depending on the loan itself.
Currently the minimum down payment required is 5% and the minimum FICO requirement is 680.
All the same work allowed by both the full 203k and the streamline 203k is allowed under the HomeStyle
program however Fannie Mae also allows for extensive landscaping and luxury items including pools.
Luxury items such as outdoor kitchens, spas, and pools may either be installed or repaired under this
program. Furthermore, all Condo projects and homes that are not yet finished are also allowed!
Speaking of things that are allowed…this loan program includes an option for someone to not only
purchase a primary residence but also a second home or investment property!! Yes, this means that
investors may purchase or rehab their properties under this program.
As you can see the options are available. I’m here to consult with you to find the best option. All of the
bank foreclosures and HUD owned inventory have potential. It’s just going to take a great rehab loan
option to realize that potential! Over the years I’ve seen many great home transformed and I’d love to be
a part of your home transformation! Call The Rehabman today. (312) 401-5626.
Jay Boetscher "The Rehabman"
Phone: (312) 401-5626
Fax : (847) 701-3280
MLD Mortgage Inc., d/b/a The Money Store® is authorized to lend in the following states: California, Connecticut, Florida, Maryland, Massachusetts , New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Virginia, and Washington. Minimum credit scores and
maximum loan limits apply. Not all applicants may qualify. Equal Housing Lender. Some products may not be available in all states. Credit and collateral are subject to approval. This is not a commitment to lend. Program, rates, terms and conditions apply. All rights reserved. Licensed
Mortgage Banker - NYS Department of Financial Services. Website authorization by the New York State Department of Financial Services is pending. Until this website is authorized, no mortgage loan applications for properties located in New York will be accepted through this site.
*Terms and conditions are subject to change. May not be available to all borrowers and eligibility varies based upon borrowers financial situation.
Minimum credit scores and maximum loan limits apply. Not all applicants may qualify. Equal Housing Lender. Some products may not be available in all states. Credit and collateral are subject to approval. This is not a commitment to lend. Program, rates, terms and conditions apply. All
rights reserved. Licensed Mortgage Banker : *Terms and conditions are subject to change. May not be available to all borrowers and eligibility varies based upon borrowers financial situation.
© 2015 MLD Mortgage Inc., d/b/a The Money Store® - NMLS #1019 | Headquarters: 30B Vreeland Road, Florham Park, NJ 07932”
Questions about rehab financing? Call The Rehabman (312) 401-5626