I get lots of questions about renovation loans and which one is the right a particular situation. Many people are quickly becoming familiar with the FHA 203K, but not so many know about its conforming sister the Fannie Mae Homestyle. So, when is the Fannie Mae Homestyle the right loan?

1.) Unfinshed New Construction — FHA 203K loans require a certificate of occupancy (known as a C.O.). This is a nearly impossible request on unfinished new construction foreclosures. This makes FHA 203K loans virtually impossible on unfinished new construction foreclosures. This is where the Fannie Homestyle comes into play. The Homestyle only requires homes be “substantially complete”.  What does that mean? Well, it is open to interpretation, but anything with the systems in place that is at least 75% complete might be a good candidate for a Homestyle.

2.) Loans Exceeding FHA Loan Limits — If you are over local FHA loan limits and need to do a renovation loan then your clear choice is the Fannie Mae Homestyle. In most places across the US conforming loan limits exceed those of FHA. For example, in Atlanta FHA loan limits are $346,250 while Fannie Mae Homestyle limits are $417,000.

3.) Borrowers with 20% Down — FHA 203K loans have mortgage insurance for 5 years regardless of the amount you put down (30 Yr fixed rate). It is possible via the Fannie Mae Homestyle to put 20% down and to avoid mortgage insurance entirely.

4.) Non-Owner Occupants — FHA loans require you to occupy the residence as your primary residence. Fannie Mae Homestyle loans will allow your to renovate a residence as a 2nd home OR AN INVESTMENT PROPERTY!

5.) I Already Have a FHA Loan! — Already have a FHA loan? Chances are you won’t be able to get another. Look at the Fannie Mae Homestyle to renovate if this is your situation.

There are certainly more situations where the Homestyle is a more appropriate loan then a FHA 203K.  Consult a knowledgeable Renovation Loan Specialist to determine what is best for your situation. We are here to HELP!

APPLY NOW FOR YOU FHA 203K or FANNIE MAE HOMESTYLE RENOVATION LOAN!!

Good Luck!!