Comparing Renovation Loan Options – Which Is Right for YOU?
Most renovation mortgage clients only know about FHA’s 203k loan, they are not aware that they may also have another option from Fannie Mae; the HomeStyle. 203k-vs-Homestyle
When shopping for the best renovation product it is prudent for some to take a look at both options IF you have them available. Not everyone or every scenario does have both options so let’s get the nasty little business of qualification out of the way immediately, then let’s look at some costs associated with each type of renovation loan.
If you are looking for a renovation mortgage and have less than a 680 middle credit score then you are an FHA 203k customer. If you have major derogatory credit; like a recent bankruptcy, foreclosure, deed in lieu or short sale, then you are likely a 203k customer.
If you are getting your funds for down payment in the form of a gift or have minimal assets then you are likely a 203k customer. If you are stretching to the max on debt to income ratio then you are probably a 203k customer.
The HomeStyle is a conventional renovation mortgage, it goes buy slightly tightened Fannie Mae guidelines. That said if you were pre-qualified by a lender for conventional financing then you are likely good to go on the HomeStyle as well. If you are wanting to renovate a vacation or investment property then the HomeStyle is your ONLY option, the 203k is for primary residence and owner occupants, period.
Now that we have that out of the way, let’s get to the meat of the post and discuss some costs, especially the cost of FHA Mortgage Insurance (MI).