Fannie Mae Homestyle Renovation Mortgage vs 203K

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Fannie Mae Homestyle Renovation Mortgage vs 203K

Bryan Boulware
St Louis, MO · Member since 2017 · 21 posts · 0 votes

Hello,

Has anyone dealt with the Fannie Mae Homestyle revocation mortgage? if so could you provide more information on the loan? Also how does it contrast from a traditional 203K loan?

How was the overall experience using this style of loan?

Thank you.

Bryan

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Joseph Firmin
Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
7y

@Bryan Boulware

I used a Homestyle loan on my first BRRRR property and it was a huge learning process, very valuable. I will be writing a blog post about process but if you'd like to connect I can explain it over the phone. It is a lot to write out. Overall, went well, I did about $50k in renovations and it took about 5 months. My contractor was good but slow and there were bumps along the way, but now on the other side, I built a out $50k in equity into the property immediately.

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  • Matthew PorcaroBusiness Member
    Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
    7y

    Hi Bryan - 

    I have not personally used the HomeStyle renovation loan, but I used the 203k on my first BRRRR. I do know the differences between them though.

    Overall, the 203k is easier on the borrower. With a 203k you can put down a lower down payment (3.5%) and can have a lower FICO score (580 min). 

    The homestyle loan is easier on the rehab and property side. HomeStyle you don't need to live in the property. You also have a higher loan limit, and can wrap "luxury" renovations into the loan (aka, putting in a Sauna or something). The caveat to this is you must have a much better credit score (650+), higher down payment (5% minimum) and a lower Debt to Income ratio than a 203k allows. 

    The 203k Way
    WebsiteView Page
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  • Bryan Boulware
    OP
    St Louis, MO · Member since 2017 · 21 posts · 0 votes
    7y

    @Matthew Porcaro

    Thank you that really helps.

    0Reply
  • Joseph Firmin
    Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
    7y

    @Bryan Boulware

    I used a Homestyle loan on my first BRRRR property and it was a huge learning process, very valuable. I will be writing a blog post about process but if you'd like to connect I can explain it over the phone. It is a lot to write out. Overall, went well, I did about $50k in renovations and it took about 5 months. My contractor was good but slow and there were bumps along the way, but now on the other side, I built a out $50k in equity into the property immediately.

    5Reply
  • Eddie Gonnella
    Bangor ME & Richmond, VA · Member since 2018 · 166 posts · 106 votes
    7y

    @Joseph Firmin -- Hey Joseph, did you end up posting that blog? I'd love to read it! 

    0Reply
  • Joseph Firmin
    Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
    7y

    I'm sorry @Eddie Gonnella, I have not written it yet! But you are the second person to ask me in the past week, so I'll get on it. 

    0Reply
  • Joseph Firmin
    Rental Property Investor · Smyrna, GA · Member since 2018 · 974 posts · 645 votes
    7y

    @Eddie Gonnella and @Bryan Boulware  Finally... Here's my personal story of a 203K / HomeStyle Renovation I did:

    https://www.biggerpockets.com/member-blogs/12390/86740-my-experience-with-a-203k-homestyle-renovation

    Enjoy! Let me know if you have any questions! - Joe

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  • Jim BlackburnBusiness Member
    Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 321 posts · 121 votes
    7y

    @Bryan Boulware

    The main difference is that that the 203k Loan is FHA Loan vs Fannie Mae Homestyle is a Conventional Loan through Fannie Mae. Freddie Mac is also coming out with their conventional renovation loan program soon too.

    In general terms, we use FHA when the Buyer has either:

    • a) credit score below 720 (because the monthly mortgage insurance and interest rate are less than conventional, or
    • b) a debt/income ratio over 45%, or
    • c) very little funds for closing (since only 3.5% of the combined purchase price + renovations is required for FHA vs 5% for conventional loan. Also important to note is the max seller credit with FHA goes up to 6% (or total closing costs & escrows whichever is less) VS 3% for conventional financing.

    In addition to that, FHA allows people with foreclosure, bankruptcy, short sale, & deed of lieu to be sooner after a derogatory credit event than a conventional loan will.

    And finally, know that FHA requires you to live in the property for 12 months as your primary residence VS Fannie Mae Homestyle conventional renovation loan can be for investment property.

    Finally, not sure if you are FTHB or not? If you are, I recommend that you read this post here to learn how you can buy 4 units up to 627k with just 3.5% down in St Louis County, plus get the seller to cover all of your closing costs and escrows.

    Check out my post on this thread.

    https://www.biggerpockets.com/...


    954-993-1625
    Stairway Mortgage, a Division of NEXA Mortgage LLC597 Reviews
    WebsiteView Page
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