Hey everyone, Freddie Mac just came out with a CHOICERenovation loan. Any ideas how this differs from the 203k loan? Seems like both cater to those who need to finance rehab costs, but I imagine there is more to it than that.
I believe it's more comparable to Fannie's HomeStyle loan where it has less limitation of buyer's situation, and difference on the down payment requirement. HomeStyle loan doesn't limit to just first-time home buyer (I see 203K as a variation of FHA loan). You can have 4 concurrent HomeStyle loans on either primary residence or investment properties (4plex max).
Check out more on HomeStyle loan, which should give you a better sense of what Freddie's would look like. Today I'm actually going to talk to couple lenders who offer HomeStyle loans, I'll let you know how it goes.
ike Fannie Mae's HomeStyle, CHOICERenovation allows investors to purchase and renovate a one-unit property without residing in it. The FHA 203k requires borrowers to live in the property for at least a year. All three programs require a borrower to live in one unit of a two-to-four-unit building.
Unlike FHA 203k, CHOICERenovation doesn't require a consultant to approve the project. Another difference from FHA 203k is that any renovation or repair can be financed with this loan as long as the work involves something permanently attached to the property, Marrocco says.
“You can even finance an accessory dwelling unit, as long as this would be in compliance with local zoning rules,” Marrocco says. “We want this loan to help millennials, seniors and multigenerational households adapt a house to meet their needs.”
The updated selling guide chapter from Freddie:
Fannie says that HomeStyle can't be used to add units, but can be used to add an ADU. Freddie doesn't have that restriction, so it might be useful for a 1->3/4 unit house hack (where allowed by zoning).