Financing in Denver>Question Details

Ccb529, Home Buyer in Southfield, MI

whats the difference between the 203k loan and homepath renovation mortgage?

Asked by Ccb529, Southfield, MI Sun Aug 9, 2009

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1. Homepath Renovation is only for FannieMae owned properties being purchased by owner occupant buyers and typically has a small construction limit of $5,000 as I understand it.
2. The FHA 203k program for owner occupants only has a much larger renovation projects with the the upper limit being the after appraised value x 110% of the after improved value appraisal but that must include your purchase price and repair cost and you need to qualify for that loan.
3. The Streamlined k is for owner occupants only as well, and has no lower limit though many lenders have introduced a $2000 or $5000 minimum renovation cost. While this loan has a maximum loan limit of $35,000 don't think that way as it includes costs and fees. Many lenders require a contingency reserved which uses 10% of the construction costs even though there is no HUD requirement for a contingency on the Streamlined k.
3. There is another FannieMae loan product you might think about called the HomeStyle Renovation which has a limit of the renovation of no more than 50% of the "after improved value" appraisal. So, if your "after improved value is $300,000 then your renovation could be as high as $150,000 which is pretty good but you still have to loan qualify at that $300,000.
Let me know if you require additional info on any of these programs. IN your area there is Marcus Smith who I have had many praises on from people we have referred him to. You can find him on the HUD consultant list.
Web Reference: http://www.203konline.com
0 votes Thank Flag Link Sat Oct 30, 2010
nikki,

My buyers are being told just 3% for the homepath renovation. is the higher downpayment amount you mentioned credit driven?
0 votes Thank Flag Link Thu Aug 20, 2009
If you're thinking of getting either of these loans, make sure you work with a lender who has done these types of loans before. It wouldn't hurt to ask for references. They're difficult loans if the lender doesn't know what he/she is doing, which can make a nightmare of an escrow.
0 votes Thank Flag Link Sun Aug 16, 2009
The 203K loan will allow you to roll the cost of your home improvements into the loan. The down payment requirement is 3.5%. There is upfront and monthly mortgage insurance required. On the Homepath loan, the property has to be owned by Fannie Mae and downpayment requirement is 5%. The Homepath loan does not require an appraisal or mortgage insurance.

If you would like additional information, feel free to let me know.

Nikki Albarella
Mountain Crest Mortgage
303.861-8605
Web Reference: http://www.mtcrest.com
0 votes Thank Flag Link Sun Aug 9, 2009
203(k) is a FHA Rehabilitation Financing loan progam. Minimum repair cost is $5,000. There is also a Streamlined (k) loan program with a max. repair cost of $35,000.

FHA loans are 100% insured by HUD (a federal govt agency) for the lender who makes loan.

Homepath Renovation Mortgage is FANNIE MAE loan program. http://www.fanniemae.com/homepath/financing/index.jhtml

Fannie Mae loans are self insured (by Fannie Mae and it is NOT a federal government agency)

Homes listed on HomePath.com are generally qualify for FHA loans. So you would wrap the 203(k) right behind the 203(b) to make your loan works. Or you could apply for a 203(k) as a refinance to repair your existing home.
0 votes Thank Flag Link Sun Aug 9, 2009
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