Are Home/Path and Home/Style renovation loans a mirror image of the FHA rehab loan?

Asked by Dominic Valenti, Chicago, IL Sat Nov 26, 2011

Do Realtors prefer this over FHA? Does it close faster? Except for a few items the most obvious difference seems to be there are no Minimum Property Standards for current conditions and no “oversight” of the construction process and I’ve been told the lender fees were higher. So why would a buyer want to use this program? There appear to be good reasons this is a great program but it seems to be structured as a property liquidation tool with less emphasis on “after the sale”. I could use a little help, anyone?

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Alexander Ro…, Mortgage Broker Or Lender, Chicago, IL
Sat Nov 26, 2011
Both types of loans are great for buyers who are buying distressed properties who otherwise would not be able to get financing with a traditional loan program. The difference is FHA requires Mortgage Insurance and Homepath does not. With Homepath, since Fannie will still own it, there is no appraisal or mortgage insurance required. Its a great program. In addition, Fannie Mae has offered incentives such as 3.5% closing cost credits. Since servicing lenders are not in the business of keeping up with distressed properties, these programs help buyers improve communities. Some Realtors do not like the Homepath program because they have worked with lenders who are less than experts in this field.

Alexander Romo
Senior Vice President
Chicagobancorp/The Federal Savings Bank
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Dominic Vale…, , Chicago, IL
Wed Nov 30, 2011
Thanks to all; there certainly are some downsides but the fact that it's an investor tool and can be used on properties that were under construction and never completed may be of some help to our local economy. Let's face it, none of these programs are easy or pleasant to navigate.
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Jeff Nobleza, Agent, Chicago, IL
Sat Nov 26, 2011
Homepath loans have no PMI unlike FHA loans. However, homepath loans have slightly higher interest rates. Also, homepath loans work on a tiered system where if a buyer has a higher downpayment, the interest rate may be lower. Homepath loans can only be used on Fannie Mae owned properties. A client who I recently closed with found that the numbers worked out better using homepath versus FHA. I'm not really sure how one can say they are bad loans
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Matt Laricy, Agent, Chicago, IL
Sat Nov 26, 2011
They have a very low down payment so a lot of buyers like them. I think they are pretty bad loans personally.
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