Rehab Loan Options: HUD 203(k) vs. Fannie Mae Homestyle Loan

With today’s dwindling housing supply, many homebuyers are considering “fixer-uppers.” However, after closing on a traditional loan, many people–especially first-time homebuyers–lack the funds needed to make to make the required renovations. But thanks to the HUD 203(k) and Fannie Mae Homestyle rehab loans, the dream of owning a home is becoming a reality for more people. But which is the best option for you? In this month’s blog, the experts at Advanced Home Inspection compare the HUD 203(k) and Fannie Mae HomeStyle rehab loan.

Both  HUD 203(k) and Fannie Mae HomeStyle rehab loans are available for purchase and refinance transactions. And while both are essentially “one time close construction loans,” each allows for different repairs and carries different requirements.

This guide will help you find the best rehab loan for your needs.
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Advantages of a HUD 203(k) Rehab Loan for First-time Home Buyers

In this month’s Advanced Home Inspection blog, we discuss the many advantages of a HUD 203(k) rehab loan. With high home prices and low inventories throughout the state, many first-time home buyers in New Hampshire are entering the housing market with the help of a HUD 203(k) rehab loan.

What is a HUD 203(k) Rehab Loan?

The HUD 203(k) rehab loan is a specialized renovation or construction loan that’s backed by the Federal Housing Administration. It is unique in that people can borrow money equal to the estimated appraised value of their home after the repair work is completed. No other rehab loan (or other type of loan) offers this.
“Through a 203(k), you can get into a home at a lower price than you could through any other loan program,” says David Cassavaugh, licensed home inspector and owner of AHINH, one of the only certified HUD 203(k) consultants in NH.
Continue reading “Advantages of a HUD 203(k) Rehab Loan for First-time Home Buyers”

What Is a HUD 203(k) Loan?

Neon Loan SignHUD’s Section 203(k) loan program is one of many FHA programs that make mortgage credit available to borrowers who are buying or refinancing houses in need of repair or modernization.

Unlike conventional rehab programs, the 203(k) has the same relaxed credit- and income-qualifying and low-down payment guidelines as other FHA loan programs. The program is ideal for those who may not otherwise qualify for conventional loans due to income, credit, and/or down payment limitations.

On our News/Resources page, we’ve included links to helpful sections of the Department of Housing and Urban Development website for those seeking more detailed information.