Both roll the purchase or refinance and the renovation into one loan, based on the home’s value after the work. FHA 203(k) is more forgiving on credit; HomeStyle allows more kinds of property and work.
Side by side
| FHA 203(k) | HomeStyle renovation | |
|---|---|---|
| Backed by | FHA | Fannie Mae (conventional) |
| Occupancy | Primary home only | Primary home, second home or one-unit investment property |
| Credit | More flexible | Higher scores expected |
| Mortgage insurance | FHA premiums, usually for the life of the loan | Private mortgage insurance with a smaller down payment, removable later |
| Do-it-yourself work | Generally not allowed | Allowed on a one-unit home within limits |
| Eligible work | Repairs and improvements; no luxury items | Almost any improvement, including luxury items like a pool |
| Consultant | Required for a standard 203(k) | Not required |
When an FHA 203(k) fits
- Your credit fits FHA better than conventional.
- You’re buying a home to live in.
- The work is repairs and updates rather than luxuries.
When a HomeStyle renovation fits
- You’re buying a second home or a one-unit rental.
- Your credit is strong and you want mortgage insurance you can remove.
- You want to do some of the work yourself, or add a luxury item.
Guides and calculators
Questions
Can a HomeStyle renovation loan be used on an investment property?
Yes, on a one-unit investment property, as well as a primary or second home. An FHA 203(k) is only for a home you’ll live in.
Which banks offer FHA 203(k) loans?
Fewer than offer regular FHA loans, because of the extra paperwork and draw management. As a broker I can go to the lenders that do them regularly.
