Conventional vs. 203k Loan

[Cameron Clark]

Hello! I'm trying to compare whether to use a conventional or 203k loan. I tried to run some numbers as you can see in the image below. What else should I be considering when comparing these two options?

I'm leaning more towards going the 203k loan route due to not having to bring as much to the table. If I were to go the conventional route It would keep me on the sidelines for too long as I have to save up for a lot more. I understand that I would have a higher PMI cost while in the 203k loan until I refinance into a conventional loan with a LTV of 80% at the most.

Note: These numbers are theoretical. I'm just trying to see what it would cost when comparing the two.

[Jason Wray]

Cameron,

One thing to always check first is your County FHA loan limit. Even with FHA 203K you cannot go over the county limit with renovations and other costs. If your all set and your total loan falls under the SFR limit I would still suggest looking at conventional lending just for the immediate issues on the rise with inflation. I would not want to be stuck in a FHA loan that is under water due to current inflated home prices. We have a storm brewing right now and the CARES act is supposed to end in October leaving a lot of people in a situation where they may lose their homes.

If that does happen Nationwide that will cause a high number of foreclosures and short sales. That will negatively effect the home values on the rise leaving a lot of people unable to refinance out of an FHA or in general to pull out any ARV cash.

If it happens to where a lot of people are predicting some of these 203K loans that offer a 110% above property's "Future" home value. Will end up under water due to inflated ARV or just maxed out under current inflated values. At least with conventional you have a tighter more managed set of guide lines.