First House financing: FHA 203k loan or private lending?

[Chris M.]

Hey guys, I'm narrowing down my hunt for a 3 bedroom foreclosure for ~130k with ~20k needed in repairs. My plan is to move in, rehab then house hack it for 1-2 years before refinancing and doing it again. This will be my first house.

I've been reading Brandon's The Book on Investing in Real Estate with No (and Low) Money Down and it got me thinking: would it be smarter to seek out private lending over using an FHA 203k loan for this purchase?

When I broke down the math between a FHA loan with a 5.05% interest rate and a private lending interest-only loan of 10%, it looked like private lending would still result in less money-out-of-pocket.

So my question is this: if you guys had the choice between a FHA 203k loan or a private lender who will do interest-only with 10% and 24 month balloon payment for your first house (~130k 3 bedroom with up to 20k in repairs)... which would you choose and why?

Greatly appreciate any feedback you guys can provide on this and hope everyone is having a nice weekend.