FHA 203k loan and the Conventional Fannie Mae Homestyle Loan

[Kadisha Ledford]

I've been talking to a number of Realtors who all have one thing in common, they try to convince me to consider a FHA loan versus a HML. The kinds the have offered are FHA 203k loan and the Conventional Fannie Mae Homestyle loan... Is this a bad idea? I understand the risks of a Hard Money Lender and how much more expensive it will be. However, I feel like they make these loans seem so great and don't really tell me the negatives of each loan. I kind've feel like There's a catch. Are there any negatives to these kinds of loans? If so, then what are they? Would these kinds of loans be good for my first flip?

[Stephanie P.]

@Kadisha Ledford

The fundamental differences are cost and occupancy.

With hard money, they're generally used for investment properties, FHA 203k is exclusively for owner occupied and the Homestyle loan, while it can be done for investment properties, is capped at 85% ltv.

Hard money will have two closings (double cost), one for the purchase and then the eventual refinance into more permanent financing while the FHA and Fannie products are one closing. I dropped a link to the Fannie guidelines below.

Best of luck

Stephanie

https://www.fanniemae.com/content/fact.../homestyl...