The short answer
Both roll the cost of repairs into the mortgage, so you buy and fix the home with one loan. The 203(k) is FHA's version and comes in two sizes, Limited and Standard. HomeStyle is Fannie Mae's version on a conventional loan.
The two kinds of 203(k)
| Limited 203(k) | Standard 203(k) | |
|---|---|---|
| Kind of work | Minor remodeling and non-structural repairs | Remodeling and repairs, including larger jobs |
| Cost of the work | No more than $75,000 in total | At least $5,000 |
| HUD consultant | Not required | Required |
HUD reviews the $75,000 limit each year. A 203(k) consultant is an inspector on HUD's roster who writes up the work to be done and its cost.
HomeStyle
HomeStyle Renovation is a conventional loan that follows Fannie Mae's rules, not FHA's. Credit, down payment and mortgage insurance work the way they do on other conventional loans.
Fannie Mae's page could not be read directly. HomeStyle details, including limits on the cost of work and which property types qualify, to be added from Fannie Mae's Selling Guide before publishing.
How to choose
- Your score and down payment. The 203(k) follows FHA's rules. What FHA says about scores
- The size of the job. Small, non-structural work fits the Limited 203(k).
- Mortgage insurance. FHA loans always carry it. What FHA mortgage insurance costs
- Who will live there. FHA loans are for a home you live in.
What the work can include
| Limited 203(k) | Standard 203(k) |
|---|---|
| Plumbing, heating, air conditioning and electrical repairs or replacement | Structural repairs and additions |
| A new roof, siding, gutters, where the structure is not affected | Foundation repair |
| Wells and septic systems, or connecting to public water and sewer | Adding or renovating an accessory dwelling unit |
| Energy-saving improvements | Converting a one-unit home to two, three or four units |
| Fixing health and safety hazards | Building or improving a garage |
What it cannot pay for
HUD does not allow 203(k) money to be used for luxury items or anything that does not become a permanent part of the property. Its examples include:
- a new swimming pool (an existing in-ground pool can be repaired);
- an outdoor hot tub, spa or sauna;
- barbecue pits and outdoor fireplaces;
- tennis courts;
- satellite dishes.
What can go wrong
- Bids that come in late. The lender needs the contractor's written bid before the loan can close.
- Work that costs more than planned. A contingency reserve is usually built in.
- Time. These loans take longer than a standard purchase.
What I see in real files
Jamal's own words go here: two to four sentences on what he sees in real files like this. Claude does not write this part.
Questions people ask next
Can I do the work myself?
To confirm in the handbook before publishing.
Can I use a 203(k) for a pool or luxury items?
Not a new pool. HUD lists new swimming pools, outdoor hot tubs and similar luxury items as not allowed. An existing in-ground pool can be repaired.
Is there a minimum amount of work?
For the Standard 203(k), at least $5,000. The Limited 203(k) is capped at $75,000.