As we discussed on Tuesday, homes which need repairs can often be a great way to get into the house of your dreams in your preferred neighborhood. It can be amazing how far a little work on a house can go as far as the home’s value, and thus what a good deal you can get on a house with some issues.

But paying for these renovations can be difficult if you are using your savings for the down payment to buy the new house. To help you with your cash needs to do the repairs, the FHA created the 203k renovation loan, which is a loan that allows you to borrow more than what the house is worth, in order to have cash available for remodeling.

And while this is a wonderful loan option for many borrowers, there are those who want to take advantage of the benefits of a traditional mortgage. And that is where the Homepath and Homestyle loans come in. They are offered by Fannie Mae as an incentive to purchase homes which are in disrepair.

The Homepath loan is available on any home which Fannie Mae has designated as a Homepath home. To see if a home you are interested in is Homepath eligible, you simply check the listing online or ask a qualified real estate professional. With this program, you can borrow more than the home is worth in order to do the repairs you need to on a home.

Meanwhile, the Homestyle loan is not limited to those flagged by Fannie Mae. This loan program can be used by any borrower who qualifies on any home. So in many ways, the Homestyle and the Homepath loans are very similar, but the Homestyle is available to every house on the market.

If you have any questions about renovation financing, please contact me. And if you have anything to add about renovation loans, please leave a comment.