An uninsured HUD home is one that needs more than $10,000 of work before FHA will insure it. Most buyers reach for the FHA 203(k). Two conventional loans do the same job, and for a buyer with good credit and 5% down they can be cheaper over the life of the loan.
The three options side by side
| FHA 203(k) | Fannie Mae HomeStyle | Freddie Mac CHOICERenovation | |
|---|---|---|---|
| Minimum down | 3.5% | 3% first-time, 5% otherwise | 3% to 5% |
| Credit score floor (typical) | 580 to 620 | 620, better pricing at 700+ | 620, better pricing at 700+ |
| Mortgage insurance | Upfront plus monthly, for the life of the loan at under 10% down | Cancels at 20% equity | Cancels at 20% equity |
| Renovation cap | Limited 203(k): $75,000; Standard: up to the FHA limit | 75% of the after-repair value | 75% of the after-repair value |
| Luxury items (pool, outdoor kitchen) | Not allowed | Allowed | Allowed |
| Consultant required | Standard 203(k): yes | Lender’s choice | Lender’s choice |
| Investor or second home | No | Yes | Yes |
When conventional wins
- You have a 700+ score and 5% to 10% down. The monthly mortgage insurance is lower and it goes away.
- You are an investor. The 203(k) is owner-occupant only. HomeStyle and CHOICERenovation allow investment property with 15% to 25% down.
- The scope includes something FHA calls luxury.
When the 203(k) wins
- Your score is under 660 or your down payment is 3.5%.
- You want the $100 down incentive. It only works with FHA, and it does work with a 203(k) on an IE home. The $100 down rules.
- You are stacking CHFA or metroDPA assistance that requires an FHA first mortgage. Check which programs allow which loans.
The HUD clock problem
All three renovation loans need a contractor bid, a plan review, and an after-repair appraisal. That is hard inside 45 days. Line up the contractor before you bid and ask the lender for a written timeline. Expect to buy one $750 extension on a full-scope renovation. How extensions work.
A plain-English example
A couple with 760 scores bid on a UI home in Arvada at $410,000 needing a roof, furnace and kitchen, $62,000 of work. A 203(k) at 3.5% down would have carried about $290 a month in FHA mortgage insurance for 30 years. They used HomeStyle with 10% down; private mortgage insurance was about $95 a month and will cancel in a few years. Same house, same contractor, roughly $70,000 less in insurance over the life of the loan.
Not sure which rule applies to the house you are looking at? Call or text 303-955-4220. A live person answers, and the answer is free.
Written and reviewed by
Brian Lee Burke, Colorado HUD home specialist and team leader
Licensed Colorado real estate professional since 2002 · REALTOR® · Team leader and licensed broker of the Kenna Real Estate Group at Keller Williams DTC, a HUD-registered group that regularly bids on HUD homes · Author of The Real Estate Playbook and Mastering Real Estate. Brian’s full HUD biography.
Last reviewed: September 13, 2026 · Sources: HUD Home Store (hudhomestore.gov) and HUD program guidance, HUD Handbook 4000.1, REcolorado MLS data via kennarealestate.com, and the Kenna Real Estate Group’s own HUD transaction files.
Contact: call or text 303-955-4220 or homes@kennarealestate.com. During office hours you reach a live local Kenna real estate professional, not a robot or a national call center. Brokerage: Kenna Real Estate Group at Keller Williams Realty DTC, LLC, 6300 S Syracuse Way, Suite 150, Centennial, CO 80111. Each Keller Williams office is independently owned and operated. The Kenna Real Estate Group is an independent real estate team and is not affiliated with or endorsed by HUD or any government agency; official property information comes from HUD Home Store. Equal Housing Opportunity.
Free guide, PDF
The Colorado HUD Home Buyer's Playbook
How HUD bidding really works, the nine ways buyers lose, and the bid worksheet. 18 pages, free.
Why you want it before you bid:
- The 15-day owner-occupant window, day by day, so you never miss a deadline
- The net-to-HUD math HUD actually scores, with a one-page bid worksheet
- The nine ways buyers lose a HUD home, and how each one is avoided
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