Is the 203k always the best choice for a renovation loan?
No, actually it isn't ALWAYS the best loan for the client. We are all about the client. As a 203k or more over a renovation consultant the 203k isn't always the best choice.
What other choice is there? The FannieMae HomeStyle®Renovation Mortgage is one and the FreddieMac Renovation is another one. The FannieMae product is for SFR while the FreddieMac program allows for 1-4 unit more like the 203k loan product.
The 203k has PMI or Private Mortgage Insurance now as a mandate and it stays with the loan for the duration... wasn't always that way. Since they did that we are seeing more and more of the HomeStyle loans going on.
FHA 203k has a low down payment of 3.5% while the HomeStyle and Freddie Mac loans have a 5% requirement and investors can use these programs with a bit more down payment, but no PMI. Just switched one over today from a 203k to a HomeStyle loan because it was to my clients best interest. PMI is like an alligator and keeps on chewing on you for years to come. If you can get out of it you should.