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Can you use an FHA loan to buy a house that is a foreclosure? What red tape is involved?

Asked by Trulia Fort Lauderdale, Fort Lauderdale, FL Fri Nov 16, 2012

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Yes, you can use an FHA loan to finance a foreclosure purchase as long as the property meets the FHA condition guidelines. Another option is to obtain FHA 203K loan if the property needs a substantial repairs and finance the cost of repairs , but again - there are very specific criteria established by FHA in order to qualify for said loan.
My advise is once you find the home you are interested to purchase consult with your mortgage broker if the PROPERTY will qualify for any of the loans mentioned above.
1 vote Thank Flag Link Sat Nov 17, 2012
FHA has a special program called 203K. That means licensed repair professionals need to do the work with permits. The money is left in escrow to be paid as the work is done. A little more work and planning but why not ask your loan professional about specifics.
1 vote Thank Flag Link Fri Nov 16, 2012
Red tape? Call that an array of bondage nooses and knots.
0 votes Thank Flag Link Wed May 22, 2013
Trulia-initiated question.
0 votes Thank Flag Link Thu Nov 22, 2012
FHA works better when buying properties that are goverment owned such as Fanny Mae, Freddy Mac and HUD. That is because if the home does not appraise, they will often lower the purchase price to match the appraisal and you get a successful closing.

When using normal FHA or 203K FHA on foreclosures owned by private lenders (WF, CHASE, BoA, etc.) if there are multiple offers yours will likely get pushed aside because they would rather work with buyers not needing to renegotiate price based on appraisal. Of course if you are the only offer made on the property they will likely take it. But i have not seen many foreclosures that are not in multiple offer situations.
0 votes Thank Flag Link Mon Nov 19, 2012
Yes you can, either with a regular FHA or a 203k, also home path has a similar program for Fannie Mae homes, if I can help


Carl Vaneyssen
Carl@CarlVaneyssen.com
0 votes Thank Flag Link Sat Nov 17, 2012
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