Less than 20% down doesn't have to be an FHA loan. There are conventional loans available in California with 5% down. So in this case you get to put a small amount down but then the seller sees the loan is conventional. Sellers are descriminating against FHA loans and I think it's totally unfounded. FHA has very flexible underwriting guidelines, more flexible than conventional loans with PMI.

But of course 20% down gets you the best loan with no PMI and a competitive offer.

Lazaro, The nicest homes that are relatively new and don't need any work have much competition. Some of the homes that need work and have less competition, and less offers competing for the same property are easier to get an FHA or VA offer accepted.

There will be more homes available toward the end of June. Inventory of Bank Owned homes is low due to the Federal Government putting a delay on banks filing Notice Of Defaults.

No it's not. However, we are in a very competitive environment right now, and Corona is especially comptetitive. I've heard of as many as 70 offers on properties in Corona.

That said, I would advise that you get with your Realtor to put together a strategy to aggressively pursue properties. I would start with getting pre-qualified with several large lenders as most of them require you to get pre-qualed with them as a condition of submitting an offer. As you've already experienced, that can slow the process down and give other buyers a head-start on your offer.

Remember that in this environment, winning the house is not only about how much down or price offered ... sometimes, the cash offers will win out just because they're a sure thing, even if they aren't the highest offer. I say that so you don't kick yourself with the 'coulda-shoulda-woulda's when you've done the best you can. That said, I commend you on having a sizeable down payment and on recognizing that you will need to offer above asking to succeed in this market.

Stay positive, get as prepared as possible, and try not to get emotionally attached to any one property. You're in a highly competitive buyer environment, so the house you'll be able to get may not be 100% your dream home and likely won't be the first one you make an offer on. But, with patience and working your plan with your Realtor, you will get a home, and I'm sure you will love it once you do.

I just wanted to share this so that you understand what you're facing ahead of time, rather than learn it the hard way by getting your hopes up and your heart broken over and over again.

Hi Lazaro:

No you do not need to have 20% down You are a stronger buyer with 20% down. You should however be an approved buyer before you put your offer in. Part of the lending process is providing your income tax, so that is not an abnormal request. You also need to make sure that your agent is in conversation with the REO agent to find out their requirements.

Good Luck
Diana 909-945-5763

Hi Lazaro,

Ultimately you will not know what the this particular bank requires until they tell you. They may require 20% and they may be happy with 10%. Every bank is different. No, you do not need 20% to qualify for any and all bank owned properties. I have seen some banks take as low as the FHA minimum 3% to purchase property. If the subject bank does come back with a 20% down requirement you will have to ultimately determine how badly do you want the home. If you want the home and you have the 20% down then up your down payment. This will also prevent you from having to pay PMI insurance on the loan. If you are not as attached to the home and willing to look for another home then you can always pull your offer. You might find that the bank will soften it's stance if they see that you're willing to walk away and find another home. Best of luck!

Matt