Alot depends on the following:
1) Your credit
2) What the property will be worth after renovations
3) The timeframe you plan on renovating.
Email me for details. I bought one place with a downpayment of borrowed money, got rent the 1st day I bought it, then when I sold the property and made over $150K. Each time was a little different but the same process...alot of risk, elbow grease and ability to reach beyond the norm.
It is true that most banks would not lend money if they feel the collateral is not at good condition. If they do, they would want to see it being repaired asap and meet certain safety code and standards. Unfortunately, there are people who do not take care of properties or don't have the financial / skill resources to maintain and walk away leaving banks properties that are difficult to resell as is.
Of course, most resell houses have some kind of wear and tear because of time and people lived in them. Slight leveling problems are usual, some tears of sidings are normal too because of the hurricanes. However, if you are talking about a wall pulling away, foundation and other issues... you are talking about potential structural problems that some lenders would want to avoid. Or, would you even feel comfortable living in there while the wall is falling over and that you are willing to take time for it to deteriorate more?
Maybe you can get a contractor's estimate or ask the seller to provide an inspection report so that you can present the reports to your lender and see whether it fits the conventional loan or it is really so bad that you need the renovation loan and work with a licensed contractor.
If it cost more to hire a contractor, then you can certainly consider making a lower offer for the house.
Residential Property - Private Financing Consultant
Ask me about Seller Financing: 560 Credit Scores, 5% Down Payment, 30 Yr Fix Financing.