5% down payment on REO?

Asked by Mefisto666, Sacramento County, CA Tue Nov 8, 2011

can you buy a REO property with a conventional loan and putting 5% down? or is there a min. 10% you need to put down since you are dealing with banks and not regular sellers?

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Teri Andrews-Murch’s answer
Teri Andrews…, Agent, Auburn, CA
Tue Nov 8, 2011
The amount you put down does not have to do with who owns the property, but what type of loan YOU are getting and what your lender requires to approve the loan based on your income, the property value and your credit worthiness.

Speak with a lender or loan broker to have them evaluate with you the types of loans you qualify for.
1 vote
Jim Walker, Agent, Carmichael, CA
Tue Nov 8, 2011
Factors that influence the percentage of purchase price required for down payment include:

Property condition: Is the structure sound? roof in good condition, no evidence of wood destroying pests.
Are all major building systems in good working order? HVAC? Windows, Doors, Built in appliances?

Property type: Single family residential for owner occupant may require a lower down payment than an investment purchase, a manufactured home, or a condominium.

Borrower qualifications: Your credit, income, liabilities, and assets,

If the REO seller is also offering to make the loan as part of the sale (REO seller financing) they may offer a lower down payment percentage than a competing lender would offer. Check out Fannie Mae Home Path and Freddie Mac Home Steps Loan programs for low down payment offerings from those two giant REO sellers.
0 votes
Robert Chome…, , San Diego, CA
Tue Nov 8, 2011
5% down is fine on REO's. You may have to compete against other offers putting 20% down or paying all cash though, and the seller may perceive those offers as safer.
0 votes
Patrick O'Ha…, Agent, Citrus Heights, CA
Tue Nov 8, 2011
You can use any financing you want, as long as the bank seller approves
and the property qualifies. The smaller your downpayment the better the
condition of the property has to be---which can be a problem with REO
properties that need repair. The seller bank may not want to entertain
minimum downpayment loans for fear your loan will be rejected due to
the condition of the property. The extreme is the fixer property where the
bank seller will only accept cash offers. Search for that REO that
is in good condition!
0 votes
Maurice Thom…, Agent, Mathers, CA
Tue Nov 8, 2011
You can purchase REO's typically with any amount down. Your loan officer will be the person to talk to about the amount you want to put down for a down payment. It depends on how much they want to loan your and the loan to value. A good loan agent will explain this to you. The amount you put down may have a impact on if you get your offer accepted or not in a multiple offer situation. This situation will usually call for a highest and best offer. The highest and best offer wins.
0 votes
Michael Abram, , Los Angeles, CA
Tue Nov 8, 2011

You can go 5% down on a conforming loan. You will have mortgage insurance on the loan, but it is possible to qualify for this purchase. Good luck!

Michael Abram
First Capital Mortgage
NMLS #235060
Direct: (310) 434-1718
Cell: (310) 995-0975
0 votes
, ,
Tue Nov 8, 2011
You can buy an REO with 100% financing - a VA or USDA loan. Conventional will allow you to put as little as 3% down (excellent credit needed), and FHA financing just 3.5% down.

The seller (bank) may want a bigger down payment, but I think they are just looking for the combination of whoever will buy it for the most & has the best chance of closing on time. I've helped people buy REO's with all varieties of financing mentioned above, so it is possible to purchase with 0% down.
0 votes
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