I'll answer your question with another question. If after winning the bid you talked with a new loan officer or lender who showed you how a loan with only 3% down would be a "better" loan for you, would the asset manager or RE Agent who holds the REO say no? Close the deal and they will most likely never ask why.
It's all about what is on your purchase contract. If you decide to use the 3% down loan, and cannot complete the transaction in a timely manner there may be losses you experience.
If you are using the REO's lender then it may be more difficult to get around this as they may already have you "pre-qualified" on the 20% down standard.
So, read your contract and see if you are stuck using the seller's lender. If not, at least talk with a lender about your loan options and do what is best for you!
If you want to talk, please call me tomorrow after 9:30am. 916/985-3403.
The Mortgage Mentors (c)
Great Advice. Great Alternatives. Great Attitudes. (c)