In a word ... no. You're about 100 points below what would be considered a minimum score. The lowest qualifying FICO score I've seen was around 580 ... and there were several extenuating circumstances (medical, job layoff, etc.). Even if it were possible, $5000 down wouldn't get you much more than a $60,000 home ... I always use 6%-8% as a minimum cash outlay for FHA-insured loans, which factors in both the 3.5% down payment and closing costs. As for "a foreclosure for more house," ...
Itâ€™s a common misconception that these properties can be purchased for pennies on the dollar. If such were the case, theyâ€™d be gone before they even hit the market. While they may be aggressively priced when first posted for sale, the strategy is to attract attention to the listing, and raise the stakes through a â€œbidding war.â€ In so many instances, foreclosures end up selling for more than the original asking price, and closer to market value.
Just about all of them need considerable work, well beyond cosmetic improvements ... sort of fixer-uppers on steroids. In a nutshell, theyâ€™re suited primarily for investors with deep pockets. I work with several, and see firsthand what these places go for â€¦ and how much it can take to get them into livable condition. Believe me, itâ€™s pretty serious money.
The terms of a foreclosure sale alone should be sufficient to drive all but the most savvy buyers away â€¦ â€œas-is, where-is, with all faults and defects.â€ Bottom line: itâ€™s yours as it sits, with no recourse. In most cases, thereâ€™s an opportunity to inspect the property and get out of the deal, but only after a contract is signed â€¦ and since the homes are generally in pretty rough shape, itâ€™s imperative to have all major components checked out by experts: roof; foundation; under-slab plumbing; structural integrity; electrical; HVAC; drainage; insect/rodent activity, etc. The cost of these inspections is totally on the buyer, and none of it is reimbursable, even if the transaction fails to close. Further, in virtually no instance will the lienholder/seller make any allowances for repairs â€¦ â€œas-is, where-isâ€ sums it up.
While you're certainly headed in the right direction, it doesn't appear as if you're quite there yet. Keep working on that FICO score. I wish you well.