I would like to purchase a foreclosure, what are my financing options? 

The type of financing available will depend on the type of foreclosure, condition of the foreclosure, your credit rating, and the amount of down payment you have.  HUD (Housing and Urban Development), Fannie Mae, Freddie Mac and some banks offer various incentives to buyers who purchase their properties known as REOs (Real Esate Owned).   First, find out what type of foreclosure the home is and if there are any incentives.   Second, find out what are the guidelines for receiving the incentives. 

Additionally, you should look into a Federal Housing Administration (FHA) loan.  FHA loans offer low cost financing at competitive interest rates, smaller down payment (3.5% down payment and the money can come from a family member, employer or charitable organization as a gift).  They are also easier to qualify for and the borrower doesn’t need to have perfect credit (typically 620 mid score or better). 

If the foreclosure meets certain health, safety and structural standards,  it may qualify for FHA 203b financing.    If the property needs rehab or does not qualify for 203b,  check into qualifying for a FHA 203k renovation loan.    There are two types of 203k renovation loans (The Streamline and The Standard).   Both provide funds for the purchase and the renovation of a home all in one.  

203K streamline will provide funds up to $35,000 in renovation expenses at low FHA rates for:

• Paint and carpet
• Appliances, heating and air conditioning
• Fixtures and New Roof
• Most any remodel items except structural items - No foundation issues allowed.

203K Standard is intended for more complicated projects and will provide funds for:

• Structural changes including room additions
• Exterior grading and landscaping
• Renovations that prohibit borrower from occupying the residence
• Project that requires engineering or architectural drawings and inspections

Consult with a knowledgeable Realtor when purchasing a foreclosure.  A good Realtor will save you time and money because they know the guidelines for various foreclosures.  They will also provide answers to your questions and help you find resources to make an informed decision.