How to Buy Foreclosed Properties With No Downpayment


How to Buy Foreclosed Properties With No Downpayment. Buying a foreclosure is an attractive option for real estate investors, first-time home buyers and anyone looking to purchase a home below market value. Buying foreclosures is still a competitive market so getting a home at a ridiculously low price is rare. Some lenders and government agencies offer financing with zero down payment to help sell foreclosures faster.

Buying a Bank-Owned Foreclose

Find bank-owned foreclosures by contacting a real estate agent who can check the MLS (Multiple Listing Service) and show you properties listed as foreclosures.

Research zero-down financing options with lenders to buy properties. VA loans are available to veterans with no money down. FHA loans are another source of no-money-down loans. Lenders will work with you to determine the best loan to fit your individual credit situation.

Become pre-approved for a zero-down-payment loan for the foreclosed property. This includes verifying your income, credit score and employment with the lender. Your credit score will need to be good to qualify, but every lender has different criteria.

Make an offer on the home. Work with your real estate agent to negotiate the cost of the property. Finalize all paperwork including the title.

Bidding on a Government-Owned Foreclosure

Locate government-owned foreclosures selling at public auction. These can only be purchased through a HUD (Housing and Urban Development) approved agent, broker or a servicing representative. Find agents at local, state and federal government websites featuring government property.

Preview properties when the auction allows it. This may be only several hours before the property is to be auctioned off. Visit government websites to view many of the available properties. Determine if the foreclosures meet your specific needs.

Secure financing in advance by working with your lender to secure a loan. Lenders will approve the loan for a set amount you qualify to finance, based on your credit score, employment and monthly income. Lenders will supply a proof-of-financing paper for you to bring to the auction.

Request that your representative arrive at the auction with cash on hand and financing paperwork. This includes a cashier's check. Amounts will vary according to the properties. Information is available on auction's website as to how much you need for deposit. Finalize paperwork at the auction.

Tips & Warnings

  • Have the ability to prove you are a good borrower by showing the lender you have a good credit rating, excellent employment history and the ability to make regular payments. They are more likely to loan to good borrowers with no money down.
  • Loan programs such as the VA loan and the FHA loan are available to qualified buyers, which provides government backing of the loan. Secure these loans through your lender, not through the government directly.

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