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I am interested in buying a home that needs a lot of work. How do I get financing for this type?

It is selling for very little, however it needs a lot of work.What dO I do to get financing for this type of property?
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August 16 2009 - Pennsville
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If this is a Real Estate Owned (REO) property then don't even think about a conventional loan much less an FHA 203(k) if the property is in a big city. 

Consider the fact that in some locations there are over 20 offers on every REO property with at least half being all cash (for homes under $100k) with 30 day closings.  Financed offers with less than 20% down go to the bottom of the list. 

So, I will need to know where you are and how much the house is listed for.

If you're in California contact Community Commerce Bank.  Otherwise, you can look up Hard Money Loans, but I don't really recommend them.
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August 17 2009
Good luck getting a 203k right now...or a contractor that will even give you estimates to work with that loan. Seller finance may be the better option.
Banks are being very conservative on what they will loan out if properties fall into foreclosure. If you don't have a lot of experience remodeling it will be a tough sell to underwriting.
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August 16 2009
Check with your mortgage broker. Ask for what makes a home 'habitable'. Some banks are different then others, but there is a basic definition. My brother bought a home with a good roof, no carpeting, just cement. My sister's home needed a roof, and had to have it repaired w/in 30 days of close of escrow or the loan would be all due and payable. Things like, no live uncovered wiring, a good roof, running water, a heater, are all considered necessary.
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August 16 2009
Hi Niki
You can get an FHA loan called 203K.  You will pay around a half a point more (please check with your lender). 
Google it find out more info =)
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August 16 2009
 
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I am interested in buying a home that needs a lot of work. How do I get financing for this type?
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