Buying a home as is: what it means for you
Finding financing options for as-is home sales
You won’t have as many financing options to buy a home as is. Conventional mortgages, i.e. uninsured or federally guaranteed mortgages, are available for some properties. The caveat here is that they can only have minor flaws. Items such as cracks in windows, a cracked or damaged driveway, and minor damage to interior walls will generally be acceptable.
What lenders don’t want to do is finance a property that is in poor condition. It’s risky for them. If the situation worsens to the point where the property loses considerable value or is unlivable, the mortgagee may not want to repay the loan.
If you are a first-time home buyer, buying a home as is may not be the best solution for you. The US Department of Housing and Urban Development (HUD) offers many more ways for first-time homebuyers to get help, through tuition or financial assistance. While HUD does not make its own loans, the Federal Housing Administration (FHA) does.
“As-is properties may not be eligible for government-insured loans like the FHA or the VA,” Brook cautions. “To be eligible for this type of loan, properties cannot have flaws such as roof problems, paint chips or other major flaws.”
“FHA mortgages are very specific about safety issues around plumbing, electrical, lead paint, and so on. Says Denise Supplee, a real estate agent from Pennsylvania. “While you may think you’re getting the ‘offer of a lifetime’, your mortgage company may not agree,” advises Supplee.