Buying a Foreclosure - What Type of Loan Can I Get?

Reader Question: I am interested in buying a home that went into foreclosure. The question is, what type of loan can I get other than an FHA loan because I have great credit and a good job.

I don't why you would be limited to an FHA loan. If you do have great credit and solid income, you will be a good candidate for just about any type of mortgage loan. The FHA insures loans made through private lenders, but I can't see why you would need that kind of backing ... seems like you're a well-qualified candidate for a mortgage loan that is within your means.

You're hearing a lot about the FHA right now because of their efforts to help "at-risk" homeowners refinance into more affordable loans. I'm guessing that will remain their primary focus for the next year or two.

There are a couple of things to keep in mind when buying a foreclosure property, that aren't a factor when buying a home under normal circumstances. For one thing, keep in mind that you'll need to be approved by the lender who has foreclosed on the property. This can be a time-consuming and often confusing process where you don't get much information. Investors often complain about this part of the process. So if it's your first time buying a foreclosed home, be sure you read up about the process that's involved.

Also, if the home ends up being sold through a real estate auction, you would actually need to have all of the financing up front. In other words, you would need to have the cash to buy the home right after successfully bidding on it.

But as far as getting approved for a mortgage in general, your options will probably we wide open if you have great credit and sufficient income.

I hope that helps you out some. You can learn more about the process of buying foreclosed homes through the Foreclosure City section of our website.