Purchase Foreclosures with FHA Loan?

[Joel Bowen]

Sorry if this question has been answered before. I tried to look around for information regarding this but didn't find anything to helpful. So a long time ago when I first kind of heard about purchasing foreclosures I was under the impression that you had to pay for them in cash (I think I had this drilled into my head from when I was young or something). After a bit more research that doesn't seem to be the case.

I was curious, is it possible to purchase a foreclosure from the bank with an FHA loan (3.5% down)?

Also, how do banks price foreclosures? Do they just sell them for what the defaulting party owed on it? Do they mark them up from that price or down?

If a bank is asking X amount of money for a foreclosure that let’s just say it doesn't need any work for simplicity, at what % discount should I be looking for offer/get. The reason I am asking is I see many foreclosures that seem to be way under market value, how do I know what a bank is willing to let it go for?

Thanks guys,