Banks that loan on appraised value rather than purchase price

[Isa G.]

Just listened to BP REI Podcast 440 and was intrigued by the no-money-down strategy they discussed. Does anyone know of a bank or credit union that gives loans based on the appraised value rather than the purchase price?

Hoping to buy low and use the left over spread to cover the down payment on some buy and holds. 

Thanks,
Isa 

[William Hochstedler]

The trick to this is to get on title either with a private money loan or seller financing.  Then season title and refinance based on appraisal.  All lenders do this but have different criteria.

All banks lend on the lower of the purchase price or appraisal.  If your purchase price is above appraisal, there have been programs that lend x% above appraisal to accommodate a higher purchase price.  But I haven't seen one of those in a while.

If you are trying to get a better LTV (and loan) based on buying something below appraisal, the strategy for doing this is the BRRRR method that is talked about here a lot. Here's the BP Guide on how to do it.