Financing an "As Is" Sale

[Tami Olsen]

We have looked at a pre-foreclosure SFH that is being "sold as-is, inspections for information only". It also says "broken glass in back, not suited for financing". NOTE: it is not listed as a pre-foreclosure on the real estate listing and it is not bank owned at this time.

The broken glass is only in an small porch addition that has structural issues anyway. It can be fixed or removed without compromising the house itself. There is one broken window so that's an easy fix.

I had someone in on our second visit to look at the foundation and the house is structurally sound (except the small porch).

It is currently being lived in, all systems work. It needs some electrical and minor plumbing, boiler works great but is old so it should be replaced. Roof is fairly recent, no signs of leaks anywhere, basement is dry. It will need a lot of cleaning and paint.

The seller said the bank won't take a loan to purchase because it's being sold as-is and she can't afford to fix anything, if it's a loan she will be required to fix things (like electrical). 

Is this correct? I'd have no problem buying the house as-is. I applied for an HELOC without knowing they looked at net income on my tax return and I am self employed so once they added 1% of the requested HELOC to my monthly debt, it knocked my DTI above their requirements. They suggested a traditional loan as I have excellent credit. I have some options with business lines of credit as well, but before doing this I wanted to check on why more traditional loans are being discouraged in this case (and if this is common). I believe rehab loans have more restrictions than I am interested in. We would do most of the work ourselves, and the house may also be eligible for historical tax credits (what's left of them).

Thanks in advance!

(ps I put this in the Foreclosure forum as I don't know where else it should be, and it will be a foreclosure if it doesn't sell in a few months)