My "Fixer Upper" needs too much work for bank to Mortgage. HELP!

[Corey Johnson]

I have a house in major disrepair that I want to Fix-Up.

Asking price is $80K and I'm looking to get it for around $60K.

Its was built in 1895 and has city water and a septic system.

The heat was supplied by Gas stoves/heaters, but is run off a Propane tank which the owners have removed.

The structure seems good to me, but the Mortgager lender I talked with said it would have to appraise and there cannot be any structural damage or safety concerns.  And the appraisal coming back "subject to repairs" would not allow the loan to close until the repairs were completed.  The house has been vacant for 5 years. The owner is likely not going to spend money on repairs and installing a propane tank and heaters (a permanent heat source is required) so that I can get a mortgage.

Also, the lender wants the sale price to be at least $70K so that after my 20% down payment, the loan is big enough.

I'm not planning on renovating and selling quickly.  I will do reno myself over time (I'm a contractor), and move in when done. And then turn my current home (which I own) into a rental property.

Does anyone know of a kind of lender that deals with these types of properties. Or is there a special kind of mortgage product that is designed for houses without heat sources.

 The loan would only be for $40K - $60K.

[Andrew Postell]

@Corey Johnson what you are describing is all too common.  There are many banks that do not have very many options for investment properties.  Just because one bank does not have an option doesn't mean that other banks don't have options.  There are absolutely loans available for this type of property.  Renovation Loans wrap the repair work into the loan itself.  Your down payment is based on the total cost of the property.  So if you purchased for $50k and the renovation was $50k then your down payment would be based on $100k...even if the home appraised for $200k, the downpayment would be based on the purchase price and renovation work.  I hope that description helps.  Seek out smaller to mid-sized lenders in the area of the property or seek out a "mortgage broker" - they represent many different banks and would certainly have an option for you.