Bank refusing to lend on property for 25k

[Jack Srimani]

Hi,
I contacted my bank for financing a property I am buying which is approx. 25k. However my bank denied stating that they will be only financing properties of much higher value where the bank needs to lend at least 30k. I am not sure why such a restriction. Is this common scenario. If so how does one get fianancing for deals on properties which are cheaper in value. I appreciate your input. Thanks

[Steve Babiak]

And keep in mind that they did use the word "lend", so your actual purchase price will be higher due to down payment requirements of the lender.

Now, think about how much money the bank makes for a loan - for the most part, that is proportional to the loan amount. Now how much work goes into underwriting a loan - for the most part, the same amount of effort regardless of the price of the house. So, at some price, it becomes more effort to do a loan than the money that the bank will earn. Your bank said that is at $30K; others might have a different number (I've read $50K more than once on these forums).