Need advice on Home Loan for my situation?

Some background: Was planning on saving money and paying off debt to improve credit before looking at a home, however a friend of a friend came forth with a housing opportunity my wife & I feel compelled to jump on. We're being offered a house "as is" at approximately $70K below what it was last appraised at. I have construction and inspection friends who did a walkthrough with me and it would need about $25k in repairs. I'd need to jump on this opportunity soon.

My problem: Savings were recently wiped out by a move, baby time off and car purchase so I have next to nothing to put down. Wife makes less than I do but has excellent credit, with my new job I make more $$ but have fair-poor credit. Is there a way I can get financed with essentially no money down and do I have any options?

Typically I would hem to the mantra "Save, improve credit, check again in 6 to 8 months" but this opportunity will not be there then. Thoughts?

FHA mortgages....also has a rehab program that will lend you to money to fix the house.

the mortgage will still need to be at the county loan limits.

Your local or state government may have low-interest loans to help you make basic home improvements and may even offer some "weatherization" type repairs free. Banks also offer home improvement loans, as they increase the value of the property, so the bank will have some collateral & protection.

Depending on where this "great deal" is at this may be the first or many such opportunities.

With the Mortgage industry calling in sick so much lately it has left a huge hole in many housing markets. This hole is affecting: mortgage companies, real estate agents, builders, construction workers, title companies, appraisers... basically, everyone who is involved with a transaction.

This hole is going to create MANY more opportunities like this. There are already builders offering ridiculous incentives for buying a brand new home. Offers like: No payments for 6 months (Chicago area), a free pool (Miami area) or a free finished basement (Dallas area).

As more people go into foreclosure, you will find many more houses coming available. This + the already overloaded market + tighter lender guidelines = you should wait.

Save your money, fix your credit and give yourself a better leg to stand on when it comes time for negotiating. If the downward spiral continues, you will be able to find something comparable or better when you are truly ready. This mess isn't going away overnight, so don't beat yourself up for "missing it."

First make sure the "opportunity" is as good as you think it is. When was the last appraisal done? Even one done 3 months ago will be radically different today. Don't confuse Market value with Appraised value.

An appraisal is just "an educated guess." It's based on what happened before (up to 6 months ago) and has no bearing on today. Market value is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

If it's appraised at 2 dollars and no one will buy it, but people will buy it at 1 dollar, then market value is 1 dollar. And once you buy it for 1 dollar, it will be appraised for 1 dollar as will all the houses like it. So where is your equity?

If it needs 25k in repairs and you have no savings, why on earth would you want to jump into a 100% mortgage? What if something breaks? what if the roof falls in, the water heater breaks, the AC goes out?

you need to have good compensating factors:
The bank asks for reserves usually 6months of PITI (principal, interest tax and insurance) this is 6 mo. of mtg pmts sitting in the bank. They will also want to see money sitting in the bank for the closing costs (unless u can get the seller to pay for your closing costs)....It is very hard to qualify for 100% financing with the current market. If you have a good loan officer, they will know how to structure your loan.