No Mortgage Under 50K For High Risk, Why Allow Higher Amount?

I Have Credit Card And Medical Debt Around $20,000 And Score Of 512. I Am Titled As High Risk For Mortgage Companies. Local And National Mortgage Companies Wont Offer Me Any Loan Progams Under $50,000 But Will Offer Those $50K And Higher At 85% Why Is That? .... Why?!

I Am Looking At An Investment Property Listed for $49K But Appraised At $38K - The Owner Wants More But Is Willing To Go 45K - I Would Be Saving Money On A Smaller Loan Rather Than Getting a 100k Home and Having to Pay An Arm And A Leg Down And Then The Closing.

I Get The Percentage Down And Closing Costs And Percentage They Cover Up To On The Mortgage Loan - I Just Dont Understand Why They Offer Larger Mortgage Amounts Than Smaller Ones. Seems Like No One Will Touch Me Without The Property Valued At 50K Or Above...

Thanks To All Those Who Help Answer This Question - Maybe The Property Onwer Will Do That Owner Financing. :-)

I am trying to buy a house now too with not the best credit. From what I understand is the appraisal value has to be the same or higher than the seller is asking. this is understandable because the lenders want to make sure that if you default on the loan there is value in the property. Look at it this way, if someone is trying to sell you something and you go and get it appraised b4 you buy , and find out its worth 50$ but the seller wants a 100$ are you going to buy it?

It all has to do with turnover value and covering themselves , they need to make sure that they wont lose any money in the long run. It is the same with financing cars these days, you are more likely to get approved for a newcar than you would an old one that is cheaper. I guess they figure less risk that way

They want to stick you with a higher loan because they make money if you pay them on it or not. Credit is a game, you only have a great credit score when you are up to your eyeballs in debts and open credit lines.

Try going for something in the middle of 75k and 100k. Also talk to a commission based mortgage broker. They get paid when you decide to take the deal so they work harder to find a loan for you. Good luck!

A very simple answer, it's the same as not being financed for a used car, but being allowed to buy brand new... If your score is low they expect you to default on the loan, they want to make sure the property you finance, can be auction/resold at a resonable rate should that happen. Lower the upfront cost, the less it could be auctioned for. The higher the purchase cost, the higher the property should auction for... Is this thinking Jacked up? YES But is it reality, YES.

The question about your deal should really be, "Why are you buying a house for 11K over appraised value"? That's not the smartest thing in the world. You realize that IF you find someone to do this deal you will have to come to the closing table with that 11K difference plus what ever else they need??? There are still a few lenders who do Low Loan Amounts out there. I would find a property that is selling for appraised value or less than, not more than. With a 512 score you are looking at a very high interest rate when you find someone who will do this.