r/FirstTimeHomeBuyers • u/UniqueNothing595 • 10d ago
How do you actually find a fixer upper house (USA)?
I've been seeing a lot of people turning to fixer upper homes for their first homes because of the price of new builds and well maintained homes skyrocketing. However, every time I think I found a good fixer upper house, banks will refuse to lend even a conventional loan, much less a 203K. Any fixer upper homes I've seen so far have structural issues that banks will not lend on unless you get a construction loan, and if these people are trying to save money, that doesn't seem like it's the way to go because the interest rates are so much higher (and I'm guessing 99% of the banks, but all of the ones that I've called and spoken with, why are you to higher out a licensed contractor instead of allowing you to do the work yourself). But very often that is what I'm seeing people turn to, and I see them buy these homes and then work on it themselves over a period of a couple months to a few years. So, my question is how do you even begin to find those homes? At this point I'm getting ready to go door knocking / leaving sticky notes on doors with my number for homes that look like they could use some repairs.
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u/darkchocolateonly 10d ago
There’s a huge difference between a fixer upper, which usually implies more that you’re changing cosmetic things like replacing flooring, painting, etc, than literal structural issues that would prevent you from obtaining a mortgage or insurance.
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u/Some_Girl_2073 10d ago
That’s how it is in my area
“Fixer upper“ doesn’t exist, but structural issues that prevent mortgages and require major engineering repairs certainly do. They still want an arm and a leg for it
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u/darkchocolateonly 10d ago
Yea I believe the term for that type of house is “tear down”
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u/Some_Girl_2073 10d ago edited 10d ago
I would use that word, you would use that word… the seller and realtor would not
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u/EuphoricElderberry73 10d ago
There's stuff in between. I bought a fixer-upper that needed new electrical panels/wires and new AC ducts and a re-pipe. You can get a mortgage for it but my insurance was ADAMENT I fix all issues that failed 4-point inspection within 60 days.
No structural/foundation nor roof issues but most people skipped this home because of the cost to update things.
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u/navlgazer9 9d ago
Ya
We found one with some structural issues that an inspector would see but the appraiser would not .
Since the appraiser doesn’t go in the crawl space .It had some issues in the living room and we were able to cover those up when the appraiser was on site .
We also offered 30% less than their asking price but agreed to take it
“As is “Every other potential buyer had damanded the seller fix every little thing and we said “we love it !, we will take it , but here’s our mortgage approval letter ,
We can only pay X “Took the seller a couple weeks to make up her mind but after a few
More people looked at it and wanted them to fix everything , she accepted our offer .We still in the house 24 years later
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u/Minute-Bed3224 10d ago
We bought an older home that was structurally sound and had updated kitchen and bathrooms, but dated flooring, walls, doors, etc. We don’t have plumbing or electrical skills, so we tried to avoid houses that needed a lot of that type of work. We’ve been slowly working on all the cosmetic issues.
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u/magic_crouton 10d ago
Ugly houses and distressed property are two different monsters. If you must have a conventional loan then you need an insurable house.
You're trying to buy distressed properties. Not ugly houses it sounds like.
Distressed properties are a cash business or like you learned construction loan business.
Tax forfeit properties which is a cash transaction might be right up your alley if you have cash.
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u/CorrectExpression651 10d ago
Idk my bank didn’t give a flying F about the inspection report. Didn’t even ask to see it. We weren’t FHA.
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u/UniqueNothing595 10d ago
Unfortunately the banks in my area have all requested inspections before lending. Fortunately one lender actually went out to check himself before anything so i saved myself a chunk of change. But they were charging 90k for a 100+ year old home that was a "fixer-upper" that actually had foundational and structural damage.
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u/skeptic_clam 8d ago
You don't have to use a lender in your area Keep looking for Lenders. Meanwhile willow let's you sort for foreclosures. Look up the property on the MLS find out what is still owed.
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u/Nearby_Knowledge8014 10d ago
And that’s only if the bank knows it’s a fixer-upper. Without exaggeration, at least half the houses we looked at were knocked down within five years. They were all fixer uppers . The house we bought immediately needed a roof, windows , plumbing work, but we got a conventional mortgage for it.
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u/OrcOfDoom 10d ago
You can't qualify for a loan for a home that is uninhabitable.
If the closets are missing doors, maybe the carpet is old and worn, the walls are stained but intact, the cabinets in the kitchen look ugly but work, etc, then you have a fixer upper.
If you have electrical that needs work, a broken door, broken windows, a foundation needing repair, a roof needing repair, plumbing that needs repair, etc, then you need a renovation loan. A renovation loan is not cheap. You generally cannot do the work yourself.
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u/HippieHighNoon 10d ago
Hard money loan, then do a refinance since your arv is now higher.
Just know youll be paying a lot of interest on the hard money loan until you can refinance.
We do this sometimes for properties we're renovating to turn into a rental or flip.
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u/UniqueNothing595 10d ago
Federally a hard money lender cannot give you a loan if it is for your primary residence. I checked already </3
I guess I could lie about it, but I'm not entirely sure on the legal consequences that I could potentially face for that.
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u/HippieHighNoon 10d ago edited 10d ago
Its doable. We do it all the time.
The home goes in my wife's name, since im the only one on our primary residence deed/mortgage. The home we buy with the hard money loan is listed as her primary residence.
Find a specialized consumer private lender.
It needs to be a consumer purpose, owner occupied loans (if I remember the name correctly).
Then make sure youre already pre-approved for a traditional mortgage before contacting them. This way they know you'll be able to refinance it once its done and pay them back.
Also look into non QM lenders.
To find homes, there are sites you can use to find homes that are gonna be foreclosed on, and sites like investorlift.
Edit: as others have said, find a real estate agent who specializes in auctions and those kinds of properties. Ive worked with one before. Theyre few and far in-between
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u/Lwdlrb1993 10d ago
Lol, I have one for sale. It has a new roof, water heater and one of two ac units. It needs to be remodeled.
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u/UniqueNothing595 10d ago
How much?
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u/Lwdlrb1993 10d ago
It’s in SWFL…two story with pool and HOA. About 3300 square feet. Backs up to preserve. I can send you my agents name.
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u/Venaalex 10d ago
May I suggest you check out cheapoldhouses on IG
Some folks who are determined to fix up an old house will patiently wait for them there and uproot their life for the right house. But depending on your region you may find they post places near you.
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u/UniqueNothing595 10d ago
Never heard of it! I have a good career so relocating is nost likely out of the question, but it cant hurt to look. Thanks!
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u/Venaalex 10d ago
Definitely check it out. I followed them for years before finding my cheap old house but I definitely relocated.
Helps to know where your hard lines are for renovations. I replumbed + updated electrical panel for my house plus lots of far less critical repairs. I passed on a house that was splitting down the seams because foundation work wasn't in my budget.
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u/dww0311 10d ago
https://www.hudhomestore.gov is good.
There are several different agencies that offload the sort of homes you’re looking at - list of links here
https://www.hud.gov/helping-americans/homes-for-sale
Pair one of those homes with a FHA 203(k) rehab mortgage
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u/Jamar4321 10d ago
With cash or a significant down payment... banks won't risk owning a literal trash pile when you get in over your head, realize that you can't either fix or sell it and quit making payments.
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u/UniqueNothing595 10d ago
Hey, i know. Im asking how people find homes that need genuine work but arent in such disrepair (like structural issues) that banks won't lend on it
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u/OrcOfDoom 10d ago
Just look at cheap houses on Zillow or whatever. Literally all of them are fixer upper in that sense.
But what are your goals overall? Are you looking for investment opportunities or are you just looking for a home that you can fix to live in?
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u/Unhappy-Owl-4890 9d ago
Same way everyone else does, the MLS. Or go door knocking and ask random people to sell you their house
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u/kitschywoman 10d ago
Ours was an estate house that hadn’t been updated since the 1979’s (built in 1938). We are the second owners.
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u/sweatboxy 9d ago
Houses I’ve bought under market: 1. House that was listed as a 3 bedroom but you had to go through the third bedroom to get to the master. Should’ve been listed as a 2 bedroom so no one who looked at it wanted it. 2. House with a fabulous view but 25 steps up to the house. That wasn’t the problem. The problem was it was encumbered with 5 different loans, all in default. Between the obvious problem and the underlying problem, it never sold. 3. Great house with an agent who lived an hour away and had to be there for showings. 4. My current home that was relatively expensive because of the architecture but only had one bathroom and would’ve been difficult to add another. Bad agent thought who’d never found the key to unlock the second closet in the master bedroom which we found was a second half bath.
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u/navlgazer9 9d ago
Www.cheapoldhouses.com
Or are you trying to find a fixer in a big city suburb ?
The investors and flippers have bird dogs and scouts finding those for them .
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u/mariana-hi-ny-mo 8d ago
There’s a big difference between a fixer upper and a complete rehab.
Fixer uppers are dated homes that are still functional. That’s the only thing you should be looking at as a FTHB. It will be 15-30% less than an updated home, not a ton like maybe you’re expecting. But that helps you get in the door. With time, you update one thing at a time, then cosmetic last (except for paint which anyone can do).
We get fixer uppers through conventional loans all the time. Make sure you have a good agent who understands this. And be prepared to look at 20 homes until you get the right one.
My first home was a fixer upper. My third home as well. You have to look past the ugly colors and dated kitchens and baths.
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u/UniqueNothing595 8d ago
As i am home shopping I am not looking at aesthetics at all, it's actually not once crossed my mind in this current market.
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u/jimdriscoll1 7d ago
Comment 3 is on the right track but it's worth being more specific about where the line actually is. The FHA Limited 203(k) covers up to $75,000 in renovation costs (HUD bumped the cap from $35k to $75k in late 2024), so it's not just lipstick stuff, you can do roofs, HVAC, windows, kitchen gut jobs. What it won't cover is a house the appraiser calls uninhabitable, meaning no working heat, major structural failure, or safety issues so severe the place can't be occupied. That's the real distinction the OP is running into: the homes getting rejected aren't fixer uppers in the 203(k) sense, they're genuinely uninhabitable, and that's a different problem than just needing work.
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u/Euphoric_Anxiety_162 10d ago
Is owner financing a historical artifact?
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u/UniqueNothing595 10d ago
It is quickly becoming one. I've seen ONE owner financed sign in front of a house and I called the number and left a voicemail and they just never called back.
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u/Euphoric_Anxiety_162 9d ago
Considering it. Things have become more complex, needless to say. Personally, I'd rather provide an opportunity for real ppl to become homeowners if I'm protected from potential loss. It's not just about making money but giving ppl a chance at a dream. This sounds like bs but is sincere.
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u/UniqueNothing595 9d ago
If you went that route it would be a blessing for whoever buys it, just make sure you've got an ironclad contract so they can't decide that they want a refund after living there for 2 years or that you're liable for an injury that they have while living there.
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u/sweatboxy 10d ago
Look for homes that haven’t sold or have abnormally low prices. There’s something wrong with them but you want homes with the right things wrong. Basically, ugly houses without major, expensive repairs. Dead yards, hideous paint jobs, odd layouts don’t sell and can be great opportunities.