How to Buy a Foreclosure | Buying Foreclosure from Fannie Mae and Freddie Mac |

UPDATE: Effective October 7, 2014, Fannie Mae is retiring the HomePath Mortgage (HPM) and HomePath Renovation Mortgage (HPRM) products.

How to buy a Foreclosure: Fannie Mae and Freddie Mac Foreclosures

If you are looking to buy a home for your primary residence at a great low price, Fannie Mae and Freddie Mac have great deals for you. Fannie Mae has thousands of properties that they will not only sell for great deals but will also provide flexible financing. Freddie Mac has just as many properties for sale but is not offering any special financing at this time.

Fannie Mae & Freddie Mac's Foreclosure Programs

Fannie Mae calls its foreclosed property resale program the HomePath program and you can view available homes for sale at

Freddie Mac's foreclosure program is called HomeSteps, and you can find properties for sale on their web site at

All those great foreclosure deals will not help you without mortgage financing to buy them. Not only does Fannie Mae offer extremely flexible financing terms for these properties, but for some properties they will also provide some rehabilitation financing to help you fix the house up when you buy it.

How can I buy a foreclosure through Fannie Mae's HomePath Program?

To help move its inventory of foreclosed real estate owned (REO) properties, Fannie Mae is offering financing to home buyers that they will not be able to get anywhere else (even through Fannie Mae's regular mortgage programs). The property must be a Fannie Mae REO, so if you find one you would like to buy you can get the following great financing deal:

  1. Down payment of only 3%. Start with a low down payment that can be a gift, a grant or a loan from your employer or a non-profit housing organization. Post-closing reserve requirements, which are normally six month's of monthly payments, are also relaxed as well.
  2. No mortgage insurance, even with less than a 20% down payment. At present, there are no mortgage insurance programs for these properties available at all, not only saving you a lot of money but also giving you the chance to get approved. Mortgage insurance underwriting is extremely tough today - requiring a minimum 700 credit score, for example.
  3. Only a 660 credit score needed. A 660 minimum score is substantially lower than the current 700+ credit score you would need for a conventional loan, and also lower than the 620 minimum credit score you would need for an FHA loan.
  4. No appraisal required. Not only does this save the appraisal fee of up to $500, but you can avoid valuation problems. In today's slower real estate market, many appraisers are having trouble finding comparable sales, which prevents underwriters from approving loans.
  5. Renovation financing is available! Similar to the FHA 203(k) program, home buyers on select properties in the Fannie Mae list can purchase a home and qualify for up to $30,000 in additional financing for rehabilitation. In many cases, that $30,000 will help you improve the property and create a market value much greater than your cost of buying and fixing it up.

REO properties are available throughout the country as Fannie Mae and Freddie Mac makes loans nationwide. These properties go quickly, so your best bet is to check the web site frequently and to work with a local Realtor.

To purchase one of these REO properties, you can work with your Realtor and make an offer just like for a property listed on the local multiple listing service (MLS). You can submit your offer with an application for financing, but you should get pre-approved for your purchase first.

The current depressed real estate market is the best opportunity for home buyers to purchase a home in over a decade. Buying a foreclosed property can get you an even better deal, so do not miss your opportunity and get started today.

For a free mortgage pre-approval and an exact rate quote to help you purchase your next home, please email us or call us at 1-877-868-2503.

To see the current mortgage rates, visit our current Mortgage Rates page.

If you have any questions that you would like answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503.