Can you use a mortgage to buy a home at an auction?

Conventional mortgages typically aren’t available for homes purchased at auction. Because auctioned properties are sold “as-is” and often require substantial repairs, lenders view them as high-risk and won’t approve standard financing.

However, that doesn’t mean financing is off the table. Many buyers turn to construction loans, which are designed to cover both the purchase and renovation costs—making them a practical solution for acquiring and restoring auctioned homes.

How can you use a construction loan to purchase a home at auction?

Since auctioned properties are typically sold “as-is,” they may need extensive repairs or fail to meet lender requirements for a conventional mortgage. That’s where construction loans come in.

A construction loan is a short-term financing option that covers both the purchase price and the cost of renovations. This type of loan is ideal for auctioned homes because it’s designed to fund properties that require significant work before they’re livable. Once the renovations are complete, the construction loan can often be converted into a permanent mortgage.

Do I have other options for financing a home purchased at an auction?

While there are a few alternatives, such as hard money loans or paying in cash, these options often come with high interest rates or require significant upfront capital out of the reach of most everyday home buyers. For most buyers–and the homes they can purchase at auction–the most practical and flexible solution is a construction loan.

When do I need to pay for a home purchased at auction?

Auction purchases don’t allow financing contingencies—your funds must be ready on auction day. Winning bidders are typically required to make a deposit of at least $5,000 or 10% of the purchase price within 1 to 3 days. The remaining balance is often due within 10 days, usually via cashier’s check or wire transfer, depending on the auction’s terms.

Can I refinance a home purchased at auction?

While construction loans can be used to buy and renovate auctioned homes, you’ll need to work closely with a lender and get prequalified before bidding. 

Once you win the auction and close with a construction loan, you can begin repairs. After the renovation is complete, the loan can typically be refinanced into a conventional mortgage, turning your short-term financing into a long-term solution.

Do auctioneers take a fee for home sales?

Buyers at auction need to keep in mind that on top of the bid price, they’ll also have to pay the auction house a fee. Often, this is 10% of the winning bid. Take this into account when budgeting and getting pre-approval for a loan.

Also, read the auction house’s terms closely to see if there are additional buyer costs such as closing fees.

Ready to finance a home at auction?

At Consumers, lending decisions are made locally, and we might be able to help you finance a home purchased through auction with a construction loan that can later be converted into a conventional mortgage. Give us a call at 800.991.2221 or talk to one of our mortgage loan officers.