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 hipoteca, turning your short-term financing into a long-term solution.

Do auctioneers take a fee for home sales?

Los compradores en una subasta deben tener en cuenta que, además del precio de oferta, también tendrán que pagar una tarifa a la casa de subastas. A menudo, esto representa el 10% de la oferta ganadora. Tenga esto en cuenta al hacer un presupuesto y obtener una aprobación previa para un préstamo.

Además, lea atentamente los términos de la casa de subastas para ver si existen costos adicionales para el comprador, como tarifas de cierre.

Ready to finance a home at auction?

En Consumers, las decisiones crediticias se toman localmente y es posible que podamos ayudarlo a financiar una casa comprada mediante subasta con un préstamo de construcción que luego puede convertirse en un convencional hipoteca. Give us a call at 800.991.2221 or talk to one of our Oficiales de préstamos hipotecarios.