Ask the Expert: Can I Really Save Money Buying a Foreclosure?

Q: I need to save money on my house purchase, and I hear buying a house foreclosure can do that. What do I need to know?

A: Yes, buying a foreclosure can help you save—but it’s important to go in with your eyes open. In 2025, foreclosures are far less common than they were during the housing crisis of 2008–2012, but they still happen, especially in areas hit hard by local job losses or recent natural disasters.

A foreclosure happens when a homeowner can’t keep up with their mortgage, and the lender takes back the home and sells it to recover the unpaid loan. These homes often hit the market at a discount of 5–7% off the list price, which can offer much-needed savings at a time when home prices remain high.

But here’s the catch: foreclosed homes are usually sold “as is.” That means what you see is what you get—and sometimes what you don’t see, too. A 2024 HomeAdvisor report found that repairs on foreclosed homes typically run between $10,000 and $30,000, often for big-ticket problems like electrical issues, broken plumbing, roofing damage, or foundation cracks. Before you buy, it’s smart to budget for a professional inspection (if the bank allows it) and set aside funds for potential repairs.

Foreclosure sales often take place at auction or through a bank’s real estate department, and competition can be stiff—especially from investors who pay cash. Cash offers are attractive because they close quickly and don’t depend on lender approvals. But here’s some good news: in 2025, investors will be less dominant than they used to be. According to a Redfin report, 60% of foreclosure purchases are now made with financing, up from 50% in 2020. That means traditional buyers like you have more opportunities to compete.

If you’re planning to finance your purchase, getting pre-approved is crucial. Banks want a smooth, fast sale—so show them you’re ready to move. One helpful option for buyers looking at foreclosures is the FHA 203(k) loan. It lets you borrow not only for the home purchase but also for needed repairs. As of mid-2025, the average interest rate for a 203(k) loan is around 6.8%, according to Bankrate.

Bottom line? Foreclosures can be a great way to save, especially if you’re handy or have room in your budget for repairs. But do your homework. Factor in possible fixes, work with a knowledgeable real estate agent and make sure your financing is solid before jumping in. The deals are out there—but like anything worth having, they take time, patience, and planning.