C5 appraisal is killing my loan!! Appraised for 20k above sale amount!

[samahok]

We found an amazing deal on a cosmetic fixer upper townhome in our desired neighborhood. Our offer of 320k was accepted with 3% down. Remodeled homes identical to this one currently sell for 390-410k. Our appraisal in came back at 340k in its current condition, but it also came with a c5 rating. The appraiser said that the floors would need to be replaced and kitchen cabinets be repaired to get a c4 rating and that by doing the repairs the value would go up to 350k. The only problem is that the seller is NOT willing to put any money into the house and that these repairs would need to be completed prior to closing. Is there anything that I can do to salvage this deal? I can't see myself putting money into a house that I do not own yet, however I also do not want to pass on such an amazing deal. Keep in mind that I am a first time buyer using a conventional loan through a Freddie Mac program allowing for 3% down. Please help!! I am open to any/all suggestions.

Thank you!!!!

[StartingOver10]

Have you talked with your LO to see if you can switch the loan to one of the streamlined type renovation loans so you can complete those specific items after closing? 

[ShanetheMortgageMan]

C5 can be a killer.  Technically it's eligible for sale to Fannie Mae (Freddie Mac doesn't purchase C5 or C6 though), but the secondary market doesn't like that rating so it's tough to sell the loan.  Freddie Mac doesn't have a 3% down program (only 5% down), Fannie Mae does though.  You sure it's Freddie Mac and not Fannie Mae?  Even if it was Fannie Mae, a C5 rating still may not be permitted (if deferred maintenance is noted, it almost always needs to be cured prior to closing).

To cure the floors/cabinets, you'll either need to fix them prior to closing or get a rehab loan (FHA 203(k) or Fannie Mae HomeStyle).  FHA just requires a 3.5% down payment, HomeStyle will do 5% down.  Both down payment %'s are based on the purchase price + cost of rehab combined.  FHA does have a maximum loan amount that you may run into though (check your county at https://entp.hud.gov/idapp/html/hicostlook.cfm).