First of all, what exactly is a HUD home? HUD homes are homes that had FHA mortgages on them that were foreclosed. These homes are now in possession of the government (under the department of Housing and Urban Development, or HUD), and they are looking to sell them back to the public. HUD homes can be a great way for people to find their next homes, and the government is often looking to get these homes off of their hands as soon as possible.
A HUD home can also be a way to find a bargain on a home, as some HUD homes may be in need of repair. While HUD will not make any repairs to the home, they do inspect the home and will provide what is called a property condition report, which informs you of repairs that need to be made. This is very useful when compared to your average home, where sometimes the big issues will not come up until after you have a contract and your inspection is done on the home.
To purchase a HUD home, you can use an FHA mortgage to finance the purchase, which only requires a 3.5% down payment. There is also a program which only requires a $100 down payment that you can qualify for. There are different types of FHA loans that you may use, depending on the condition of the home. If the home only requires minimum repairs such as chipped paint or a leaky faucet, then the home will qualify for a regular FHA loan. If there are major repairs needed, then your home will not pass the FHA inspection, and the lender will not be able to finance the loan. For properties like these, FHA offers the 203k loan, where the lender will loan you the money to pay for the home plus the money needed to make the repairs. This is a great opportunity for you fix up your new home just the way you want it.
HUD homes offer a great opportunity for you to find a home for a good price. Whether you are looking for a fixer upper or a home that is move in ready, HUD homes may have the home that you are looking for. If you have any questions or wish to learn more about HUD homes, feel free to contact me!