Frequently asked questions on buying a HUD homes. 

A resource for the home buyer.

What is a "HUD home"?

A HUD Home is a property that has gone the foreclosure process on a default of an FHA insured mortgage. After the foreclosure, the original FHA lender is paid by FHA what was owed on the original note and the ownership of the home is transferred to FHA/HUD. When title is conveyed HUD is charged with setting a market price of the home and marketing it for sale.

Can anyone buy a HUD Home?

The purchase of a HUD home is available to anyone that can pay cash or can qualify for conventional or FHA financing.

Does HUD repair the home prior to sale of the property?

As a general rule, HUD homes are sold "as-is". Usually HUD will not be responsible for correcting any problems associated with the property. Buyers will get the home professionally inspected to determine the extent of the problems. Houses built prior to 1977 may have lead based paint, so read all disclosures carefully on this matter.

What is the procedure for buying a HUD home?

HUD homes are offered sold through approved agents. Your buying process starts by locating a HUD participating real estate agent. Your real estate agent will submit your bid online for you, any commissions due the agent are paid by HUD.

Where can I find a list of the HUD homes that are available in my area?

HUD homes for sale are updated daily. You approved real estate agent can forward information to you on new listings as they become available.

Does HUD provide the financing for the home?

In a word, no! HUD is not a lending entity, they are charged with the disposition of the property. You can either attempt to place an new FHA loan or a conventional loan of the property. In either case, the lender would be an independent party to the contact with HUD.

Are HUD homes available to investors?

The charge of the program is to create opportunities for home ownership to owner occupants. While the priority is to offer these homes to owner occupants, investors may bid on these homes after the priority period is up. Refer to the timelines section of this website.

Can non-profits and local government agencies buy a HUD?

Yes, there are special sales programs for approved nonprofit organizations and government agencies to purchase homes use in local housing or homeless programs. Please refer to HUD’s site for more specific information.

I heard that HUD has programs specifically designed for police officers and teachers.

More completely described in the Police Officers and Teachers sections of this site., HUD has a special sales program to purchase homes at substantially discounted prices in defined revitalization areas.

Should I do a walk through inspection on the property?

Beyond the formal home inspection that you should do, you should also plan on performing a walk through inspection at or near the date of your contract acceptance and, again, immediately prior to closing. Any defect discovered that did not exist at the time of sale must be immediately brought to HUD's property manager’s attention.

Can I bid over the asking price of the home?

While this would be unadvisable given the state of the real estate economy, you can offer more than the offering price of the home. Keep in mind that the home has been appraised and you will have to pay cash for any overbid in excess of the sales price if you are seeking FHA financing. This would be in addition to the 3% down down payment required by the loan. If you are utilizing a conventional lender, they will be appraising the home and determining its value, to down payment is subject to the terms you are seeking from them

Does the repair escrow amount shown on the listing include any additional coverage?

Yes, the identified amount for repair escrows on the website listings includes the repairs amount plus the 10% overage. This amount will be included loan.

What is the Section 203K Program?

This program is designed for purchase and rehabilitation of HUD property. Designed to provide a single loan for both, the program is more completely described in our FHA 203K sections of this site.

What is the Repair with Escrow Program?

When repairs required on a particular HUD property are less than $5000, FHA will allow a single loan to be originated covering the purchase of the home and all the repairs to meet the intent of minimum property standards. Please refer to our listing codes section of this website. If a property is listed as such, the only way effect the repairs is with the FHA financing. If you choose to obtain conventional financing, you will be responsible for affecting the repairs which could be problematic.

If a property is “Uninsured” can I get an FHA loan?

While an insured property qualifies for a standard FHA 203b loan, an uninsured property may be eligible for the 203K program. Please refer to the 203K program eligibility and listing codes sections of this website

How much money do I need to put down with my contract?

Currently, you deposit or “earnest money” is $500.00 for home selling for $50,000 or less and $1,000.00 when the purchase price is over $50,000.00.

How do I choose my Closing Agent?

You don’t, closing agents are assigned by HUD based on the location of the property. Your agent can provide you with that information to locate the appropriate office.

How can I get more information about HUD homes and bank owned homes?

Utilize this site, it has extensive information not only on purchasing a HUD home, but has extensive resources for locating and purchasing bank owned, foreclosed and auctioned properties throughout the country.

Need more information about HUD homes available in your area, click here.

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