Question 1: What is a "HUD Home"?
Answer: When someone with a HUD insured mortgage can't
meet the payments, the lender forecloses on the home;
HUD pays the lender what is owed; and HUD takes ownership
of the home. Then we sell it at market value as quickly
Question 2: Who can buy a HUD home?
Answer: Anyone! If you have the cash or can qualify for
a mortgage, you can buy a HUD home. HUD employees and
relatives of HUD employees are eligible, but must receive
written approval from the Director of HUD's Office of
Single Family Asset Management in order to purchase a
HUD-owned single family property. HUD employees should
refer to paragraph 10-29C of Handbook 4310.5, REV-2, Property
Disposition Handbook-One to Four Family Properties for
the exact requirements to purchase a HUD-owned single
Question 2: Are HUD Homes meant for people with low incomes?
Answer: HUD homes range in price, but most are affordable
for low- and moderate-income Americans.
Question 3: Is it true I can get a HUD Home for a dollar?
Answer: No. HUD sells homes at market value - that means
that the price is set based on the price of similar homes
sold in the area.
Question 4: If the HUD Home needs repairs, will HUD make
Answer: HUD Homes are sold "as-is," without
warranty. That means that HUD will not pay to correct
any problems. But even if a HUD Home needs fixing up -
and not all of them do - it can be a real bargain! For
example, HUD's asking price on the home will reflect the
fact that the buyer will have to invest money to make
improvements. HUD might offer special incentives such
as an allowance to upgrade the property, a moving expense
allowance, or a bonus for closing the sale early. And
keep in mind that on most sales, the buyer can request
HUD to pay all or a portion of the financing and closing
costs. Your real estate agent will have details. We encourage
you to get the home professionally inspected before you
make an offer so you will know what repairs you may have
to make BEFORE you submit your bid.
Question 5: How do I buy a HUD home?
Answer: Start by finding a participating real estate
agent. Your real estate agent must submit your bid for
you. Normally, HUD Homes are sold in an "Offer Period."
At the end of the Offer Period, all offers are opened
and, basically, the highest reasonable bid is accepted.
If the home isn't sold in the initial Offer Period, you
can submit a bid until the home is sold. Bids can be submitted
any day of the week, including weekends and holidays.
They will be opened the next business day. If your bid
is acceptable to HUD, your real estate agent will be notified,
usually within 48 hours.
Question 6: If my bid is accepted, then what happens?
Answer: Your real estate agent will help you through
the paperwork process. You'll be given a settlement date,
normally within 30-60 days, by which you need to arrange
financing and close the sale, or forfeit your earnest
money deposit, or pay for an extension of your sales contract.
We have an excellent booklet to help you understand the
settlement process: "Buying Your Home - Settlement
Costs and Helpful Information
When you buy a HUD Home, the selling agent's commission
will be paid by HUD but only if you make this a condition
of your offer. The listing agent's commission is always
paid by HUD. HUD will pay a total sales commission of
up to 6%.
Question 7: How can I find out what HUD Homes are for
Answer: Right here! "Find
a HUD Home" Just select a state to begin your
Question 8: How can I get a loan to buy a HUD Home?
Answer: HUD doesn't make loans directly. But we do have
a number of mortgage
insurance programs that could help you buy a home.
Contact a HUD
approved lender, who will take you through the steps
and actually make the loan.
Question 9: Can I buy a HUD Home as an investment?
Answer: Most HUD Homes are initially offered on a priority
basis to owner occupant purchasers (people who are buying
the home as their primary residence). Following the priority
period, unsold properties are then available to all buyers,
Question 10: Is there anything else I should know about
Answer: We encourage every homebuyer and homeowner to
be a wise consumer, so be sure to read our consumer
information. Houses built before 1978 may have lead-based
paint, which can cause harm to your family; so be sure
about this hazard and about what you would need to
do to correct it. Teachers
and law enforcement officers qualify for 50% discounts
in certain situations.
Attention: Nonprofits and Government Agencies!
HUD has a special
sales program under which approved nonprofit organizations
and government agencies may purchase properties at discounted
prices for use in local housing or homeless programs.