HUD Housing Assistance

If you are interested in purchasing a new home, it is possible to save an extraordinary amount of money by purchasing an HUD home.

The United States Department of Housing and Urban Development (HUD) offers HUD homes to low-income families. Typically, these properties have one to four residential units available for families and individuals to rent. These HUD homes are generally sold to families at lower rates, which allows low-income families the opportunity for home ownership.

What is a HUD home and Who Qualifies?

The homes sold by the Department of Housing and Urban Development are available to interested buyers who are capable of paying for the low-interest mortgage. Hopeful applicants with a poor credit score may still be eligible if they apply for loan assistance through other subsidized government programs.

An HUD home is a home with a mortgage that has been backed by the Federal Housing Administration (FHA). HUD home loans are generally easier to qualify for since the credit score requirement is a minimum of 580. Typically, other mortgage providers will only provide loans for applicants with a credit score about 600.

In addition to a lower qualifying credit score, recipients of HUD home loans may be eligible for down payments as low as 3.5 percent of the total mortgage.

In the event that the owner of an HUD home is unable to make their mortgage payments, the home will be repossessed by the HUD. Any FHA-backed home that faces foreclosure will be repossessed by the Department of Housing and Urban Development.

The HUD will take repossessed homes and place them back into the housing market in an attempt to recover some of the finances that were lost in the foreclosure. If a home goes unpurchased after a certain period of time, it may be sold to private investors or outside buyers.

Buying a HUD Home

The Department of Housing and Urban Development does not directly create mortgages for those interested in buying a HUD home. Instead, home buyers are required to provide their own payment or apply for a loan from a third-party bank or lending institution.

Interested buyers who believe their credit score is too low for a standard mortgage are encouraged to apply for an FHA loan. The Federal Housing Administration approves third-party lenders to generate loans at low interest rates with a small down payment.

Third-party lenders are more willing to create these low-interest loans because they have these mortgages insured by the FHA. Insured loans will have less risk of financial loss.

If you are looking for listings of HUD homes, you can visit the Department of Housing and Urban Development’s website. Typically, homes are listed at their sale price on this website in order to promote the low prices of HUD homes in hopes that there will be an increase in home ownership within a community.

First Time Home Buyer Programs

A first-time home buyer loan may be difficult to find, especially one with beneficial discounts and perks. Applicants who have never purchased a home before can sometimes be a bigger risk for lenders.

The federal government understands how difficult the home buying process can be, so they have created a variety of resources and programs to assist first-time home buyers. There are a number of first-time home buyer programs offered by the FHA, the U.S. Department of Agriculture (USDA) and others.

Housing Grants

The federal government has a variety of subsidized housing grants that are used to transfer benefits to families in need of assistance with purchasing homes. Most of these grants are provided by the Department of Housing and Urban Development in an effort to produce equal housing opportunities for low-income applicants.

Essentially, these federal housing grants help struggling neighborhoods by stimulating the economy and the housing market. The HUD provides a list of grants on their website in addition to details on who is eligible and how to apply for them.

Rent-to-Own Homes

Another popular option for first-time home buyers is to search for rent-to-own homes. Essentially, tenants in a rent-to-own agreement will rent a house for a certain number of months before they have the option to buy it and become homeowners. In most agreements of this kind, a portion of the monthly rent will be paid towards a future down payment on the home.

It is important for homebuyers and tenants to carefully read the contracts in a rent-to-own agreement. Some rent-to-own homes offer a lease option where tenants have the choice to purchase the home at the end of the agreement. Others, often called a lease purchase, requires the tenant to purchase the home once the agreement reaches the end date.

Hiring a Licensed Professional Home Inspector

As mentioned previously, HUD homes are sold “as is”.

While most of these homes are still in prime condition, the HUD strongly urges all prospective buyers to hire a professional home inspector prior to placing an offer on the home. This home inspection is to ensure that you are satisfied with both the value of the home and the condition of the home before purchase. This can help prepare you for any additional expenses that the HUD home may bring, should you choose to purchase it.

The home inspector will evaluate the home in great detail, including the state of the foundation, roof and the interior. The HUD does not provide any sort of warranty on the home, but if desire a HUD home that is in need of repairs, you may be eligible for an FHA 203 (k) Rehabilitation loan or other financing options.

HUD Financing Options

The Department of Housing and Urban Development (HUD) does not provide financing options for their own. They accept cash offers, but you can also apply for a loan through an approved broker.

It is worth knowing that mortgage lenders must be certified in the sale of an HUD home. If this is your first home purchase, you may be eligible for an insured mortgage through the Federal Housing Administration (FHA), which are often available to households with lower income, lower credit scores and lower down payments as opposed to a normal mortgage lender.

Special Discount Offers

One of the incredible advantages of purchasing an HUD home comes in the form of the HUD’s Good Neighbor Next Door program. This program is designed to help communities flourish and promote ownership by offering up to 50 percent off of an HUD home’s listing price to qualifying buyers.

In order to qualify for the Good Neighbor Next Door program, you must either be a law enforcement official, a firefighter, an emergency medical technician (EMT) or a teacher that teaches classes anywhere between pre-Kindergarten through 12th grade. Should you take advantage of the Good Neighbor Next Door Program, you must commit to living within the property as your sole residence for a minimum of 36 months.

Where to Learn More About HUD Properties Available in Your Area

Property listings can be viewed on the HUD Home store at any time. Mortgage lenders and brokers who are approved to help you in your purchase of an HUD home can also provide you with more information about these homes.

Should you choose to view the homes that are available within your neighborhood online, it is important to be aware of the superior search functionality that the HUD has to offer.

By using convenient search properties, you can not only narrow your search by location, but also by price range, bedrooms, bathrooms and the status of the home.

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