HUD Housing Options & Assistance

The Department of Housing and Urban Development (HUD) offers HUD housing options to low-income individuals who want to buy property or cannot afford rent. To offer affordable homes, HUD identifies foreclosed properties and puts them up for bid. Applicants interested in buying houses sold by the department must contact a HUD-approved broker to participate in a bidding process for available properties.

Along with assistance purchasing property, HUD also offers Section 8 housing benefits for those who need help paying rent. Section 8 is a program that helps individuals remain in low income apartments by covering a portion of the required monthly rent. Individuals applying for Section 8 rentals should contact their local public housing agency (PHA) to apply. The sections below go over HUD’s housing options, the Section 8 program and how to apply for both.

Where to Find HUD Housing

Applicants looking for HUD housing assistance can search through listings in both rural and urban areas. Through the HUD Home Store, individuals can find up-to-date listings for a variety of houses available across the country and bid on them. Prospective homebuyers can filter through the options by price, number of bedrooms, zip code, state and more.

Once you have put together a list of HUD homes for sale that fit your needs, you can begin narrowing down the options based on other factors. You can seek more information or advice by contacting a local realtor or mortgage lender about your financing options. You can also contact HUD-approved brokers to learn more about the local housing market and the HUD bidding process. For instance, a broker may be able to inform you whether a local HUD housing market is competitive or quiet. In some areas, dozens of individuals may apply for any one property, while in others you may be the sole bidder.

A HUD housing broker can also let you know if you qualify for the Good Neighbor Next Door program. This program offers a 50 percent discount to teachers and first responders who purchase properties in a “revitalization area.” Home buyers must live in the property for at least 36 months to qualify for the benefit. If you qualify for this program, you may choose to look only for homes in revitalization areas.

Related Article: Working With a Realtor to Find an Apartment

Bidding on HUD Housing

Once applicants find suitable HUD homes for sale through the Home Store, they must contact a broker or realtor licensed by the department. Then, the broker must bid for a property on the applicant’s behalf. Bid results are posted daily, which means sales move fast.

Applicants can only obtain HUD housing if they can afford the property or qualify for financing to complete the purchase. The department does not provide loans, so home buyers must consider outside lenders to purchase a HUD property. Qualified applicants may consider applying for a mortgage backed by the Federal Housing Administration (FHA). FHA loans only require a 3.5 percent down payment, and they are available to borrowers with credit scores of 580 or higher. If applicants fail to secure financing after winning a bid, HUD will move on to the second highest bidder.

Owner-occupant buyers have access to HUD homes for sale first. Unsold properties are available for any interested buyers or investors. The department gives owner-occupants priority for HUD housing to ensure that lower-income individuals have access to affordable homes.

Financing a HUD Housing Purchase

Applicants interested in buying HUD housing frequently turn to FHA loans to make the purchase. However, these loans have their own sets of requirements. When prospective buyers apply for an FHA loan, banks will consider:

  • Their credit score.
  • Their debt-to-income ratio.
  • Their financial history.
  • Their employment history.
  • Their plans for the property.

Home buyers may obtain HUD housing by applying for financing through a private lender. However, the property must meet the lender’s standards. Buyers may also purchase the property with cash. Because HUD properties are often sold well below market value, this is a realistic option for many buyers.

Finally, the department strongly encourages buyers to inspect any HUD homes for sale before purchase. No HUD housing assistance is provided to buyers who discover damage on the property, and the house does not come with a warranty. Buyers should hire a licensed inspector to check the following aspects of the home:

  • The foundation
  • The roof, walls and floors
  • The heating and cooling system
  • The plumbing system
  • The electrical system
  • The basement

Note: Buyers should ask about the cost for the home inspector‘s services. HUD does not pay for private inspections before purchase.

Applying for Section 8 Rentals

In addition to selling properties, HUD offers Section 8 housing vouchers for individuals who need assistance paying rent. Section 8, also known as the Housing Choice Voucher Program, requires participants to put about 30 percent of their income towards rent for a property. HUD covers the difference between what applicants pay and the actual cost of rent. Individuals must submit a Section 8 housing application to their local PHA. Approved applicants must then locate apartments that will accept the voucher. Once applicants find a property that will take the voucher, they can remain in the program until they no longer need financial assistance.

Local PHAs review Section 8 housing applications to determine who is eligible for the program. Housing agencies consider an applicant’s total income, housing history, family makeup and citizenship status. Applicants who meet the eligibility requirements are then placed on a waiting list for vouchers. When a voucher becomes available, the PHA will notify the next person on the list.

Section 8 Housing Lists

Individuals granted a voucher can look through Section 8 housing lists in their area to find rentals. Not all apartments will accept a Section 8 voucher, which means these listings are often the best place to find housing. In addition, the PHA may have information about local listings that accept housing vouchers.

Rental seekers should review properties posted on Section 8 housing lists before signing any contracts. Additionally, there may be high competition for the listings online. Most applicants need to conduct an extensive search to find housing that fits their needs and accepts the Section 8 housing voucher.

Related Article: First-Time Homebuyer Grant

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