HUD has several types of special programs offering unique opportunities for buyers of HUD-owned homes.
$100 Down Homes
The best buyer opportunity is offered to FHA buyers in some areas of the country. These areas include Indiana and Florida. These FHA buyers may purchase a HUD owned home for their residency for just a $100 down payment!
Most loan programs require buyers to have a down payment of several to tens of thousands of dollars. The normal down payment for an FHA home loan is 3.5% of the purchase price. For conventional loans the down payment is up to 20% of the purchase price!
Not a lot of Realtors or Lenders seem to talk about the government program that allows a buyer to purchase a home with just a $100 down payment!
This $100 down payment program has the following requirements:
- HUD-owned homes only!
- FHA financing only. The buyer needs to be approved for an FHA home loan.
- This program is for Owner-Occupants only, not for Investors. Buyers will certify they are living in the home and not using as an investment with some very steep penalties for falsifying this information.
- Buyers still need to have earnest money of $1,000 for properties listed above $50,000 and $500 for properties listed for less than $50,000. The earnest money will be returned to you at closing as a credit on the Closing Statement.
- You can ask HUD to pay for closing costs up to 3% of purchase price.
Ask your Lender or Realtor how to make sure you are approved for this program!
Direct HUD Offers
If you are considering purchasing a HUD home, or if you are a Realtor representing a buyer of any kind, you should know about all the HUD special programs. These programs encourage the development of communities as the home owned by HUD is offered for sale.
There are three main programs:
Good Neighbor Next Door– This program offers law enforcement officers, firefighters, emergency medical technicians and teachers a chance to purchase a HUD home at a 50% discount! The homes need to be located in revitalization areas as designated by HUD. If you are in one of these professions, or working with one of these professionals, speak to your lender for more details.
HUD Dollar Homes– This initiative allows local governments to address specific community needs by offering low to moderate income families the opportunity to purchase qualified HUD-owned homes. The local government or not-for-profit can acquire certain homes for $1 each, fix them up, and offer them to new homeowners at a considerable savings.
Nonprofit 30% Discount– FHA offers community and faith-based nonprofits the opportunity to purchase certain homes at discounts up to 30%. The intent is that the nonprofit will rehab the home and then sell it to first-time homebuyers and low to moderate income families.
Knowing these programs exist can open the door to homeownership to many good people. If you believe you qualify for one of these programs, be sure and discuss it with your agent and lender!
(photo credit: What subprime crisis? Affordable houses are everywhere. via photopin (license))