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How to Buy a HUD Home

Seniors may want to consider HUD homes to obtain reasonably priced housing in their area. The process to buy a home from HUD is almost the same as buying a normal home that is on the market. There are many advantages of buying an HUD home for senior citizens and other prospective homeowners on a fixed budget. While anyone can purchase a HUD home, preference is given to those who are purchasing the home to live in. For more information on how to buy HUD homes and the benefits of purchasing a one, please refer to the sections below.

What is a HUD home?

HUD homes are properties that the U.S. Department of Housing and Urban Development (HUD) has gained due to foreclosures on mortgages insured by the Federal Housing Administration (FHA). HUD becomes the owner of the property and adds it to its list of HUD homes for sale in order to regain the amount lost in the foreclosure. Seniors who need assistance in purchasing a home from HUD can utilize housing counseling services from one of the HUD-approved agencies.

About the Advantages of Buying a HUD Home

Since HUD is recouping the losses on HUD homes, these properties are often more affordable than similar dwellings in the same area. Seniors who want to buy a home from HUD may be able to qualify for FHA loans, which have more advantageous loan terms like lower interest or required down payment. Interested buyers may also use conventional loans or purchase the property with cash.

In some cases, a HUD home may have had cosmetic enhancements, repairs or undergone inspection prior to being available to the general public. However, HUD does not pay for any issues or repairs that a home may need and suggests that seniors who wish to purchase a HUD home have a licensed home inspector view and inspect the property before they even submit an offer to purchase it. This will help the senior assess how much the HUD home will cost them in total. In the case that the house needs repair, the person wishing to purchase it will usually need to secure financing to make repairs along with purchase the home. Usually, the loans for obtaining a home and completing the construction on it come with high-interest rates. However, when buying a HUD home, seniors may be able to qualify for an FHA 203(k) Rehabilitation loan. These loans provide a streamlined way for potential buyers to just get one loan for all of their needs. This mortgage loan will be set at a long-term fixed rate or an adjustable rate if the senior would prefer. This loan will cover both the purchase and the repairs of the property.

Some HUD homes are located in Revitalization Areas, which are geographic regions that have been authorized by Congress under the National Housing Act and are designed to revitalize communities and encourage homeownership. These HUD homes and areas are chosen because of household income, homeownership rate, FHA insured mortgage foreclosures in the area and more. HUD promotes homeownership in these communities through its Good Neighbor Next Door initiatives. These programs allow police officers, firefighters, EMTs and teachers to move into certain homes at a significant discount. HUD homes are also available at discounted prices through the Asset Control Area (ACA) program. Local, state and county government units can obtain a two-year contract with HUD requiring the department to make FHA properties in ACA areas only available to ACA participants. ACA homes that have been appraised at a value of less than a certain amount can be bought for a nominal sum. Other homes under this program are offered at a significant discount.

Seniors can buy a home from HUD by using HUD’s Single-Family Home Locater to find maps of properties if they wish to participate in any of these programs and meets the requirements. Interested seniors should routinely check the HUD home locator since HUD is constantly working to add new areas to these programs. Find out more about where to find a HUD home in our free guide for seniors.

How to Buy a HUD Home

If seniors are wondering how to buy HUD homes, then they should know that these homes are open to anyone in the public as long as they have the financing necessary to purchase the home. Seniors looking to finance a HUD home cannot finance it through HUD. HUD does not have any financing options for HUD homes available. Instead, seniors must either finance the home with their money or visit a mortgage lender. If seniors do not have the cash required to buy the HUD home but can qualify for a loan, then they may be able to purchase the home. Seniors can locate information on obtaining homeownership loans and have their questions answers by seeking counseling services from an HUD-approved agency.

Once a HUD home is put on the market, it is offered to people who intend to live in the home themselves. After that, if the HUD home is still unsold, then it becomes available to any buyer including investors, real estate brokers and more. Download our free senior guide to learn more about purchasing a home from HUD.

Where to Find a HUD Home

Single-family homes owned by HUD will have a sign identifying it as a HUD home with the property manager listed on it before the home goes up for sale. The HUD home is then appraised and any title issues are worked out. The homes are then listed on HUD’s HUD Home Store. Seniors can also contact the HUD Management and Marketing Contractor in their area or the FHA Resource Center about HUD homes near them.