PART 03: Do You Qualify for One of These Special Programs?
HUD has several programs that make buying a HUD home even more affordable for owner occupants.
$100 Down Payment (no, this is not a typo)
A buyer can purchase a HUD home with just a $100 down payment if the following conditions are met:
Buyer is an owner-occupant.
Buyer will live in the property as their primary residence for at least a year.
The home is FHA insurable.
FHA financing is being used and the buyer meets the minimum FHA underwriting guidelines.
Mortgage insurance is still required.
The home is located in an eligible area.
Assuming a buyer and the HUD home they want meets those criteria, then this can be great way to purchase a home if you don’t have a lot saved up for a down payment and closing costs.
Good Neighbor Next Door Program
While this program is limited to a specific set of buyers, it can be an absolutely amazing deal if all of the conditions are met.
A buyer can purchase a HUD home for 50% off (this is not a typo either) the list price of the home if they meet the following criteria:
Buyer is a law enforcement officer, pre-Kindergarten through 12th grade teacher, firefighter or emergency medical technician.
Buyer is an owner-occupant.
Buyer will live in the property as their primary residence for at least three years.
Buyer, as well as spouse, must not have owned any residential property during the year prior to submitting a GNND bid.
Buyer may not have purchased another home under the GNND program.
The discount is based on the full listed price of the HUD home.
A second “silent” mortgage is signed that equals the amount of the discount. No payments are made on this mortgage note and the “silent” mortgage is waived once the three year occupancy requirement is met.
The HUD home is located in an eligible area.
Qualifies for the $100 down payment program if using FHA financing.
A bid submitted through the GNND program must be submitted during the Lottery listing period.
If multiple buyers bid on a home using the GNND program, the buyer of the home is selected through a lottery.
If you made it all the way to the end of this, I am sure we can both agree that there is a lot of information here. And depending on your specific situation, there will most likely be some more nuanced conditions that need to be met.
From the time you decide to buy a house—then finding the right available HUD home, going through the bidding process, closing on the home, and completing construction/renovation to make it the home of your dreams—the entire process could take up to a year or even more. A recent project with Urban Green Design Ltd. that was a HUD home and used a Limited 203k took about ten months from start to finish.
That said, if you have the patience to make through this entire process, you can end up with a gorgeous home that meets all of your needs and wants at a value that you just would not be able to get going through the standard home buying process.