Hud Homes

Hud Homes

HUD Homes and the FHA 203k Loan


What is a HUD Home?

Are you interested or wondered what HUD homes are and how to finance them?  Well, just like properties which are purchased with conventional loans, properties purchased with FHA insured financing also at times go into foreclosure.  When that happens those properties are then acquired by the Housing and Urban development (HUD).  HUD becomes the owner of these properties that were financed with an insured FHA loan and then offers them for sale to recover the loss on the foreclosure.  That is what a HUD home is.

How can I buy a HUD Home?

A HUD home can be a 1-to-4 unit residential property, condo, townhome or PUD and yes you can buy one.  Actually anyone can buy one if you have the cash or can qualify for a loan. HUD sells these properties through a bidding process so you will need a Real Estate Broker that can sell HUD homes to submit the bid for you.  The bidding time frame and who is allowed to bid on the property depends on what listing period it’s in.  The two most common listing periods you will see when searching for HUD properties will be “exclusive” and “extended” listing periods.

The exclusive listing period is primarily to give owner occupant bidders a head start before the property goes into the extended listing period phase.  When the exclusive listing period ends then all buyers are welcome to bid, owner and non-owner, so investors are welcome during the extended listing period.

If you are a homebuyer who plans on occupying the property then your bid is given priority over all other bidders regardless of the listing period, exclusive or extended. When making bids for a property in the exclusive listing stage, your submitted sealed bid will be reviewed along with any others on the “bid open date”.  When biding on a property in the extended listing period, bids are reviewed as they come in on a first come, first served basis.


How to finance a HUD Home

If you can purchase using all cash great!  There is no need to talk about financing.  For most homebuyers though who need a loan, the lending options are the same as if you were buying any other type of property on the market.  In other words, the financing is your responsibility as HUD does not provide direct financing to buyers of HUD Homes.  There is good news though if you use an FHA loan, because HUD will have already had an appraisal performed before they put the property on the market, so you could bypass ordering a new appraisal.

To find out if you can take advantage of using an FHA loan you must find out if the HUD Home you are interested in is “insured” or “un-insured”.  If the property indicates “Insured” then you have the green light for an FHA 203b loan.  If the property is “un-insured” then it might be eligible for an FHA 203k loan which includes rehab funds.  Both FHA loans are only for owner occupied buyers.  Sometimes HUD homes will have two FHA financing options.  The FHA 203b (without rehab) and the FHA 203k (with rehab) but other times only one of those choices will be available and at times neither will be a choice.

Here is an example of what you might see under listing information and what you should look for if you plan to use FHA financing on a HUD home.  If the “FHA financing” slot shows IE (insured escrow) that means you can use a standard FHA 203b loan to purchase the property.

If the “203k Eligible” slot shows “Yes” that means you can use the FHA 203k as another financing option to purchase your property as well.  The “Repair Escrow” slot is the allowance amount that HUD will give the buyer to address specific repairs.  “Repair Escrow” is only available on some properties.

Listing Information
List Date:01/01/20**
Listing Period:Exclusive
Period Deadline:01/01/20** 11:59:59 PM CST
List Price:$100,000.00
As-Is Value:$100,000.00
FHA Financing:IE (Insured Escrow)
203K Eligible:Yes
Repair Escrow:$1,100.00
Review PCR for Repair Escrow Items

When the “FHA Financing” slot shows UI (uninsured) then the FHA 203b is not an option.

When the “203k eligible” slot shows “NO” then the FHA 203k is also not an option.

HUD homes are sold in there “AS IS” condition which is why many of them give you the option to use the FHA 203k loan.  Remember these properties are foreclosures so it’s not unusual that something is needed.  This is where the 203k loan comes into play because you can purchase and renovate or repair your HUD home all in one loan.  It’s a great way to purchase your HUD Property to turn it into the home you want, so working with an FHA 203k Loan Specialist will allow you to have both FHA options available to you.


Where do I find a HUD home?

You can find your HUD home online at the HUD home store here:

There you can find HUD HOMES in the states below as well as in U.S Territories:

NevadaNew HampshireNew Jersey
New MexicoNew YorkNorth Carolina
North DakotaOhioOklahoma
OregonPennsylvaniaRhode Island
South CarolinaSouth DakotaTennessee
VirginiaWashingtonWashington DC
West VirginiaWisconsinWyoming


Ready to get started?

Then get qualified first with an FHA Loan Specialist for your state and then get connected to an authorized HUD Broker/Agent to get your bid submitted on your HUD Home.

Happy bidding…



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