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What Is the Definition of a HUD House?

A HUD house is a home that is owned by the Department of Housing and Urban Development (HUD) after a homeowner has defaulted on a mortgage secured by the Federal Housing Administration (FHA).

  1. Significance

    • According to HUD, a HUD house is a property that is sold to recoup the losses on a foreclosure claim that a lender has filed with the FHA.

    Types

    • HUD homes can be residential properties with one to four units, which include condominiums, townhouses and single-family homes.

    Benefits

    • One of the major benefits to purchasing a HUD house is that these homes are often sold at a discount. In addition, if you are a teacher, firefighter or police officer, you may qualify for the Good Neighbor Next Door Sales Program, which offers a substantial discount from the house's list price in exchange for residing in the HUD house for a minimum of three years.

    Warnings

    • Since a HUD house is sold as-is and carries no warranties, it is recommended that you obtain a home inspection prior to buying one.

    Misconceptions

    • Many potential home buyers believe that HUD offers financing to purchase a HUD house, but this is not the case. Alternatively, you can seek a new FHA loan from an approved lender for the HUD house that interests you.

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