How to Purchase HUD Homes

A HUD home is a property retrieved by HUD because of a foreclosure regarding an FHA-insured mortgage. HUD then becomes the owner and sells the property to offset the loss from the foreclosure. The U.S. Department of Housing and Urban Development (HUD) mission is to "increase home ownership, support community development and increase access to affordable housing free from discrimination." Any individual is eligible to purchase a HUD home.

Things You'll Need

• Computer
• Internet
• Telephone
• Pen or pencil
• Paper

Instructions

Before You Start Your Home Search

1. Discover how much home you can afford. Determine where you want to buy. There are a variety of HUD homes available for purchase. Knowing how much you can afford to spend on a property and where you want to live will help tremendously.

2. Review the listings of HUD homes at http://www.hud.gov/homes/. Choose the appropriate state to look for HUD homes in your area. When you select your state, you are taken to an Internet site managed by companies contracted to HUD. There are also homes for sale by other federal agencies. You can browse those properties at http://www.hud.gov/homes/homesforsale.cfm. You can get directions to the properties and check out schools in the area.

3. Contact a HUD-approved real estate broker within your area. This individual is authorized to sell HUD properties. Ask the broker to submit a bid for you to purchase the property if you're interested in buying the home. If you are unsure of the process, contact a housing counselor. You can locate a counseling agency in your area by going to http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or calling [phone]. There are agencies throughout the country sponsored by HUD that give advice on credit issues, home buying, foreclosures and renting.

4. Consider special programs. If you happen to be a teacher, firefighter, law enforcement officer, emergency medical technician or a nonprofit or local government employee, you may be eligible to purchase a HUD home at a reduced rate through HUD's Good Neighbor Next Door initiative. HUD offers an incentive program allowing these workers to purchase at a discount of 50 percent off the list price for certain properties. You can even buy a HUD home at a discount if you are an evacuee misplaced by Hurricanes Katrina, Rita or Wilma.

5. Gather necessary documents. No matter what type of home you purchase, some things never change. You almost always will need to provide certain information when you apply for loans. The items you should have ready to hand over include current bank statements, work history, identification, credit information, pay stubs and other proof of income and assets.

Tips & Warnings

• Don't be afraid to ask for help if confused. Contact a HUD housing counselor.

• Some HUD homes qualify for FHA-insured loans. Ask, and research FHA loans.

• All HUD properties are sold as is. Get a home inspection after your bid is accepted.

References

• U.S. Department of Housing and Urban Development