Information on Qualifying for HUD Homes
Almost anyone with the money to pay for a HUD home is qualified to buy one. The limiting factor is having the money. Qualifying for a loan, such as one insured by the Federal Housing Administration, better known as FHA, thus becomes the bottleneck in buying a HUD home. HUD assistance programs in each state also have qualifications.
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Owner-occupants
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Most buyers of HUD homes live in the homes they buy, as opposed to buying a home and renting it out. In fact, HUD auctions, which are the means for buying a HUD home, are initially open only to those types of owners. Only after a HUD property fails to sell to an owner-occupant does HUD accept bids from real estate investors.
HUD Auctions
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You can't buy a home directly from HUD but must tell a HUD-approved real estate agent about the HUD property in which you're interested. You then tell the agent how much you're willing to bid for the home. If you're bid is highest during the time slot HUD has opened for accepting bids--and you have the money to buy the home--you'll get the home.
Also, HUD sometimes offers discount prices for their homes to certain populations, such as the victims of natural disasters like hurricanes. You have to be in that population to qualify for those discounted rates.
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State Programs
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Every state has at least one program to help potential buyers get a HUD home. These state programs have their own qualifications you must meet to participate in the program. For example, the California Housing Finance Agency has programs helping first-time home buyers make the down payment on their home. They also provide assistance with the mortgage payment, if you've previously qualified for assistance programs while renting an apartment. These programs are only open to people purchasing their first home. New Mexico is another example of a state with programs with qualifications. One program gives assistance only to Native Americans seeking a HUD home.
Loan Qualifications
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To qualify for an FHA-insured loan, your finances must meet certain criteria. Although these criteria vary from lender to lender, each lender will look at these factors in deciding whether or not to loan you money for a mortgage: your credit history; timely payment of utility bills; current assets and net worth; current income; and the type of employment you have. For example, if your income fluctuates from one pay period to the next, as it sometimes does with freelance workers, a lender may consider you a higher risk than if you earned the same amount with each paycheck.
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References
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- Photo Credit The red house and key from the house image by ketrin from Fotolia.com
