HUD Articles

BENEFITS of BUYING A HUD HOME and FHA

By Tom Nelson HUD-LLB

October 25, 2021

Many people have heard of HUD homes but are not sure what they are and how to buy them.  This snippet may help you understand the advantages of buying a HUD home and FHA insured loans/mortgages.

Hud homes are those properties that have been turned over to the Department of Housing and Urban Development (HUD), by the Federal Housing Administration (FHA).  They are then marketed by special Licensed Listing Brokers (LLB).

HUD homes can range from below 100,000 thousand dollars to several hundred thousands of dollars.  Additionally, they can be found in most locations.  They can be single family, multi-family (up to four units) as well as condominiums. They can almost always be purchased with an FHA loan and many can be purchased with conventional, Fannie Mae, VA or USDA loans from most banks and lending institutions.

One advantage of a HUD condominium is that it can be purchased with an FHA loan in a condo complex that does not conform and would otherwise be denied to any other condo in the complex.

Another advantage is that since almost all HUD homes can be purchase with an FHA203b or FHA203K loan it gives they buyer options that allow them to buy homes that they may want to improve or upgrade with the financing included in the mortgage costs.  This allowance also includes the purchase of new appliances financed in the mortgage loan.

A third advantage is that the mortgage is assumable.  This is not an option with many other types of loans.  The value is that as rates go up, the next buyer can have the same rate.  Consequently, this adds value to the home when sold, thereby allowing for a potential higher sales price.

Finally, although you will need a real estate agent or broker to make an offer, you can search the HUD National Data Base of homes listed on the HUD website yourself.  Simply go to HUDhomeStore.com.  Put in the area you are looking to buy and you can get the listing with information related to that home.

FHA secured loans/mortgages are available from most banks and credit unions.  All in all, buying a HUD home and using an FHA insured loan/mortgage has a number of benefits.