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Buying HUD Homes - What Is A HUD Home?

What is a HUD Home?


A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

The following information is provided to as an introduction to the process through which HUD homes can be purchased . You can either scroll down the page, or access specific topics through the following topic menu. Additional links provided in the menu to the right provide access to FHA program and policy information for homeowners, homebuyers, and members of the mortgage lending and real estate industries.

Who Can Buy a HUD Home?

Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the 10 day priority period for owner occupants, unsold properties are available to all buyers, including investors.

If you are an evacuee displaced by Hurricane Katrina, Rita or Wilma, you may be eligible to purchase a HUD Home at a discounted price. 

How Are HUD Homes Sold?

All properties available for purchase by the public are offered for sale at internet listing sites maintained by management companies under contract to HUD. Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker's commission, if included in the contract.

HUD Homes are offered for sale at fair market value, based on a recent appraisal. Generally, HUD Homes are sold in what is known as an "Offer Period," during which a potential buyer's offer must be made. At the end of the Offer Period, all offers are opened and the bid providing the highest acceptable net return to HUD may then be accepted. Following the initial "Offer Period" homes remaining unsold are offered on an "extended" basis which means offers may be submitted any business day. If a bid on one of these homes is acceptable, the broker will usually be notified within 48 hours of HUD's acceptance of the offer.



Should I Get a Home Inspection?HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspectionprior to submitting an offer to purchase.

If you are interested in acquiring a HUD Home that is in need of repair, you may be interested in applying for an FHA 203(k) Rehabilitation Loan. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. Click here for more information about FHA's 203(k) Rehabilitation Loan Program.

What About Financing?

HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing through either their own cash reserves or a mortgage lender. If you have the necessary available cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. While HUD does not provide direct financing for the purchase of a HUD Home, it may be possible for you to qualify for an FHA-insured mortgage to finance the purchase.

Where Can I Learn About Available HUD Properties?

Any single family property acquired by HUD FHA will display a sign identifying who is managing the property before it is listed for sale. During this time the property is appraised, title issues are resolved, if necessary, and a determination is made about the property's eligibility for HUD's discount sale programs. Listings are posted on the Internet and the Multiple Listing Service. For more information, contact the Management and Marketing Contractor serving your area.


FHA REO properties located in designated 
Revitalization Areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Initiatives.Does FHA Offer Any Special Discount Sales Programs?


If you are an 
evacuee displaced by Hurricane Katrina, Rita or Wilma, you may be eligible to acquire a HUD Home at a discount. Click here for additional information about HUD assistance to Gulf Coast communities affected by Hurricane Gustav. Click here to learn more about disaster assistance provided through HUD's Office of Disaster Recovery.HUD Assistance for Disaster Areas

Additional Information About HUD Homes and Other FHA Programs

If you have more questions, contact:

We are HUD home specialists serving the Indianapolis area.

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