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omarzamora1+…, Home Buyer in Chicago, IL

Can I purchase an HUD home using a conventional loan?

Asked by omarzamora1+trulia, Chicago, IL Fri Oct 25, 2013

There is a HUD home that I am interested in purchasing but only list an FHA loa. I am pre-qualified for a conventional loan and would like to avoid the hassle of a FHA loan. Do HUD home FHA qualified properties allow this?

Help the community by answering this question:


Here are the different types of special financing you can receive when purchasing a HUD home as your primary residence:

$100 Down Program – You can purchase a HUD Home with only $100 down! While the buyer is still responsible for the earnest money and must submit to typical FHA lending guidelines, this is a great program for first-time home buyers looking to purchase a home.

Good Neighbor Next Door (GNND) – Designed to enhance urban communities, this type of financing offers discounts to firefighters, EMT’s, police and teachers. They receive 50% off the property list price and require only a $100 down payment. There are some minimum guidelines, though. The property must be located in a designated revitalization area, and the buyer must live and work in the same county as the home. Also, the buyer must live in the home for at least 36 months.

203(B) Repair Financing – If the HUD home you are looking at needs under $5,000 of repair work, you can finance the cost by using the 203B loan. This is available on 1-4 unit single family real estate, manufactured housing and condos.

203(K) Streamlined Financing – Allowing for up to $35,000 in repairs, this loan was developed to address properties in need of smaller repairs. This includes repair, replacement and upgrad as well minor remodeling and even painting. You can also finance appliances (not to exceed $2,000) with this loan.

Energy Efficiency Mortgage (EEM) – Aimed at increasing energy efficiency, this loan allows buyers to finance 100% of a cost effective “energy package”. The cost of the improvements, including maintenance, is less than the present value of the energy saved over the useful life of those improvements. Plus, an EEM may be used with 203(B) and 203(K) loans.

Web Reference:
2 votes Thank Flag Link Thu Jul 23, 2015
Yes- this is not a problem
If you would like a competetive quote please feel free to contact me
Sam Sharp
Senior Vice President of Mortgage Lending
773 290 0455
1 vote Thank Flag Link Fri Oct 25, 2013
you can purchase using a convetional loan
0 votes Thank Flag Link Sat Feb 27, 2016

Contact your lender and ask him/her to walk you through the process. Also, make sure you work with a broker that is familiar with HUD homes, she/he will need an access key, but it sounds like you already determined which one you like and want.

Good luck!
0 votes Thank Flag Link Sat Oct 26, 2013
Yes. When you buy a HUD home, you can pay cash, conventional or FHA. But I recommend you use a broker who knows HUD home procedure. They can be a great deal, but they need to meet conventional mortgage standards, there are limits on overbidding and you need to pay the closing and title fees and in some areas, your attorney has to handle all with the title company.

Even the bidding process is both easy and tricky. The entire process is very different. And you must use a HUD registered broker to bid. But just because they are a HUD broker, you need to make sure they have done HUD transactions within the last 12 months.

You can go on the website and look for brokers in your area. Just make sure to ask experience questions when you speak with them.
0 votes Thank Flag Link Fri Oct 25, 2013
You can go conventional on a HUD home.

Any questions feel free to call me or email me.

Chris Diamond
Licensed Mortgage Banker
NMLS: 771882
Diamond Residential Mortgage Corporation
0 votes Thank Flag Link Fri Oct 25, 2013
Mr. Zamora,

I believe I know what was confusing you. HUD AQUIRES homes from FHA loans that were foreclosed but absolutely does NOT require a buyer use an FHA loan to purchase a HUD home. Below I have copied and pasted a definition directly from the HUD website and below that is a link. I recommend you peruse their website and you might find some useful information. For example, if you are a police officer, firefighter, EMT, or teacher you could qualify for a *50%* discount on the list price of the 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."


Best of luck in your search and please call me if I can help you further.


Stephanie Scott, Agent at Coldwell Banker
0 votes Thank Flag Link Fri Oct 25, 2013
Dear Home Buyer,

Sam Sharp with Guaranteed Rate is your man. :)
0 votes Thank Flag Link Fri Oct 25, 2013
It sounds like you are are misunderstanding the HUD home's listing. The listing probably says that the home is eligibile for FHA financing. This does not mean that you cannot use a conventional loan to purchase the home. HUD does not care what type of financing you use. If the home is in good enough condition for FHA financing it is probably in good enough condition for a conventional loam. Did the listing mention if there was a repair escrow required? Also, you mention that you "would like to avoid the hassle of a FHA loan". What hassles are you referring to? I don't find conventional transactions to be any easier to close than FHA transactions.
Nick Radakovich Home Sales Realty
0 votes Thank Flag Link Fri Oct 25, 2013
Thank you for the prompt reply. There is an escrow of $150.00 for needed repairs from when it was last appraised. I was under the assumption that an FHA load was required on all HUD home properties. After hearing the reply's this is not the case. I would like to stick with a traditional loan.
Flag Fri Oct 25, 2013
As long as the condition of the home meets the Conventional Loan criteria, then you should be OK.
Web Reference:
0 votes Thank Flag Link Fri Oct 25, 2013
Yes of course , but keep in mind that if you used FHA loans they will granted closing costs to you of 3% but ni with conventional loans in HUD houses ...
This rule apply in 90% of cases
0 votes Thank Flag Link Fri Oct 25, 2013
Any qualified buyer can purchase a HUD home using either an FHA or conventional loan. You may even purchase a HUD property with cash. You need an agent who is qualified to bid on the home of your interest. Since HUD homes are foreclosed properties it is especially important to have a comprehensive home inspection.
0 votes Thank Flag Link Fri Oct 25, 2013
Yes you can do this.

Get a good Realtor and lender to help you out in this process.
Web Reference:
0 votes Thank Flag Link Fri Oct 25, 2013
You shouldn't have any problem.

Please cal Miz Ramadani at Sierra Pacific Mortgage 708 499 5626
0 votes Thank Flag Link Fri Oct 25, 2013
Hi Omar,

Purchasing a HUD home with comventional financing is possible depending on the condition of the home. Some HUD homes require repairs and would not meet Conventional lending standards. We would be glad to answer specific questions that you may have about the condition of the home and whether it would pass Conventional guidelines.

Feel free to contact us directly at
Richard Kimball
Illinois State Manager
Crosscountry Mortgage, Inc.
847-252-7900 xt. 5515
0 votes Thank Flag Link Fri Oct 25, 2013
Hello Omar,

You can purchase a home using any kind of financing you wish. Now, there are some properties that require certain issues to be fixed before you buy or after the purchase. These type of homes require a special type of financing called "Rehab Loan". If this home is in need of repairs then you might be reading a requirement for an FHA 203k loan (Rehab Loan). Although FHA does a majority of these loans there are also many conventional rehab loans available.

If you still need more help please feel free to contact me. Good luck!
0 votes Thank Flag Link Fri Oct 25, 2013
It depends on the condition of the property but generally yes.
0 votes Thank Flag Link Fri Oct 25, 2013
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