In order to finance a home through HUD, it must pass a HUD inspection, which is different from a standard home inspection. Most likely there are some issues with the home that have thrown up a red flag. For example, sometimes the former owners were in the midst of remodelling. Perhaps they tore out the entire kitchen and hadn't replaced it before losing the home. This may flag it as something HUD may not finance.
You could probably still get standard financing. And by all means, get an inspection!