Confused? Will HUD pay closing costs of up to 3%?

Asked by nursehollins, Atlanta, GA Sun Jul 29, 2012

I read a blog saying HUD can pay up to 3% of closing costs. So if financing through FHA where 3.5% is required, does the buyer then only pay $100 down and 5% of their closing costs? Or is this in conjunction with another program? All these blogs make my head spin...

Help the community by answering this question:

+ web reference
Web reference:

Answers

7
, ,
Sun Jul 29, 2012
Below are some important items on HUD REO properties that you need ot be of:

• An owner occupant can purchase a HUD home using FHA financing with only a $100* down payment instead of the normal 3.5% that FHA requires
• HUD limits the seller contribution toward closing costs/pre-paids to 3% of the sales price instead of the normal 6% limit for FHA mortgages
• For properties with FHA required repairs, HUD allows for 110% of the repair costs to be financed into the loan (up to a maximum of $5,000)

*HUD limits the Total Loan Amount (including UFMIP + Repair Escrow Amount) to 100% of the “As-Is” value listed on the http://www.hudhomestore.com website.

This means that you may now often have to bring much more than just the $100 Down Payement and the difference in closing costs/pre-paids to closing. It UFMIP is 1.75% of your loan amount. On HUD REO's, it is becoming more difficult to finance this in now.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing
1 vote
TLC Realty G…, Agent, Cary, NC
Mon Feb 4, 2013
You must remember that asking for HUD to pay closing costs reduces the overall bid. So, HUD will pay closing costs if you ask for it and the bid is accepted that way. The bid may be declined if you ask for closing costs and accepted if you don't, so it's not as easy as "yes" HUD will pay closing costs. Hope that didn't further confuse you. It is a complicated process and an experienced Realtor is a great help in the journey.
0 votes
I just won a bid on a HUD home last week. I asked for 5K towards closing costs and they accepted. However, I overbid 5K in order to win the bid bcz the market is very competitive in my area. So I guess it all depends on how you negotiate.
Flag Thu Apr 3, 2014
Larry Casner, Agent, Fayetteville, GA
Fri Aug 3, 2012
You REALLY need to be working with an agent who has specialized in HUD sales. The complication purchasing HUD properties are too numerous to account for here, but If your agent has not closed at least 10 HUD properties within the last year...move on!

As Rodney very well pointed out," HUD limits the Total Loan Amount (including UFMIP + Repair Escrow Amount) to 100% of the “As-Is” value listed on the http://www.hudhomestore.com website."

As the market has reverted back to a Seller's market, almost all of HUD properties are selling above the as -is value, making the 100 down program largely obsolete.
0 votes
I know this is an old post, but the problem is, you can search for HUD realtors and NOTHING comes up, even on the HUD site!
Second problem is, you get into a relationship with a realtor, maybe even signed a contract. THEN you find a HUD home 2 mos. later. What do you do...fire your realtor because they don't have HUD experience? Very tough situation all the way around.
Flag Thu May 25, 2017
Regina Ambro…, Agent, Lawrenceville, GA
Sun Jul 29, 2012
Hud will pay 3% closing costs. Your closing cost may be higher than that; check with your Lender. Also, when buying a HUD home you can use the $100 down program; however, check with your lender. Most lenders may require that you pay the MIP up front in the $100 down payment program. Please feel free to call me on any additional questions or need further clarification. Regina Ambrose, Associate Broker, Chapman Hall Realtors, 678-613-5636
0 votes
Regina,
Paying the MIP upfont does not vary from lender to lender, but is a HUD rule. HUD no longer allows the Total Loan Amount to exceed 100% of the "As-Is" value,
Flag Sun Jul 29, 2012
Ava Anderson, Agent, Snellville, GA
Sun Jul 29, 2012
When buying a HUD home you can use the $100 down program which means you must provide the earnest money amount requested by HUD normally $500-$1000 depending on the purchase price of the home. The difference between the $100 and balance of your money will be used for any of your closing cost you are responsible for and yes HUD will pay 3% towards closing cost. In my experience closing cost is normally about 4% of the purchase price of the house. Please feel to call me if you have any additional questions or need further clarification.

Ava Anderson
Solid Source Realty Inc.
Associate Broker
770 369-5121
0 votes
The home is 28,300
Flag Sun Jul 2, 2017
Hi my name is Patrice I'm looking a home that was HUD owned it's 28,900 I want the home but this will be my very first time trying to buy a home what should I do?
Flag Sun Jul 2, 2017
Le Johnson, Agent, Atlanta, GA
Sun Jul 29, 2012
Yes hud will cover up to 3% of the closing $100 down if you use the fha program. So you will need to
bring closing cost and whatever you bid over the appraised value.
0 votes
Deeba Khader, Agent, Atlanta, GA
Sun Jul 29, 2012
HUD does pay Upto 3% in closing costs. Which means that with a$100 down payment, you will have to bring any closing costs over the 3%, and that is all.
0 votes
HUD no longer allows the Total Loan Amount to exceed 100% of the "As-Is" value. This means that buyers are now having to bring to closing much more than teh $100 and difference in closing costs/pre-paids.
Flag Sun Jul 29, 2012
Search Advice
Search
Ask our community a question

Email me when…

Learn more