Buy a Home for $100 Down – HUD Homes

If homeownership feels far out of your reach because you have been struggling to save enough money to afford a sizable down payment, there might be another way for you to secure your own home.

In fact, purchasing a HUD home may mean you only need a $100 down payment. But what are HUD homes and is buying one the right decision for you?


Buy A HUD Home Foreclosure In West Michigan

The Department of Housing and Urban Development (HUD) is a federal government agency that was formed in 1965 by President Lyndon B. Johnson as part of his mission to diminish poverty in the U.S.

HUD was created to ensure individuals living in urban areas could access affordable, quality housing. Buyers can work with Realtors to find HUD foreclosures available for purchase in West Michigan.


What Is A HUD Home?

HUD homes are a specific type of foreclosed property that is up for resale, following repossession of the property.

When a homeowner uses an FHA Loan (a mortgage that is secured by the Federal Housing Administration) and they fail to make their mortgage payments, the loan goes into default, resulting in foreclosure. FHA then pays the remaining balance on the mortgage to the lender and takes over ownership of the property.

After ownership is transferred to HUD, the agency places the homes up for resale to recover the outstanding mortgage balance. These homes are sold through an online bidding process on the HUD Home Store or by working with a real estate agent who specializes in HUD homes.


HUD Home Requirements

HUD home requirements align with the requirements to secure an FHA Loan, aside from the minimum down payment amount.

  • You must be a U.S. citizen
  • You must have a minimum credit score of 580
  • Your HUD home must be a primary residence
  • You need to have at least a two-year work history
  • You have to provide documentation of all your income and assets
  • You cannot have any bankruptcy filings within the past two years


Who Qualifies To Purchase A HUD Home?

Any buyer who qualifies for a mortgage loan or has the funds to buy an HUD home is eligible to make the purchase. Although real estate investors can purchase these homes, they are offered to buyers who plan to make the home their primary residence (owner-occupant buyers) first.

There is a caveat to keep in mind too — eligible buyers must not have purchased another HUD home within the last two years and if they are a current homeowner, they must also have lived in their current home for at least one year.


How To Find HUD Homes For Sale

If you’re looking to purchase a HUD home, your search won’t be the same as a standard scenario on a straightforward sale. Here’s what the process looks like:

  1. Since HUD homes are sold at auction, you’ll need to find a real estate agent who specializes in HUD homes. They will work with you so you can view and bid on HUD homes.
  2. You will not be able to find HUD listings on MLS or Zillow, as you are able to with traditional homes. Instead, go to the HUD Home Store, a website operated by the U.S. Government, to see what HUD homes are currently up for sale in Michigan.
  3. HUD accepts bids from owner-occupant buyers throughout a priority 30-day window. When the priority window closes, HUD reviews the bids to determine the highest offer. If HUD determines the highest bid is still not high enough, the bidding process will be extended to real estate investors in a general public auction.
  4. HUD will contact the agent of the buyer with the winning bid with a settlement date. Buyers are typically given 30-60 days to close.


Perks Of Buying A HUD Home

  1. HUD homes are affordable
    • Since HUD homes are foreclosures, HUD is vehement on recouping the costs they had to pay to rectify the outstanding mortgage balance. Subsequently, HUD homes are often sold below market value and the homes go for relatively lower selling prices at auction.
    • Some buyers might be able to secure an HUD program that accepts down payments as little as $100, as opposed to the standard 3% down payment requirement.
  2. Owner-occupant buyers get priority bidding, so they have first dibs before investors can swoop in, making the purchasing process less competitive.
  3. In some cases, repairs may be financed by your loan (structural and non-structural)
  4. HUD may provide assistance to buyers for closing costs, including help with title fees, inspections, some taxes, and other closing costs.
  5. Gift funds can be used for down payment.


How The Bidding Process Works For FHA Foreclosures

  1. Find a Realtor with HUD experience (Treadstone can help!).
  2. Connect with a Loan Officer for HUD home financing.
  3. Find an HUD home you would like to purchase.
  4. Submit a bid with your Realtor with an earnest money deposit.
  5. If the bid is accepted, inspections and mortgages are worked out between you, your Mortgage Lender, HUD, and your Realtor.


Get A Mortgage For A Foreclosed HUD Home

There are several different loan programs available to homebuyers interested in purchasing a HUD home.

  •     FHA Loans: FHA Loans are popular among first-time home buyers due to their low down payment requirements and flexible qualification criteria, especially compared to Conventional Loans.
  •     FHA 203(k) Loans: The FHA 203(k) is designed for buyers who want to purchase a HUD home in need of repairs or renovations. This loan combines the purchase price of the home and the cost of repairs into one loan.
  •     USDA Loans: The U.S. Department of Agriculture (USDA) offers loans for rural homebuyers who meet certain income and property location requirements. While not specific to HUD homes, USDA Loans can be used to finance eligible properties, including some HUD homes in qualifying rural areas.
  •     VA Loans: These loans are provided by the Department of Veterans Affairs and offer competitive terms, including no down payment requirements and flexible credit standards. To qualify, buyers must be a military service member, veteran, or eligible surviving spouse.
  •     Conventional Loans: Also not specific to HUD homes, Conventional Loans from private lenders are another option for financing a HUD home purchase.


Interested in purchasing a HUD home? Treadstone specializes in helping buyers like you navigate the process and secure the financing you need. Whether you’re a first-time homebuyer or looking for a property in need of rehabilitation, our experienced team is here to guide you. Contact us for a personalized plan!


Frequently Asked Questions On HUD Homes

Can you negotiate the price on a HUD home?

There are no traditional negotiations on the price of a HUD home. All homes are purchased via auction, so you can bid the price that you would like to spend on the home. The highest bid wins.

Why should you buy a foreclosed home?

If you are looking for a more affordable property, a foreclosure might be the route for you. These are also ideal properties if you want to customize your home.

How long does it take to hear back from a HUD bid?

The time it takes to hear back from a HUD bid varies. For some properties, you might hear back within a few days and others might take closer to 30 days.

How does a home become a HUD home?

Homes that are financed through FHA Loans with missed mortgage payments leading to foreclosure become HUD homes.



Subject to credit approval, not all borrowers may qualify. Rates and terms are for illustrative purposes only; your actual rates and terms may be different. Please contact Neighborhood Loans for current rates and programs. Neighborhood Loans is an FHA approved lender, not endorsed by or affiliated with any government institution. Not to be considered tax or financial advice. Please consult a tax or investment professional.

You may only need a $100 down payment!