First Time Home Buyers: $100 Down Payment for HUD Homes in Florida

HUD Homes are Foreclosures owned by the Department of Housing and Urban Development (HUD) that were previously financed with FHA financing.

While you may use any type of financing or pay cash, there are specific perks in using FHA financing when buying a HUD home as your primary residence.

HUD Homes can be Single Family Homes, Multi-Units (up to 4), Condominiums or Townhomes.

You can browse available inventory at the HUD Home Store.

Unlike most homes for sale, HUD Homes are sold through bids placed by HUD approved Realtors on its website.

$100 Down Payment Program
Many lenders/banks offer a special FHA mortgage program designed only to purchase HUD homes with a minimum down payment of only $100 regardless of the price of the home No Appraisal Fee
HUD orders and pays for the appraisal. As long as it is less than 4 months old when your loan is in underwriting it is generally accepted and used. If it is over 4 months or even 6 months old, you will be required to order and pay for another one. No Inspection Fee
HUD orders and pays for a detailed Property Inspection Report which you will receive once under contract. Typically 45 Days to Close
Although the time frame could vary, most contracts allow for a reasonable closing time frame of 45 days. Ability to Escrow for Repairs (out of pocket)
Many lender/banks do not let you close on your home if there are deficiencies with the home. With HUD homes, you have the ability to escrow for repairs and perform them after you close. Oftentimes, the escrow is funded by you however.

Some of the most common misconceptions with this niche product are:

I cannot ask HUD to pay part or all of my closing cost.

WRONG. HUD does allow for closing cost concessions. However, as with any other real estate transaction, you may make your offer less attractive in a bidding situation.

I have to use FHA financing.

WRONG. While there are incentives for FHA buyers and thus owner occupant buyers (such as early bidding), you are not required to use FHA financing. You may use conventional financing or pay cash.

I can use my Realtor of choice.

WRONG. As in any other real estate transactions, HUD allows for a listing and selling realtor. However, both have to be approved/ registered with HUD. There is a comprehensive list on HUD’s website where you can check for your Realtor’s name.

I cannot inspect the home.

WRONG. While every HUD home comes with a Property Inspection Report, given to you once you win the bid and thus are buying the house, you are able to still inspect the home on your own or with a licensed home inspector.

I do want to point out one downside:

As with any government owned foreclosures (FannieMae/FreddieMac), the seller is congressionally exempt from paying sales tax. Thus, you will pay your documentary stamps/state tax on the mortgage (35 cents per $100), your intangible tax/county tax (20 cents on $100) plus the sellers documentary stamps/state tax on the Deed (70 cents per $100).

Regardless of the financing tool you intend to use, HUD homes are worth exploring.

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