Denver’s market has recently endured a bit a cool down, but home prices here are still high, with inventory numbers still on the low side. For this reason, many house hunters add HUD homes to their searches – not only can it increase your options, but you could also end up making a great investment.
Below we breakdown what a HUD home is and buyers who qualify for them.
What is a HUD Home?
HUD homes are residential properties that contain one to four units and are owned by the HUD (Department of Housing and Urban Development). Properties become part of the HUD program when the previous Federal Housing Administration (FHA)-backed mortgage goes into foreclosure. HUD recovers the property to sell at fair market value, recovering losses on the bad debt.
Considerations for buying this type of home
During the first 30 days, a HUD home is on the market it can only be bid on by buyers who intend to make the property their
primary residence. Once those 30 days are up, investors can bid on the property. If the home requires less than $5,000 in repairs, it can qualify as an FHA-insured HUD property. If it needs more than $5,000 in repairs, it is considered an FHA-uninsured HUD property. Bids, or offers, are made through a HUD-approved realtor.
Who qualifies for a HUD home?
One of the great things about buying a HUD home is that it isn’t all that different from a traditional sale – at least in terms of qualifying. The HUD is not a lender, so anyone with the cash or an approved loan can qualify for a HUD property. For FHA-insured properties, buyers can qualify for FHA financing with only 3.5 percent down with a minimum credit score of 580.
If you’re in the market for a HUD home in the Denver area, step one is to find an experienced pro who is skilled in these types of deals. Give Metrowest a shout – we specialize in these types of sales and would love to help you start the process!