Who can buy a HUD home?

While the Denver market is slowly shifting towards buyers, inventory here remains low, while prices are still high. That’s why many house hunters add HUD homes to their searches – not only can it increase your options, but you could end up making a great investment!

But what exactly is a HUD home and how do you know if you qualify for one?

Defining a HUD Home
HUD homes are residential properties containing one to four units. Properties become part of the HUD program when the previous FHA-backed mortgage goes into foreclosure. HUD recovers the property to sell at fair market value, recovering losses on the bad debt. These properties are sold “as is” with no warranties on the condition of the home.

Who can buy a HUD home?
One great thing 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.

Considerations
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 pass, investors can bid on the property. So if you were looking for a HUD home as a rental opportunity, that’s something to consider. 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. These distinctions are important because investors can bid on the property sooner if it is an FHA-uninsured property. Bids, or offers, are made through a HUD-approved realtor.

Depending on your budget and timeline, purchasing a HUD home could be a great option to help you break into homeownership. Step one is to find an experienced pro who is skilled in these types of sales. If you’re interested in checking out HUD homes in the Denver area, contact Metrowest. We specialize in these types of sales and would love to help you start the process!

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