What is HUD home?
A HUD home is house that has been approved the Department of Housing and Urban Development for federally insured loans. These are very desirable homes because often they are selling for less than market value and the terms of purchase are excellent.
- Low down payment
- Easy credit terms
- Low debt-to-credit ratio
HUD homes are very often in great shape. They have to meet very strict inspection standards, so as the home buyer, you are virtually guaranteed to get a great house.
The down payment on a HUD home is usually 3.5% to 5%. This can make home buying much more affordable for first time buyers and lower income home purchasers.
The house payment, with insurance and everything included, can’t exceed 31% of your income. Your total living expenses, such as car payments, credit card payments, and student loans, cannot exceed 43% of your total income. This is important to calculate before you even get started looking at homes.
Getting into a HUD home has lots of restrictions. You will want to make sure you qualify before you even begin the home search. There are some website that you can use to to determine your eligibility.
A HUD home is an excellent way for first time home buyers to get into an affordable house. It’s also a great way for people who have had foreclosures in the past (over 5 years) to get back on their feet.