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Frequently Asked Questions
1. What is the HUD $100 Down Program?
2. Which properties are eligible for the $100 down payment incentive?
3. Does the $100 Down Program mean I can buy a house for only $100?
4. What are the requirements to place a bid?
5. How can I make a bid on a HUD Home?
6. Will HUD negotiate with me, like a regular seller?
7. Are properties listed under Good Neighbor Next Door available for the $100 Down Payment Incentive?
8. I won the bid on a HUD Home, but I bid more than appraised value. Can I still buy for $100 Down?
9. I submitted the original contract under a Conventional loan; can I still apply the $100 Program if I switch to FHA?
10. How long will this incentive program last?
11. What is a Repair Escrow?
12. Are there any other incentives I can take advantage of??
13. What if I have more questions?
Q: What is the HUD $100 Program?
A: The $100 HUD program is very simple. It is available to all homebuyers who are going to occupy the house, and who qualify for an FHA loan. FHA loans are easier to get than most others - they are not purely credit-score driven! The down payment for an FHA loan is normally 3.5%
Because HUD has so many homes, they have developed a special program. For anyone who buys a property listed by HUD ONLY, they will waive the majority of the down payment requirement! That means you don't have to come up with the 3.5%.You only pay $100 for down payment.
In addition, you are able to ask HUD to pay up to 3% of your closing costs. There are some costs that they cannot pay, such as the insurance and tax escrows,but in general you may be able to get into a house with 6.5% less than you normally would - in some cases, this means you may be able to purchase with just a few thousand dollars out of pocket!
Q: Which properties are eligible for the $100 down payment incentive?
A: Any property that is listed through the HUD Program and that shows as available for FHA financing (203B, 203B with repair escrow and 203K) will be eligible. The buyer must be an owner occupant to qualify. To get a list of properties, which comes out every week, just fill in your name and email on the form to the left.
Q: Does the $100 Down Program mean I can buy a house for only $100?
A: Unfortunately, no. You will need between $500 and $1,500 for the earnest money deposit at the time you submit your purchase contract, depending on the price of the home. HUD requires a certified check or money order. This amount is included as part of your closing costs. But the only other out-of-pocket costs prior to closing may be the appraisal and inspection, and sometimes a mortgage application fee. These costs could be included in the closing costs, so they may be included in the 3% HUD allows if you ask for it. Ask your mortgage broker for a Good Faith Estimate to find out what your total closing costs will be.
Q: What are the requirements to place a bid?
You will need an Approval letter from your lender prior to submitting an offer. An Approval is different from a Qualification! Qualifications are very general, and most sellers are no longer accepting them. Make sure you get the Approval letter, which states that you are approved for a specific loan program. Most lenders and mortgage brokers can get you a letter within 24 hours.
If you're already qualified, great! Just make sure that your lender is aware that you will be using the HUD $100 Down Program with the FHA loan. Some lenders are not aware of this program, but we would be happy to work with them to get it through. If you are not yet qualified, get qualified now.
Q: How can I make a bid on a HUD Home?
Offers on HUD homes can only be made through a HUD-approved Real Estate Broker. We will be happy to submit any of your offers! Many of the properties have deadlines by which a bid must be submitted. Check with us if you're not sure when the Bid Date is so you don't miss out on a great property!
Q: Will HUD negotiate with me, like a regular seller?
When you submit a bid (offer), you will not know if there are any other offers or how much the other bidders are offering - so make sure you make your best offer from the outset! HUD will take the bid that nets them the most money. They will not often make counter-offers, unless no one else has placed a bid and your offer is very close to what they are looking for.
Q: Are properties listed under Good Neighbor Next Door available for the $100 down payment incentive?
A: Properties sold under the Good Neighbor Next Door Program are eligible as long as an FHA loan is used.
Q: I won the bid on a HUD home, but bid more than the appraised value because I wanted to make sure I won the bid. Can I still buy the home for $100 down?
A: The down payment amount should remain the same, but you would still be required to bring in the difference between the accepted offer and the appraised value in cash at closing.
Q: If I submitted the original contract under a Conventional loan, can I still apply the $100 Program if I switch to FHA?
A: If the property meets eligibility criteria and HUD approves an amendment to the contract, you may still be able to take advantage of the $100 down program.
Q: How long will this incentive program last?
A: There is no time frame defined for this program. That means that it could end tomorrow ... or go on for years. But why take the chance? With prices and interest rates at their lowest in years, now is the time to buy!
Q: What is a repair escrow?
A: A repair escrow is an account set aside at your closing which is used to pay for health and safety repairs to your property. HUD determines how much (if any) repair escrow they will allow on each property. If you want to take advantage of the repair escrow, you will need to add that amount to your loan amount, and you must make the repairs prior to having the funds released to you.
Q: Are there any other incentives I can use?
Yes! If you buy a house before December 21, 2009 and re-file your 2008 taxes, you may be able to get 10% of your purchase price, up to $8,000, back as a tax credit! That's cash in your pocket! Ask your tax preparer for more information - but hurry!
Q: What if I Have More Questions?
If you have any questions, need more information, or would like a list of the new HUD homes sent to you every week, please do not hesitate to contact us.