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This specialty FHA mortgage was created to remove some of the barriers to home ownership, and make it easier to purchase HUD homes. HUD homes are one to four unit properties owned by the US Department of Housing and Urban Development (HUD) through foreclosure. The previous owners had financed the properties with FHA insured home loans, and following foreclosure proceedings ownership transferred to HUD.
Anyone including investors can purchase a HUD home, but priority is given to those who will live in the property as a primary residence. When the home first becomes available for sale there is a period of time during which only owner-occupant buyers can bid on the listings, and in addition, buyers who will live in the home can also take advantage of the FHA $100 Down mortgage program.
Available exclusively for the purchase of HUD homes, this specialty FHA program allows for a down payment of just $100. In the standard FHA loan the minimum down payment for a purchase is 3.5 percent. The extremely low, $100 down payment option opens up home ownership opportunities for many consumers who might not otherwise be able to afford it.
With only a $100 down payment requirement this is very close to a no money down program. Lowering the upfront costs means that home buyers don’t have to have a large amount saved in order to qualify for the purchase. They are still required to meet income standards to show that they will be able to afford the monthly mortgage payments, but this program eliminates the burden of a large amount down.
It’s not uncommon for foreclosed properties to be in need of repairs. Buyers concerned with minimizing out of pocket expenses are likely to not have extensive funds available for fixing up a home, and the sale will not be approved if the property doesn’t meet the FHA’s standards for health and safety.
So what happens if the home needs work in order to qualify for the $100 Down program but the buyer can’t afford to pay for it? There is a solution. The $100 Down mortgage can be used in conjunction with the FHA 203(k) loan or the FHA 203(b) Repair Escrow, both of which allow the borrower to finance both the purchase of the home and the cost of repairs, updates, or renovation.
In order to qualify for this program the home buyer must be purchasing a HUD home to be used as his or her primary residence. Additional requirements include:
Borrowers will also need to meet the income, asset, and minimum property standard requirements specified by the FHA.
You can now schedule a free consultation with me about the low down payment programs we have for you. We also have low credit score programs with 3.5% down. Schedule Now by clicking Let's Talk