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What is a HUD Home? Buying Guide and Tips

Theresa Stevens
Written by Theresa Stevens
Rene Bermudez
Edited by Rene Bermudez
Updated on: January 30, 2025 Content was accurate at the time of publication.
We are committed to providing accurate content that helps you make informed money decisions. Our partners have not commissioned or endorsed this content. Read our editorial guidelines here.

With housing prices soaring, finding an affordable place to call home can be challenging. One option to explore is HUD homes, which are often sold for less than their market value. But what is a HUD home, and how can you determine whether it’s the right choice for you? Here’s what to know.

Key takeaways
  • HUD homes are sold as-is and often need repairs.
  • You’ll need to work with a HUD-approved real estate broker to submit a bid.
  • You can choose from single-family and multi-family homes.

HUD homes: what are they?

HUD homes are properties that are sold by the U.S. Department of Housing and Urban Development (HUD), generally for a reduced price. HUD acquires these houses when a borrower with an FHA mortgage loses their home due to foreclosure. HUD then sells the properties to recoup the losses they incurred from the foreclosure process.

How HUD homes work

HUD homes are generally sold as-is and usually require some repair work. That’s why it’s important to think about both the mortgage costs and potential renovation expenses when considering a HUD home.

You can finance HUD homes with traditional home loans, including conventional loans and government-backed mortgage programs, like FHA loans.

Who qualifies for a HUD home?

Anyone can buy a HUD home, as long as they have the financial means to purchase the property, whether with a mortgage or personal savings. Buyers must live in the home for at least a year to receive priority during the bidding process. You’re not eligible if you bought a HUD home within the past two years.

Where to find HUD homes

You can search for available single-family HUD homes on the HUD Home Store. Use the interactive map or search by zip code for properties in your desired location. The availability of HUD homes inventory can be limited, with some states only having a few properties available.

If you’re looking for a multi-unit property, HUD publishes a weekly listing of available multi-family homes. You can learn more about multi-family HUD homes for sale on HUD’s website.

HUD home pros and cons

Pros

  • You may be able to buy a home for below-market value.
  • You can choose from both single-family and multi-family homes.
  • If you plan to live in the home, you’ll be prioritized during the bidding process.
  • The home’s value could increase after you complete renovations.
  • You might be able to use sweat equity as a down payment.

Cons

  • HUD homes are sold as-is.
  • You must use a HUD-approved real estate agent.
  • You must live in the home for the first 12 months after purchase in order to receive priority when bidding.
  • You may have limited inventory to choose from.

Should you buy a HUD home?

Buying a HUD home can help you become a homeowner at a discount, especially if you’re willing to put sweat equity into the property. But if you’re looking for a move-in ready house over a fixer-upper, a HUD home is likely not the best option for you.

Due to their relative affordability, HUD homes can be a good option for first-time homebuyers. Again, it’s important to consider the full cost of buying the home, including the mortgage and repairs.

How to buy a HUD home

1. Determine what you can afford

Use a home affordability calculator to determine how much you can afford to pay for a home, then shop around for a mortgage preapproval.

2. Secure financing

Financing a HUD home is a similar process to standard home sales. Your loan options include:

  • Conventional loans. A conventional loan isn’t backed by a government agency and typically has more stringent requirements than government-backed loans. You’ll need at least a 620 credit score to qualify.
  • FHA loans. These loans are backed by the Federal Housing Administration (FHA), and you can qualify with a credit score as low as 500. You may be able to purchase a HUD home with a $100 down payment under the FHA $100 down program.
  • FHA 203(k) loans. An FHA 203(k) loan allows you to finance the cost of a property and its renovations at once.
  • VA loansVA loans are offered through the Department of Veterans Affairs (VA) to eligible military members for typically no money down.
  • USDA loans. If you want to buy a home in a rural area, you may qualify for a loan through the U.S. Department of Agriculture (USDA). USDA loans generally don’t require a down payment.

3. Find a home

You can view available single-family homes on the HUD website. Weekly listings of available multi-family HUD homes can be found on the agency’s website.

4. Contact a HUD-approved real estate broker

Once you find a home you’re interested in, contact a HUD-approved real estate broker using HUD’s broker search tool. You’ll need a broker before you can complete the next step.

5. Submit a bid

Your real estate broker will submit the bid on the HUD home on your behalf. Owner-occupant buyers are prioritized during the bidding process — real estate investors must wait until the initial bidding period is over to submit their bids.

6. Close on the home

The closing process is similar to that of a standard home sale and involves paying closing costs and finalizing the loan paperwork. It’s smart to get a professional inspection to make sure there are no major problems with the property.

Other HUD home-buying programs

Good Neighbor Next Door

The Good Neighbor Next Door program gives teachers, firefighters and other service professionals a generous discount when buying a home — 50% off the list price. The property must be located in one of HUD’s designated revitalization areas, and buyers must occupy the property as their primary residence for at least 36 months.

You can search for available homes through this program on the HUD website. In the list of programs above the map, select “Good Neighbor Next Door Program.”

HUD-approved nonprofit discount program

Qualified nonprofit organizations can purchase HUD homes for a discount during the exclusive listing period. These nonprofits then typically turn around and offer the homes to low- and moderate-income families at affordable prices. To search for HUD-approved nonprofits in your area, use the search tool on HUD’s website.

Learn more about HUD’s program for nonprofits.

Dollar homes for governments

Under the dollar homes initiative, local governments can buy single-family HUD homes for $1, fix them up and then resell them to first-time homebuyers in the area — usually at a large discount. To find out if these homes are available in your community, go to the HUD Homes website and click on your state.

Learn more about HUD’s dollar home program.

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