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What is a HUD Home? Here’s What You Should Know

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A HUD home is a residential space that is typically sold for less than market value by the Department of Housing and Urban Development —this is done after the previous owner(s) defaulted on their mortgages and HUD foreclosed on the property. HUD homes can be a great deal for new and veteran homeowners alike.

How buying a HUD home works

  1. Determine your budget and get a preapproval. Use a home affordability calculator to determine how much house fits comfortably in your budget, then shop around for a mortgage preapproval.
  2. Partner with a real estate broker. Only a HUD-approved real estate broker can help you buy a HUD home. To become a broker, a real estate agent must pass further education, exam and experience requirements.
  3. Identify a home you want. All homes undergoing a HUD foreclosure, including multifamily properties, are listed on the HUD Home Store. You can view them on your own, but your broker can show you other foreclosed homes on the Multiple Listing Service (MLS) if you want to expand your search.
  4. Place a bid. Your broker will submit a bid for you on the house you want.
  5. Follow through. HUD will notify your broker, typically within 48 hours, if you win a bid. You will have 30 to 60 days to follow through on the mortgage closing process.


In the process of buying a HUD home, you may come across the term REO. “REO” stands for “real estate owned.”  A HUD REO foreclosure is when HUD repossesses a home.

Buyer requirements

You must not have purchased a HUD home within the last two years, and you typically must live in your HUD home for at least one year.

Pros and cons of buying a HUD home


  HUD homes are listed below-market price: HUD homes are typically sold at prices below market value. If you also qualify for a HUD assistance program, such as the Good Neighbor Next Door, you could save up to 50% off list price.

  Owner-occupiers have first priority: People who want to purchase a HUD home to live in are the first people allowed to bid on a home. A person or a company who wants to purchase a home as an investment property is only allowed to bid during the extended listing period, if no owner-occupiers have successfully bid on the home.

  FHA loans possible: HUD homes were previously financed with FHA loans — which means you could likely get an FHA mortgage on your HUD home, and receive all the benefits that come with it.


  HUD homes are sold as-is: Property sold as-is means that what you see is what you get. The seller won’t make any repairs or upgrades to the home before you buy it. However, there are fixer-upper mortgage programs specifically for as-is homes, including an FHA option.

  You must use a HUD-approved broker: Because HUD requires you to work with a HUD-approved broker rather than a regular agent, your choice of which real estate professional to work with is limited.

  There are time requirements: As an owner-occupier, you can only purchase one HUD home every two years, and you’ll typically have to occupy the home for at least twelve months.

Note that if you have an FHA loan, you’ll also have residency requirements: Buyers must occupy the property as their primary residence within 60 days of closing on the loan and similarly, live there for at least one year.

HUD assistance programs

Good Neighbor Next Door

This HUD program offers homes that are located in revitalization areas for 50% off list price to:

  • Law enforcement officers
  • Teachers (pre-kindergarten through 12th grade)
  • Firefighters
  • Emergency medical technicians

Buyers must commit to live in the home as their principal residence for 36 months. Here’s more about the program.

HUD-approved nonprofit discount program

Nonprofit organizations that are registered and approved with HUD can purchase HUD homes for up to 30% off list price, so that the organization can flip the property, fix it up and sell it, passing the discount on to a low- to mid-income family. Learn more about the program.

Dollar Homes for government sales

Local governments can buy single family HUD homes that are valued at $25,000 or less and have been on the market for six months or more for $1 — this allows them to fix up the home and sell it at great value, attracting residents and revitalizing the neighborhood. Read more.

Where to find HUD homes for sale

HUD isn’t the only government agency that sells homes — here’s the official list of where you can find single family homes for sale from several federal agencies:

If you’re interested in a multifamily home, you can look at HUD in addition to these two other sources:

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