Ever heard of the HUD 100 program? I’m amazed that so many people are surprised when they hear they can purchase and renovate a home with a down payment of only $100.00!! Housing and Urban Development (HUD) has a great program, that actually has been around for quite some time, called the HUD 100 program. Basically, if the home you want to purchase qualifies than you can purchase the home and your down payment is reduced to simply $100.00.
To begin with let’s define a HUD property:
When a home financed with an FHA loan goes into foreclosure the bank holding the loan will file a claim with HUD. Once that claim is paid the property is then marketed and sold by HUD directly. The home is first put up for action and once the auction period ends bids may be submitted. It’s a slightly different purchase so do consult with your realtor if this is the route you want to take. HUD homes are great and often put you in a fantastic equity position.
Now let’s get to the good stuff…the HUD 100 Program:
- This is an incentive available for purchasers of HUD REOs on certain properties that have not sold – Be sure your realtor knows you want to use this program because you must ask for it when you submit your bid
- The bidder can obtain a loan for $100 less than the final winning bid as long as the winning bid is not more than the list price (Appraised Value).
- When the winning bid is higher, the winning bidder must pay the difference in cash – Take a look at the example below:
Let’s say the list price (appraised value) is $100,000 and the winning bidder bid $101,000 so that they could beat all the other bidders. The maximum financing is $99,900 so the winner must pay $1,100 as the down payment.
- You are still able to ask for 3% seller concessions from HUD but remember if you are bidding against someone not asking for concessions you may lose the bid as a result.
Want to renovate your home too? Not a problem since we can combine this program with either the full or streamline FHA 203k loan! In this scenario your down payment is still just $100 but the loan amount is based on the purchase price plus the improvements!! Talk about a nice deal.
It’s always best to be pre-approved before making an offer so contact me today to start the process.