HUD home FAQ

 HUD home definition

HUD home is a 1-to-4 unit residential property acquired by the Department of Housing and Urban Development (HUD) as a result of a foreclosure action on a Federal Housing Administration (FHA)-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

Who can buy HUD homes?

Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

Who can sell HUD homes?

Any licensed real estate agent or broker who is registered with HUD may sell HUD Homes.

How do I register to sell HUD homes?

The Principal Broker (designated broker) for your company or office must register by completing SAMS (Single-Family Acquired Asset Management System) forms 1111 and 1111A, and attachments. All forms must be signed by the designated broker. Registration must be renewed annually using the same forms to maintain current status. You can register and obtain your NAID number by visiting It takes approximately 6 to 8 weeks for processing.

What is a NAID number?

A NAID number is a Name Address Identification Number issued by HUD. This number allows the agents and brokers to submit bids on behalf of prospective buyers of HUD homes.

What is a Listing Broker?

The M&M Contractor has engaged Listing Brokers to list the properties in the local Listing Services (MLS). They are paid a fee by the M&M Contractor. The Listing Broker provides assistance to realtors with access to the property and with sales information.

Do I need a realtor to place a bid for me?

Yes, Please contact a Real Estate Agent of your choice that is HUD registered. If you are not working with a Real Estate Agent, please contact the Listing Agent for more information or our sales team at 888-826-5651.

How do I find a property to bid on?

You may utilize our FREE HUD Homes Photo list located on the Home Page of this site. You may also contact a Real Estate Agent of your choice that is HUD registered. If you are not working with a Real Estate Agent, please contact the Listing Agent for more information or our sales team at 888-826-5651.

How can I obtain financing for my property?

Please contact a lender or mortgage broker.

Do owner-occupants have a priority in bidding?

Yes, there is an initial owner-occupant period set aside at the beginning of the bid process.

What are my financing options?

You can use FHA or conventional financing to purchase a HUD home. You may also purchase a property with cash.

>I am an investor. When can I bid on a HUD property?

During the exclusive listing period, bids may be submitted by Owner Occupants. At the conclusion of this exclusive listing priority period, all general public bids will be accepted.< >Can a buyer elect to use his or her own closing agent?

Effective 09/30/2013 HUD has implemented “Buyer’s Select Program. All buyer’s whose contracts are executed on or after 9/30/2013 will have to choose their own escrow company at the buyer’s expense.

All buyers whose contracts are executed on or after March 8, 2013, will have to choose their own escrow company at the buyer’s expense.

The selling agent will be required to complete an addendum providing the name and contact information of the selected escrow company. This addendum must be submitted with the contract package at the time of bid acceptance.

Please note:t his is a change from previous notices that will be effective with this pilot program. This is a change from previous notices that will be effective 09/30/2013 

If I don’t like the home that I chose, can I decline the acceptance?

The purchase of the property may be declined at any time but may be subject to earnest money forfeiture.

What is the earnest money held for, and can I get it back?

Earnest Money is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious about wanting to complete the purchase. If the seller accepts the offer, the earnest money is held in escrow by the real estate broker or by a settlement or title company until closing and is then applied to the buyer’s portion of the remaining costs. If the offer is rejected, the earnest money is usually returned, since no binding contract has been entered into. If the buyer retracts the offer or does not fulfill its obligations under the contract, the earnest money is forfeited.

When can I complete a home inspection on the property?

All purchasers are strongly encouraged to perform a walk-through inspection at or near the date of your contract acceptance and, again, immediately PRIOR to closing. If a purchaser discovers a property condition that did not exist at the time of sale they must immediately notify HUD’s property manager of the damage. The purchaser or agent should complete the Property Damage Report and fax it to the appropriate fax number listed on the form. Reporting the damage does not guarantee the correction of the problem that has been discovered. The lack of written documentation describing property condition at contract acceptance, however, will preclude consideration for repairs or price adjustments in the event of subsequent damage. Each case will be looked at independently and a determination will be made as to whether the damage will be repaired (or not repaired) or, under some circumstances, credits given at closing. The buyer assumes full responsibility for the property and its condition on the date of closing. HUD assumes no responsibility and will make no settlement for damages reported to HUD after the close of escrow.

Can I make repairs to the property if needed prior to purchase?

HUD properties are sold as-is with no warranty. No repairs should be performed on a property until after the new owner has taken possession of the property.

Does HU give money for repairs to the property?

No. However, a home buyer may wish to utilize an FHA 203K streamline loan to finance repairs on the property.

How much money do I have to put down on a home?

The answer depends on the type of financing being used. For FHA financed properties, the down payment is 3 ½ percent (3.5%) of the sales price.

What are the various listing periods and how do they pertain to the Owner Occupant Period?

There are three listing periods: the Lottery Period, the Exclusive Listing Period, and the Extended Listing Period. Certain properties are featured in the Lottery Period for the first 7 days on These properties are available for purchase by Good Neighbor Next Door participants, HUD-registered non-profit organizations, and government entities. When the Lottery Period ends, these properties enter the Exclusive Listing Period.

Properties in the Exclusive Listing Period are available for purchase by Owner Occupants, non-profit organizations, and government entities. The duration of this period will vary depending on the property’s FHA insurability.

If the property is being sold as Insured (IN) or Insured with Escrow (IE), the Exclusive Listing Period is 30 days. Bids received during the first 10 days are considered to be received simultaneously, and the initial bid review is on the 11th day of the Exclusive Listing Period. If there is no winning bid, bids continue to be reviewed on a daily basis (Monday through Saturday) until the 30-day period ends.

If the property is Uninsured (UI) or Uninsured 203(k) eligible (UK), the Exclusive Listing Period is five (5) days. Bids received during these five (5) days are considered as though they are received simultaneously, and are not opened until the 6th day of the Exclusive Listing Period.

How do I get access to show the property?

Please contact a Real Estate Agent of your choice that is HUD registered. If you are not working with a Real Estate Agent, please contact the Listing Agent for more information.

How can I cancel my Bid?

If you are awarded a property either by Lottery or General List, and you cannot complete the transaction, you will need to submit the Electronic Bid Cancellation form printed on your Broker’s letterhead. The cancellation form can be found in the forms section of this website.

What is FHA financing?

There are three main types of FHA Financing. More information may be obtained from any mortgage company familiar with FHA Guidelines for the various programs. (1) 203(b) Regular FHA Loan – Listed as “IN” • If the Property does not have any mandatory repairs FHA will ensure the Loan hence the classification of “IN” (2) 203((b) – Repair Escrow – Listed as “IE” • When a property has less than $5000 in repairs to bring it up to Minimum Property Standards, FHA will insure the loan provided the repairs are completed by the Buyer or the Buyer’s agent within 90 days from the date of Closing. • It is a cost to the Buyer that the Buyer can finance and add the amount to the mortgage. • The Lender monitors and keeps the funds in an escrow account for disbursement on completion of repairs to the Lender’s satisfaction. (3) 203(k) – Rehab Loan – Listed as “203K ” • When the property has more than $5000 in Minimum Property Standards repairs to be done. • The Lender must obtain an Inspection report from an approved 203(k) consultant and a new appraisal.

How is the repair escrow amount determined?

The FHA appraiser lists the estimated cost of repairs needed to bring the property up to minimum FHA standards. This amount is then multiplied by 110% and this amount is listed as the repair escrow amount. Example: if repairs total 1,000.00 x 110% = 1,100.00. The Repair Escrow amount will be listed at $1,100.00.

How do I determine the mortgage amount when there is a repair escrow?<

The DE Underwriter will determine the final 203(b) mortgage amount. The DE Underwriter will take into account the repair escrow amount to determine the FHA loan amount. The DE underwriter will determine this amount. Regardless of whether or not a repair escrow will be used in the purchase of a home, the lines on the Sales Contract that request the down payment amount and the secured mortgage amount should be filled in “TBD” (To Be Determined). The line associated with the length of the loan should also be filled in TBD. Please remember that the repair escrow amount needs to be filled in only if the buyer is using 203(b) repair escrow financing.

Will HUD pay for any closing costs?

HUD will allow closing costs to be deducted from its proceeds, purchaser financing and closing costs that are considered to be reasonable and customary in the jurisdiction where the property is located. In no event may these costs exceed 3% of the property’s gross purchase price. Please reference HUD Notice H2006 -12 for additional information. Please refer to page 2 of your state/regional Forfeiture and Extension Policy for a list of the closing costs that will automatically be paid by HUD and other closing costs that may be paid by HUD.

Why do I have to get a Pre-Qualification Letter before I bid?

A Pre-Qualification Letter must be obtained prior to bidding on a property. This is to avoid having to tie up the property with a transaction that is unlikely to close. The Pre-Qualification letter must be directly from the lender (NOT the mortgage broker) giving a current date and an amount of the loan that is acceptable. It should also include the name the buyer(s) whose credit report was reviewed and approved by the lender.

How long do I have to close? What if I need more time?
Sales transactions shall close within the timeframe as specified on your state/regional Forfeiture and Extension Policy (Addendum A, Rev 11-13-06). Closing timeframes are: (California and Georgia=45 days*); (Hawaii, Guam, Northern Marianas=60 days). Properties may close in less than the timeframe specified. However, the number of days specified above for your state/regional area MUST be entered on the HUD Sales Contract. If closing does not occur within the timeframe then extension fees will apply. The Broker must submit a written request for an extension regardless of the reason for the delay in closing. The Extension Request Form can be found in the forms section of this website and must be accompanied by the extension fee.