Buy a Home for only $100 down?

Conventional loans require up to 20% for the down payment. Even FHA loans require 3.5% down payment. HUD has homes you can purchase with a $100 down payment.

What are HUD Homes?

A HUD home is a home that HUD owns as a result of foreclosing on an FHA loan.

These HUD homes are not the HUD homes of the past. FHA increased the loan limits to a high of $729,750 for Single Family homes and up to $1,403,400 for Four Family homes. As a result of higher loan limits, the inventory of homes includes more expensive properties.

The largest hurdle buyer’s face in purchasing a home is coming up with the down payment. The down payment for these HUD homes is $100. Everyone should be able to come up with $100 for a down payment.

There are some requirements you must meet in order to take advantage of the $100 down payment program. When someone with an FHA insured loan can’t make the payments, the lender forecloses on the home. FHA, as the insurer of the loan, pays the lender what is owed and then the United States Dept. of Housing and Urban Development (HUD) becomes the owner of the home

Who is Eligible to Buy HUD Homes?

Almost anyone can buy a HUD home. Any individual who can qualify for an FHA mortgage or who can pay cash may buy a HUD home.

Buyers must have a pre-qualification letter from a lender or proof of cash funds. HUD does not provide financing for the purchase of HUD homes. It is up to the buyer to procure financing through a bank or mortgage lender.

Priority is given to purchasers who are owner occupants. Owner-occupants must live in the house as their primary residence for at least one year and may not purchase another HUD home for two years

 Requirements:

1. HUD Foreclosed homes only.

2. Must use FHA financing.

3. Purchaser must be Owner - Occupant. You must sign a form at closing stating that you are going to live in the property and not use it as an investment such as a rental property.

Is news really news if it had already been anticipated? I'm referring to May's housing numbers, which everyone anticipated and which surprised few.  Existing home sales rose 12 percent compared to April's numbers.

Under more conventional circumstances I'd be tempted to break out the bubbly on such a bullish report, but we all know why home sales under contract spiked in April – impending expiration of the federal homebuyer tax credits.  The credits were a useful band-aid, to be sure, but they were no panacea.  They simply moved demand forward without aggregately increasing it, and they really moved it forward in April.

I'm even less tempted to break out the bubbly when vetting the latest national pricing data.  On that front, the Standard & Poor's/Case-Shiller home price index showed that prices of single-family homes were down 0.5 percent between February and March, the sixth consecutive month-over-month decline. Year-over-year prices are up 2.3 percent nationally.  Meanwhile, the median price on existing homes increased 4 percent to $173,100 in April while the median price on new homes tumbled 9.6% to $198,400, as those who took advantage of the tax credits did so with cheaper homes.

This isn't to say that I am discouraged.  I think the market is simply in a holding pattern at the moment, with inventory levels holding relatively steady at an 8-month supply on existing homes and at a 6-month supply on new homes.  Some reservation is understandable; no one is really sure how the housing market will react to standing on its own heading into the prime buying season.  I remain optimistic, because I think the data suggests it will keep moving forward.

Meanwhile, the refinance market remains robust, and why shouldn't it with rates on 30-year-fixed rate loans regularly found below 5 percent and rates on 15-year fixed-rate loans regularly found below 4.5 percent?  For many borrowers, it's an opportune time to save a lot of money over the long haul by refinancing to a 15-year loan from a 30-year loan.

Of course I'll warn once again that good deals don't last forever. The turmoil in Europe has helped push rates down a few basis points, but rumblings for change are emanating from the Federal Reserve.  Recent minutes of the latest Fed meeting show a growing number of its banks want to raise the rate charged to banks on emergency loans, which is a sign of confidence in the economic recovery.  It's worth remembering that as the economy improves, the opportunity to get a bargain-basement mortgage rate and home price decreases.