Table of Contents
What Closing Costs Does HUD Cover?
HUD will cover the following closing costs on a HUD Home transaction, according to HUD.gov:
- Prorated property taxes, HOA fees and utility bills
- Condominium or HOA transfer fee
- Cost to provide condominium documents to the buyer
- Repair escrow inspection fee of $200
- Recording fees and charges for the deed
- Overnight mailing fee for the Closing Disclosure
- State and local transfer taxes
There are additional closing costs HUD may help pay for, up to an amount that is equal to 3% of the purchase price; be sure to talk to your real estate agent about requesting these funds in your contract.
Will HUD Make Repairs?
No matter how your home inspection turns out, you won’t be able to negotiate with HUD to have any repairs completed. You also won’t be able to complete them yourself until you’ve closed on the home.
If you’re buying a HUD Home that needs extensive repairs, be certain that you can afford to make those repairs before agreeing to purchase the home.
How Much Of A Down Payment Is Required For A HUD House?
The amount of money you’ll need to put down on your HUD Home will depend on the type of loan you get, the lender you get it from and your own financial situation.
FHA loans allow some borrowers to put down just 3.5%, while some conventional loan borrowers can do 3%. In other cases, you may be required to put down a minimum of 5% or 10%. To avoid mortgage insurance on a conventional loan, you’ll need to put down 20%.
If you’re unsure whether you’ll be able to afford a full down payment, you might consider looking into your down payment assistance options. If you qualify for a VA or USDA loan, you may be able to get a mortgage with no down payment.
Do I Have To Offer A Deposit With My Bid?
An earnest money deposit is required for HUD Home transactions to show that you’re serious about purchasing the property.
Homes with a sales price of $50,000 or less require a deposit of $500. Homes that sell for more than $50,000 require a deposit between $500 – $2,000.
If an owner-occupant buyer fails to close on the transaction due to certain circumstances (such as job loss or death of an immediate family member), HUD will return 100% of the earnest money deposit.
If an owner-occupant buyer fails to close for a nonqualified reason, they forfeit the earnest money deposit. Investor buyers who are unable to close on the transaction also forfeit their deposit.
Is My Bid At HUD Auction Contingent On The Home Inspection?
If HUD accepts a bid you’ve made, you’ll have 15 days to conduct inspections and terminate the contract if an inspection reveals serious issues that were not previously disclosed.
If you meet these terms, you’ll still be able to request a refund on your earnest money deposit. If you terminate the contract outside of these terms, you’ll likely forfeit any earnest money you’ve put down.