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The US Department of Housing and Urban Development (HUD) assumes ownership of homes securing foreclosed FHA mortgage loans. You can find HUD homes online and may qualify for an FHA home loan.

Using an FHA Loan to Buy a HUD Home

When FHA home loans are foreclosed, mortgage lenders convey title to these homes to the US Department of Housing and Urban Development (HUD) once their claims for foreclosure losses have been paid by FHA. HUD hires property managers to evaluate each home's condition and perform a title search. Once this has been done, foreclosed homes owned by HUD are listed for sale throughout the US. FHA does not provide direct financing for purchasing HUD-owned homes, but it's easy to find FHA-approved lenders in your area.

FHA Rehabilitation Loans Can Fund Repairs

HUD-owned foreclosed homes may be sold as-is; having a HUD-owned home inspected by a certified home inspector before making a purchase offer is highly recommended. If you're interested in buying a home and repairing it, an FHA 203(k) loan can provide funds for purchasing the home and paying for repairs and renovation. Mortgage amounts for these loans are based on a home's estimated value after it's repaired. FHA-approved lenders can provide details about this type of FHA mortgage.

FHA Good Neighbor Next Door: Buy a HUD-owned Home at a Discount

Eligible buyers can take advantage of a 50% discount on HUD-owned homes located in HUD's designated revitalization areas. Eligible employment categories for buyers include:

  • Sworn law enforcement officers who work full time in the employ of state, federal, local, and tribal law enforcement agencies
  • Teachers employed full-time by an accredited pre-k through 12 schools; serving the area where the HUD home being purchased is located.
  • Firefighters and Emergency Medical Technicians (EMT) employed full time by a fire department or emergency response agency of a federal, state, local, or tribal government agency serving the area where the home being purchased is located.

FHA home loans and HUD homes can provide an affordable combination of benefits for first time buyers and others wishing to transition from renting to owning their own homes.


Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.