HUD $100 Down Payment Home Purchase Program

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HUD $100 Down Payment Home Purchase Program

This ARTICLE On The HUD $100 Down Payment Home Purchase Program Was PUBLISHED On October 14th, 2019

What is the HUD $100 Down Payment Home Purchase Program

HUD $100 Down Payment Home Purchase Program On FHA Loans:

BREAKING NEWS: FHA HUD REO $100 DOWN PROGRAM IS NOW AVAILABLE FOR HUD REO PROPERTIES:

  • Specialty loan programs are constantly being announced through major mortgage agencies such as FANNIE MAE, FREDDIE MAC, and HUD (U.S. Department of Housing and Urban Development)
  • Gustan Cho Associates is excited to offer these programs to our clients
  • In this blog, we will detail the $100 Down Payment program offered by the FHA, a few new updates to the program, and how to apply for the $100 down payment loan

In this article, we will cover the HUD $100 Down Payment Home Purchase Program on REOs.

HUD Launches HUD $100 Down Payment For Home Buyers

Why HUD Launches HUD $100 Down Payment For Home Buyers

Housing and Urban Development have recently created a specialty FHA mortgage.

  • This product only requires a $100 down payment and is designed to remove barriers for homeownership
  • It makes it easier to purchase HUD-owned homes

A HUD owned home means, a one to four-unit property currently owned by the U.S. Department of Housing and Urban Development, acquired through foreclosures.

Buying HUD Foreclosed Homes With HUD $100 Down Payment

What that's mean Buying HUD Foreclosed Homes With HUD $100 Down Payment

If the previous owner had the property financed with an FHA-insured home loan, the foreclosure proceedings transfer ownership to Housing and Urban Development (HUD).

  • Anybody can purchase these properties, including investors
  • Priority is given to those who live in the property as a primary residence
  • When the home first becomes available there is a time where only owner-occupant home buyers can bid on the listing

You may only utilize the $100 down payment mortgage program if you plan to utilize this as your primary residence.

HUD $100 Down Payment Loan Program Is For Primary Residence Buyers Only

Why HUD $100 Down Payment Loan Program Is For Primary Residence Buyers Only

Strict occupancy requirements must be met.

  • Meaning if you are an investor, you will not be able to utilize the $100 down payment program
  • The $100 down payment may only be used to purchase a HUD-owned property
  • Typically, you need 3.5% as a down payment
  • However, the $100 down payment option opens up homeownership opportunities for many consumers who might not otherwise be able to afford the property
  • This program is put in place to protect communities
  • Vacant and abandoned properties tend to have a negative impact on a neighborhood, potentially lowering property values

These $100 down payment homes are meant to sell quickly. 

Eligibility Requirements On HUD $100 Down Payment Mortgage Program

What are Eligibility Requirements On HUD $100 Down Payment Mortgage Program

A few basics of the $100 down payment FHA mortgage:

  • May only be utilized to purchase a home, no refinance options available
  • Loan terms are available in 10, 15, 20, 25, and 30-year fixed-rate mortgages
  • There are also 5/1 hybrid arm options available
  • Check with your licensed loan officer to compare the fixed-rate pricing compared to the ADJUSTABLE-RATE option
  • Eligible property types include one to two-unit homes, manufactured homes, condos, and PUDs (Planned Urban Developments)

Benefits Of FHA Loans And The DPA HUD Program

What are Benefits Of FHA Loans And The DPA HUD Program

Benefits of the $100 down payment program:

  • Low out-of-pocket expenses
  • FHA mortgages, in general, have low out-of-pocket expenses as they only require a 3.5% down payment, this program has an even lower out-of-pocket expense
  • This is because it only requires a $100 down payment
  • Lowering the upfront costs means buyers DO NOT have to have large amounts of capital to qualify for the purchase
  • You are still required to meet income qualifications and pass the ability-to-repay qualifications
  • The ability to combine the $100 down payment with an FHA 203(k) mortgage
  • That’s right, you can combine this program to complete necessary repairs
  • It is common for foreclosed properties to be in need of repair
  • This option allows you to finance both the purchase price and the cost of the repairs, updates, or renovations into one mortgage loan

Who Can Qualify To Use The HUD $100 Down Payment Loan Program

Who Can Qualify To Use The HUD $100 Down Payment Loan Program

Who can use the FHA $100 down payment loan? 

Any qualified borrower is eligible to use this program assuming they are buying a HUD-owned property. Few additional requirements:

  • The borrower must submit a full price offer, these homes are priced to sell
  • Negotiations are not accepted
  • And not have purchased a HUD owned property within the past 24 months
  • Must have a 580 credit score or higher
  • Borrowers must meet all FHA income and asset requirements
  • All properties must meet the FHA Minimum Property Standards requirements outlined in the HUD 4001.1 HANDBOOK
  • If the property will not meet these requirements, you will need to use the FHA 203 (k) loan

UPDATES On FHA Mortgage Guidelines

What are UPDATES On FHA Mortgage Guidelines

Update to the $100 down payment program:

  • HUD has updated the Good Neighbor Next Door Loan program to eligible individuals and can now be combined with the $100 down payment
  • This update allows up to 50% off the purchase price of a HUD-owned property for all law enforcement, teachers, firefighters, and EMTs
  • These employees must be full-time employees of a local, state, or federal agency
  • Any qualified “Good Neighbor Next Door can purchase a HUD owned home for up to 50% off!

This program can still be combined with the FHA 203 (k) loan. 

Applying For The $100 Down Payment FHA Loan Program

How Applying For The $100 Down Payment FHA Loan Program

How to apply for the FHA $100 down payment loan? 

The process is IDENTICAL to applying for an FHA loan.

  • You will First call Mike Gracz at Gustan Cho Associates
  • You can call Mike Gracz directly on 630-659-7644 or email mgracz@gustancho.com
  • Mike will go over qualifications with you and send you to a licensed loan officer

Documents Required To Kickstart Mortgage Process

What are Documents Required To Kickstart Mortgage Process

Your loan officer will send you an application link and you will send in the following documents:

  • Last 60 Days Bank Statements – to source down payment
  • Last 30 Days Pay Stubs
  • Last Two Years W2’S
  • Last Two Years Tax Returns (NOT ALWAYS NEEDED)
  • Driver’s License

Next step, your loan officer will go over specific qualifications and send you a pre-approval letter. This will allow you to shop any HUD owned home based on your qualifications. 

Learn More About The Low Down Payment Mortgage Program By HUD

How Learn More About The Low Down Payment Mortgage Program By HUD

As you can see the U.S. Department of Housing and Urban Development has added this amazing $100 down payment program. It is important to have communities functioning on all cylinders, so programs like this to get foreclosed properties off the market quickly are highly effective. This is an amazing opportunity to buy a home with minimal out of pocket expense. Please call us today to get pre-approved to buy a HUD-owned property. We are available seven days a week for all your mortgage needs. Call Mike Gracz on 630-659-7644 today!

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