A Federal Housing Administration (FHA) loan is one requiring only 3.5% down, insured from default by HUD (Housing and Urban Development). Your total housing expenses and monthly debt cannot exceed 41% of your gross monthly income. But the down payment can be borrowed funds or a gift. It is accompanied with mortgage insurance from the government and you will have two mortgage insurance payment amounts on your loan: an upfront fee and a monthly fee until the loan hits 20% down OR you refinance to a new conventional loan.
If an FHA loan goes “bad” or is foreclosed, HUD then buys out the underlying lender, and puts the home on the market to resell. This is where a HUD home comes from when you are buying.
For more information on HUD homes, visit HUD’S website at: http://portal.hud.gov/hudportal/HUD
If you are interested in buying a HUD home visit www.Hudhomestore.com for current homes for sale and be sure you are working with a HUD approved REALTOR, which we are!