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What is a HUD home?

What is a HUD home?

What does it mean to buy a HUD home?  How is it different from purchasing a “regular” house?  Is it different from buying a different kind of foreclosure? These are questions that I get quite frequently. The answer is: yes, it is different.

HUD stands for The Department of Housing and Urban Development, a department of the U.S. Federal government. This department does many things, one of which is provide insurance on certain mortgages. These mortgages are called FHA (Federal Housing Administration) loans when they have this insurance. When a home is FHA insured and it forecloses it will go back to the lending back like other foreclosures, but then the bank turns it over to HUD to collect on their insurance. HUD then takes ownership of the home and is responsible for selling it. This is what we refer to as a HUD home. It is a foreclosed home where the previous homeowner had FHA insurance on their loan.

Purchasing a HUD home is different than purchasing other types of foreclosures. Typically banks work with asset managers that assign foreclosed homes to REALTORS® to market and then any offers received are presented to the listing agent who sends them on to the asset manager to make a decision on. With a HUD home there is an asset manager and there is a listing REALTOR® but offers go to HUD through their a bid made through the buyer’s agent onto the HUD website which is Although you need to be a registered agent to submit an offer, the public may look at this sight to search for available homes, get a property condition report (PCR), and look at other pieces of information.

HUD homes are different, but if you’re working with an experienced agent who can guide you through the differences this can be a great opportunity for buyers to get a great value!