Answer

Yes, FHA lenders may use various marketing tools to help sell FHA/HUD Real Estate Owned (REO) Properties.

One of these allows HUD to sell single-family homes are HUD REO Properties to FHA-qualified buyers with a minimum down payment of $100.

ELIGIBLE FINANCING COSTS
The cost of the Upfront Mortgage Insurance Premium (UFMIP) may be financed in the FHA loan provided the total loan amount (including UFMIP) does not exceed 100 % of the property as is' appraised value.

INELIGIBLE FINANCING COSTS
Prepaid expenses and closing costs may not be financed in the FHA loan.

Example:
Current appraised value: $100,000. After 90 days, FHA reduces the listing price of the unsold unit to $90,000. FHA accepts a bid for $95,000. The buyer qualifies for FHA financing and the $100 down payment program. Closing costs and prepaid expense = $2,375 & UFMIP is $949 (1% of $94,900). The maximum FHA loan amount is $95,849 ($94,900 + $949). Cash required is $2,475 ($100 down payment + $2,375).

Such sales initiatives may be available for certain properties located within the HUD Atlanta Homeownership Center jurisdiction (Alabama, Florida, Georgia, Kentucky, Illinois, Indiana, Mississippi, North Carolina, South Carolina, and Tennessee)

Note: This does not impact FHA financing policies and requirements for the Good Neighbor Next Door (GNND) Program, which are governed by Mortgagee Letter 00-27, "Appraising and Financing HUD Real Estate Owned (REO) Properties with FHA-Insured Financing Single Family Loan Production.


For more information about buying a HUD home and to determine the sales incentives that HUD may be offering in your area please visit http://www.HUD.GOV/HUDHomes