Financing HUD Homes

3 financing options for a buyer to purchase Arizona HUD homes:

FHA Financing, Conventional Financing, or Cash are all acceptable payment methods for purchasing government foreclosures.  A pre-qualification letter from a lender or proof of cash funds is due two days after acceptance, so be sure you are have one or the other prior to making an offer on a HUD home.  The bidding is online, but the written purchase contract (the offer) must be turned in within 2 days.

1. Conventional financing- any non-FHA financing including VA.

2. There are 3 types of FHA financing:

  • IN – Insurable – 203(b)
    • Properties listed “IN” qualify for FHA 203(b) loans.  When a HUD home is listed as “IN” it means that there does not need to be any repairs made in order to allow the loan to be FHA insured.  This means that the condition of the property is compliant. When you start looking at the list of Arizona HUD homes you will understand exactly what I mean.  “IN” is stated right there on the listing information.
  • IE – Insurable with Escrow – 203(b) Repair Escrow
    • Properties listed “IE” are eligible for FHA financing with repairs to be completed by the purchaser after the close of escrow. These repairs must be made to meet the Minimum Property Standard (MPS). These repairs total less than $5,000. MPS Categories include; roof, structure, and mechanical systems, such as plumbing, electric, and heating. A listing posted inside the property will indicate actual repair amounts.
    • The cost for the repairs is not paid by HUD; however, the buyer may finance the repair escrow amount in their mortgage. The lender is responsible for inspections of the repairs and authorizing release of funds.
    • REPAIR ESCROW ONLY APPLIES TO FHA FINANCING – not cash or conventional transactions.
  • UI – Uninsurable – Conventional, Cash, or 203(k)
      Properties listed UI generally are in need of extensive repairs. These properties are usually purchased with cash or conventional financing. The only type of FHA financing they may qualify for is a FHA 203(k) loan. 203K FHA financing is a rehabilitation loan for owner occupants purchasing properties that need more than $5,000 worth of repairs to meet Minimum Property Standards. Not all “UI” properties will qualify for FHA 203(k) financing.

The Queen of HUD
(480) 206-6425
Realty One Group
4041 S. McClintock Rd Ste 310
Tempe, AZ 85282


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