When someone with a mortgage insured by the Federal Housing Administration defaults on the loan agreement and the lender forecloses on the property, FHA pays the lender the amount owed on the loan.
Then the U.S. Department of Housing and Urban Development, which administers FHA programs, takes ownership of the property. The property becomes a HUD home.
Because HUD is not in the business of owning homes, FHA developed, in November 2007, an incentive program that allows a qualified buyer to purchase a HUD-owned property for only $100 down.
Standard FHA-insured loans require a minimum of 3.5 percent down payment, and conventional programs require at least 5 percent. However, if you are willing to purchase a HUD home, you can do so with as little as $100 down.
This is a government program of course, meaning some strings are attached, as well as some other points to keep in mind when considering this option.
FHA was formed in 1934 to help people living in the Depression era buy a home. One of the primary goals of this organization has consistently been to make homeownership available to working middle class America.
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