The program is back in some states including Louisiana! Due to the number of HUD homes currently on the market, HUD is now offering the $100 down payment program to owner occupants.
This can be an excellent program for buyers wanting to buy a home for themselves. But, this is a FHA loan so you need to be aware of the following items:
- If you are bidding over appraisal, you will need to come out of pocket the difference between the appraised price (which is usually the list price) and the final sales price. This would be above the $100 down payment and your closing costs! Most agents are not aware that the appraisal is a FHA and will stay with the home for 6 months.
- If there are any escrows for repairs, the escrow amount shown will be truly escrowed out of your pocket until the repairs are complete. So you need to have some additional cash flow! Once the repairs are completed AFTER closing, you should receive that money back.
In areas that are outside the city limits you may be better off utilizing a Rural Development loan, if that is an option for you. You just need for your loan officer to compare the two loans and decide which one is better in your situation.
So in the end.....
If you are an owner occupant buying the home for the list price and there are no repair escrows than this is a great opportunity to buy a home!
Obviously the home-buyer will still need to qualify for an FHA loan. My hope is that this program would 'free' up cash for the home-buyer to purchase items for their new home such as furniture, appliances etc. to help stimulate the local economy!
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