The U.S. Department of Housing and Urban Development (HUD) oversees the administration of affordable housing in conjunction with state and local governments around the country. HUD has numerous programs to help prospective homeowners navigate the buying process, many of which are centered on financial assistance with this process. One of the more popular HUD initiatives is the $100 down program.
The HUD $100 down payment program is an incentive to get people to purchase a home using Federal Housing Administration (FHA) financing. These are previously foreclosed-upon homes that HUD is trying to re-sell at a value to those that meet the program's qualifications. To qualify, you must use FHA financing and be purchasing the property for you to live in. The purchase price of the home must be equal to or less than the appraised value of the home, according to the HUD Home Expert website.
The obvious benefit to this program is the fact that you can pay a $100 down payment on a home. Because 100-percent financing is no longer a reality for many traditional forms of financing after the U.S. financial collapse of 2008 to 2009, this allows homeowners without thousands of dollars for a down payment a chance to purchase a home. Moreover, because these are foreclosure properties, the overall sale price is more reasonable than it might be on a non-HUD home.
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Participating in the HUD $100 program means that you are forced to use FHA financing; this eliminates the possibility to shopping around for better loan terms. Moreover, you are getting a foreclosure home, which means that you generally get it as-is. You may have to sink more money into fixes around the property, which is not something you have to deal with when you purchase a recently vacated home.
This may seem too good to be true for those homeowners that want to purchase a home but don't have the funds for a down payment. However, you must qualify to even participate in this program. Do your research and make sure that you are getting the best possible deal for your individual financial situation. Depending on your credit, you still may be able to get 100-percent financing from your bank, which is an avenue worth exploring.