HUD homes are homes acquired by the U.S. Department of Housing and Urban Development. The properties range from single family residences to condos and are often in a state of disrepair or require a little elbow grease to spruce up the home. When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then they sell it at market value as quickly as possible. HUD sells properties at reduced prices that you might want to buy. A borrower must have a minimum credit score of 620 to qualify for all conforming HUD loans.

Before you begin the search for your new HUD home, it is important that you have a plan how you will finance it. Not only is this a sensible business strategy, but also HUD requires that you be pre-approved HUD loans before you may bid on a home. HUD doesn't make loans directly. But we do have a number of mortgage insurance programs that could help you buy a home. You contact a HUD loans lender, who will take you through the steps and actually make the loan. It is important for you to know what a lender will require when qualifying for a HUD loans. These guidelines not only inform you of the expectations from a loan officer, but also empower you to analyze yourself and your financial picture before the process begins.

• Credit History: A borrower must demonstrate a good to excellent repayment history of all debts. FHA and VA do not have credit score requirements.
• Employment: A borrower must show a history of stable income. Self-employed or commission income borrowers must average the last two year’s adjusted gross income from their federal tax returns.
• Down payment: Generally a borrower must have a minimum of 5% down on a purchase that can be verified from acceptable sources.
• Documentation: For salaried borrowers, documentation includes: W-2 forms from all employers for past two years, recent pay stubs for 1 month, bank statements for all accounts for past 3 months, current account statement for all investment accounts.

Before searching for the right home to purchase, it is important that you have a sound financial road map planned out. Not only is this a sensible business strategy but HUD requires that you must be pre-approved before bidding on a HUD home. Trying to shuffle through the maze of HUD loans program can be outright confusing. Ask yourself, are there any advantages of a 30 year loan versus a 15 year loan? Why would anyone choose an adjustable rate mortgage over a fixed rate mortgage? Knowing what a lender will require when qualifying for a hud loans not only informs you of the expectations from a loan officer but empowers you to analyze yourself and your financial picture before the process begins.