The FHA $100 Down mortgage program offers individuals lacking sufficient funds an opportunity to afford a home or a down payment for one. This initiative is for properties owned by the Department of Housing and Urban Development (HUD), allowing buyers to make a minimal $100 down payment. Potential homebuyers should search for available HUD properties online and offline and filter out listings that do not meet their requirements before proceeding with the purchase.
About the FHA $100 Down Program
The program was established to remove a few barriers individuals face when pursuing home ownership. The FHA $100 Down program also streamlines the process of buying HUD homes, which are foreclosed properties with one to four units owned by the Department of Housing and Urban Development. When homeowners finance their properties with home loans insured by FHA, the ownership of the property is transferred to the HUD on foreclosure.
Almost anyone is eligible to purchase a HUD-owned home. That said, people who plan to live in the home are prioritized over investors and other buyers. When the property is first made available on the market, it will be open only for owners and occupants to bid on. When planning to purchase the property, people who intend to occupy it as their primary home can also make use of the FHA $100 Down program.
The initiative allows buyers to make a down payment of just $100 for the house, which is significantly lower than the standard 3.5% down payment on purchase costs set by the Federal Housing Administration (FHA). The program opens up a rare opportunity for people to purchase homes that they might otherwise be unable to afford.
Basic requirements
Buyers or potential homeowners can avail of the $100 Down mortgage program only upon purchasing HUD homes. The program does not provide the same benefit for people looking to rent or simply make an investment. The program is valid for condos, 1–4 unit homes, PUDs, and manufactured homes. Homeowners must sign up for 10,15, 20, 25, or 30 years of the loan term to be eligible for the program. They also need to make sure that the $100 incentive payment is included in the sales contract that is finalized and executed.
Benefits
1. Lower expenses
A key benefit of the $100 Down mortgage program is the low out-of-pocket costs for homeowners. The program enables potential home buyers to go ahead with the purchase without setting aside large amounts towards the house’s downpayment and other legal documentation. Additionally, they are not required to prove to the bank or credit unions that they have money saved up that will help their affordability. That said, individuals should remember that they must meet the standard income requirements to be eligible for bidding, loan application, and property purchase.
2. Combination with other programs
Foreclosed properties often need significant repairs, which can add to the expenses for buyers and potentially become a substantial financial setback. In most cases, people who are looking to buy foreclosed houses to use them as primary residences do not have such an amount sitting in their accounts. They might not have access to extensive funds to fix their newly purchased home. This can be a setback, as the property sale might not go through if the place does not meet the FHA standards for safety and health.
In such scenarios, buyers can use more than one FHA program. If they cannot afford the repair costs, they can apply for the FHA 203(k) loan in conjunction with the FHA $100 Down mortgage payment. Alternatively, the latter can also be used in combination with the FHA 203(b) Repair Escrow. Both these programs financially assist potential buyers in paying for the house purchase, upgrades, and repairs.
Eligibility
To be eligible for the FHA program, one should intend to use the purchased property as their primary residence. Additionally, the program also requires one to submit a full-price offer. When applying for the program, one should know they are only eligible for the benefit if they have not purchased any other HUD properties in the preceding 24 months. The organization also needs buyers to have a minimum FICO score of 580 points to avail of the benefits offered by the program. Other eligibility requirements involve the potential homeowner meeting the standard minimum property, asset, and income requirements set by the FHA.
The FHA $100 Down program assists aspiring homeowners in making their dream of purchasing a home a reality with minimal upfront costs. Besides simplifying the purchasing process, this initiative offers a strategic advantage to individuals committed to making a HUD property their primary home.
