From what I was told by a LO the other day, if you want a HUD home then an FHA loan is pretty much out of the question as he said most HUD home sellers want the closing done ASAP and will not wait 30-45 days for an FHA loan to be processed....this didn't sound right to me.
I guess it could be a case by case basis, but I do not see what the problem would be.
However, with HUD homes, does HUD contribute to the closing costs like a normal seller would in a traditional sale?
A HUD home is essentially a HUD REO property (a property that had an FHA loan on it that was foreclosed by the lender).
FHA will finance HUD homes. It could be that either your lender has a guideline where they won't finance HUD homes with FHA financing. Or your LO may be leery or what is the most common reason, your lender won't do a 203k type loan (the FHA rehab loan). Not many lenders do the 203k loans as they are more paperwork intensive and time intensive. Many of the HUD homes require rehab loans.
Have you only talked with the one LO or have you spoken to several? You might be better off working through a mortgage banker that specializes in 203k loans and the world of HUD homes will open up to you.
(Do a search for *FHA financing for HUD homes* and you will get a better explanation of the various types of financing available for HUD homes and FHA financing)
HUD does contribute to closing.
We purchased a HUD home with FHA, went fine. Our lender would not even consider trying a rehab loan, so the HUD homes that needed that we didn't look at.
What ARE the requirements for buying a "FORECLOSRE"? Can someone with a 640 with old collections & charge offs qualify if they qualify for an FHA Loan?
I also bought a HUD owned home using FHA. Mine was also an FHA foreclosure. FHA/HUD even provided an incentive to use an FHA loan with a $100 downpayment offer. This was just last Feb so not back in the crazy loan days.