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Buying a HUD home: first-time homebuyer program

If you are thinking of buying a HUD home, the first-time homebuyer programs offer you ways to lower your interest rate and get a low down payment.

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Buying a HUD home first time buyerWhen you are ready to buy a home, the U.S. Department of Housing and Urban Development (HUD) offers federal home-buying programs, assistance and loans insured by the Federal Housing Administration. It also resells foreclosed homes that had government-backed loans. Whether you want to buy in a traditional sale or buy a HUD home, you may qualify for the first-time home buyer program.

FHA loans

If you want to apply for an FHA loan, HUD doesn't have many restrictions on the type of home that you can buy. You can buy a single-family house, a mobile home or manufactured home or a multi-family complex. First-time buyer requirements stipulate that the property you buy must be used as your primary residence.

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FHA's first-time homebuyer programs can help you lower your mortgage interest rate and get a down payment as low as 3.5 percent. You may also qualify for grants that pay your down payment, closing costs or other home-buying fees.

HUD homes

The best thing about HUD programs is that you have multiple buying options. With HUD, you can even buy foreclosed homes. These foreclosed properties often provide a good bargain, because the asking price is typically below market value. HUD has a portfolio of foreclosed homes you can view online. First-time homebuyers are given priority during the auction process.

When you are ready to buy a first home, your biggest concerns may be getting a mortgage at a good interest rate. If you are buying a HUD home, first-time buyer programs backed by the FHA are available through many lenders. This mortgage insurance guarantees your loan. If you fall behind on your mortgage payments and the lender forecloses on your home, the mortgage insurance pays the lender what you owe. HUD then owns your former property. This is why HUD has foreclosed properties for sale.

HUD help

As a first-time homebuyer, you can also buy homes in need of rehabilitation with an FHA loan. Many foreclosed homes on the market are available for a low cost because they are in disrepair. If you want to buy a fixer upper and make the repairs, you may qualify for a FHA 203(k) loan. The repair costs are added to the mortgage rather than you paying out-of-pocket.

HUD and FHA offer a multitude of loan programs, educational tools, grants and personal housing counseling. Because there are so many options, you should talk to a HUD housing counselor in your state about the many options for you.

The federal government wants to help you become a homeowner, especially if you want to buy a first home. There is much to learn about buying a home, especially buying a HUD home. First-time buyer programs can make owning a home a reality. If you want to shop free property listings, or find a real estate agent to help you, go to Reply!

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About the Author

Larque Goodson is an real estate editor at Reply! She has 20 years of experience in photojournalism and marketing. To share ideas about real estate, find her on Google+.