HUD $100 Down Program

On a $240,000 HUD-owned home in Fayetteville, a standard FHA loan would require a 3.5% down payment of $8,400. With the HUD $100 Down Program, that entire amount drops to just $100, saving the buyer $8,300 upfront. The buyer will also need to submit an earnest money deposit of 1% of the sale price (up to $2,000), which is applied toward the purchase at closing.

Estimated closing costs in Fayetteville run $5,000 to $7,000. HUD may pay up to 3% of the purchase price toward buyer closing costs, which on a $240,000 home equals $7,200. If HUD covers the full 3%, the buyer could potentially have closing costs fully covered by the seller. FHA also charges a 1.75% upfront mortgage insurance premium ($4,200 on this purchase), but that can be financed into the loan rather than paid out of pocket.

Keep in mind that HUD homes are sold as-is, so the purchase price is often below the area median. A HUD-owned home listed at $180,000 would require only $100 down and the earnest money deposit, with HUD potentially covering up to $5,400 in closing costs, making the total out-of-pocket cost as low as a few hundred dollars.

The HUD $100 Down Program uses FHA financing, which means it can be combined with many state and local down payment assistance programs that are compatible with FHA loans. In North Carolina, the NC 1st Home Advantage Down Payment ($15,000 forgivable loan) and the NC Home Advantage Mortgage's standard assistance (up to 3% of the loan amount as a deferred loan) both work with FHA first mortgages, though a buyer can use only one of the two. Since the HUD $100 Down Program already reduces the down payment to $100, the primary benefit of stacking DPA is to cover closing costs rather than the down payment itself.

FHLBA programs like the First Time Homebuyer Product ($17,500 forgivable) and Community Partners Product ($20,000 forgivable) may also be available depending on your lender, and these can offset closing costs that HUD does not cover. Some programs have purchase price or income limits that could restrict eligibility depending on the HUD home you are purchasing.

The most practical stacking approach is to combine the $100 down benefit with a closing cost assistance program. A buyer pairing the $100 down with $15,000 from NC 1st Home Advantage could potentially walk into the home with virtually no out-of-pocket expense, assuming the property meets all program requirements and the buyer qualifies for both programs.

The HUD $100 Down Program offers one of the lowest entry costs of any home purchase option in the country. With just $100 down and the potential for HUD to cover up to 3% of closing costs, a buyer could move into a home with less than $1,000 out of pocket. There are no income limits and no first-time buyer requirement, which makes this accessible to a wider range of buyers than income-restricted programs like HomeReady or USDA loans. The program is available nationwide wherever HUD-owned properties are listed.

The biggest limitation is inventory. You can only use this program on HUD-owned foreclosure properties, and the selection in any given area may be limited or in poor condition. HUD homes are sold as-is, so buyers must be prepared for potential repair costs that could offset the savings on the down payment. Full-price offers are required for the $100 down incentive, which means no negotiating on price. Buyers looking for move-in ready homes with more choices should consider FHA loans with standard 3.5% down, HomeReady (3% down with cancellable PMI), or USDA loans (0% down) if purchasing in a rural-eligible area.