In order to help first time buyers and low-to-moderate income families to avail loans from lenders to purchase homes, the Housing and Urban Development department (HUD) has a mortgage insurance program called the the Federal Housing Administration (FHA) in place.

A HUD home is a property acquired by the Housing and Urban Development department (HUD) following foreclosure action resulting from a homeowner defaulting on an FHA-insured mortgage. As such, it becomes part of the HUD inventory and is sold on through a bidding process conducted by HUD brokers (usually a licensed real estate agents) to recover the loss incurred by the HUD on the foreclosure claim.

HUD brokers will not charge you a fee for their service as the fee is usually paid for by the HUD.

HUD homes are usually available at the rate of their defaulted loans, making them a bargain as they are below comparable market value.

However, some HUD homes may show signs of neglect and damage as previous owners tend not to care for them once they know they will be losing the property. The HUD may in some instances provide financial assistance to cover repairs in a bid to have the homes occupied quickly. And in some cases, once an offer is made and accepted, you can go to closing in as little as 30 to 60 days.

Usually HUD homes are not open to investment purposes and are aimed only for people who intend to live in them. However, if no owner-occupant purchasers bid on the property, they became open to bids by property investors.

For those interested in buying HUD homes, the best way to find homes for sale is by visiting the official website where the homes are classified according to location. You can also buy a list of HUD homes for sale from some componies that make these available to investors but you should make sure that such lists are not outdated as they may include homes which have already been sold.

If you are an investor, always make sure that any HUD homes you are interested in are not targeted by owner-occupant purchasers as they are usually prefered to investors.