Break out your swear jar, piggy bank, cash back rewards, or wherever it is that you might have $100 kicking around — you could use it to put a down payment on a home, provided you aren’t that picky.

The Department of Housing and Urban Development is taking a more aggressive stance on turning around housing prices, and you could benefit. While the program isn’t new, it isn’t widely known about, and it has just recently expanded to Georgia, Florida, Illinois, Indiana, New Mexico and Texas.

hui-buh / PHOTOCASE source

How It Works

For just a $100 down payment, you could be approved to purchase a HUD-owned foreclosed property, provided that you use it as your primary residence, and get your financing through a Federal Housing Authority-approved lender. HUD wants to get this shadow inventory of foreclosed homes moving, so they’re offering steep discounts on upfront home buying costs.

Interested parties can use HUD’s Home Store to find home listings in qualifying states. Then, a real estate agent must make a bid online. Should the bid be accepted, you only need to find an FHA-approved lender and $100 down to finance the purchase. One caveat here: your bid must be, at minimum, the asking price of the home — no haggling. HUD, after all, is trying to get their money back on these homes.

When a home purchased with an FHA-insured mortgage is foreclosed on, HUD becomes the receiver. Like any other lender, they put the house back on the market in an attempt to recoup the capital lost through the foreclosure. Previously, HUD required a 3.5% down payment on HUD home purchases. While that was generous — even in the good old days, 10% down was standard — $100 is practically no money down.

And if the home happens to be damaged, which seems likely, you can get financing with HUD’s 203(k) program, which helps finance repairs to a new home purchase, and bundles those costs into the mortgage all in one step. Instead of buying a new home only to turn around and apply for a home equity loan to finance necessary repairs — which often have steep rates — the 203(k) allows repair costs to be financed and amortized along with the rest of the debt.

HUD Expands Program into Hard-Hit States

By bringing the program to Florida, Illinois, and Georgia, HUD adds some of the areas hardest hit by the foreclosure crisis. The $100 home program has already been operating in Arkansas, Colorado, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Utah, Wisconsin, and Wyoming.

Notably, California, Arizona and Nevada, the three worst hit states, are not eligible for the program. The special $100 down payment program will be in effect through October 2012.

Did you enjoy this article? Yes No
Oops! What was wrong? Please let us know.

Ask a Question

  • Laura Huchzermeyer

    Very interesting program. I wonder why it hasn’t gotten more attention?

  • Marilyn Brier

    Sounds almost like how I bought my first home when the Savings & Loan crisis hit. Only back then it was called “Sweat Equity” program and  you didn’t  have to pay any down payment. Instead, the Bank Owned Home payed you to fix  it up,  and that went towards the down payment. That first little fixer has leveraged itself into 5 other home purchases since! None of them are currently under water. Big dreams start  with small steps! I highly recommend this as a way to buy your “first” investment!