Since the slowdown in the housing market years ago, options for 100% home financing have pretty much disappeared. In fact, today only a few home loan options in Georgia remain that allow NO down payment home financing – USDA and VA. USDA loans require the property to be located in a rural defined eligible area, so unless you are looking to live outside places like Atlanta, this option is not feasible.
VA loans are only reserved for past or present military homebuyers. But there is one other less known option for 100% financing here in Georgia, that program is the FHA-HUD $100 Down Program. Many buyers are not aware that FHA and HUD have a special 100 dollar down mortgage program, mainly because this is a specialty program that very few lenders and banks specialize in.
To begin, we need to discuss what exactly is a HUD owned property and how you find one. A HUD home is a house that has been foreclosed on that had homeowners that originally used an FHA mortgage to purchase the property. The homeowner could not make the payments for whatever reason, and the bank was forced to foreclose on the house.
HUD then reimburses the lender or bank for what is owed to the lender, and HUD takes ownership of the property. Once HUD takes back ownership, they will start to prepare the property for sale. It is then listed with a local HUD approved Real Estate Broker. This is when the property is made available to the public for bid!
Ok, now to the good part, the HUD 100 Down Payment Program. To be able to take advantage of this great program, you will have to use FHA financing to purchase the property. The normal down payment for an FHA home loan is 3.5% with a max 96.5% financing. The main reason HUD offers the $100 down payment program is to sell HUD foreclosed homes fast and quickly get owner occupant into the homes.
They believe people who own their home will take care of it better than a renter, thus improving the overall neighborhood. This program is only for homebuyers who are going to buy the homes to live in as a primary residence. Single family and eligible condos only, manufactured homes are not eligible. The HUD 100 down program is not for investors or vacation homes.
Properties that are being sold by other sellers are only eligible for the standard FHA loan, please note this. Georgia homebuyers can find a complete list of approved HUD owned homes in your area by clicking here.
Let’s discuss the benefits of the HUD 100 down program in Georgia:
- Flexible credit qualifying under normal FHA Guidelines.
- $100 down payment instead of the usual 3.5% minimum FHA requirement. Finance a property with FHA with nearly no down payment.
- Eligible for up to $5,000 in escrowed repairs.
- HUD can also pay buyers closing costs as part of the contract negotiations.
Even though buyers only have to pay $100 down payment, they will still need a good faith deposit to hold in escrow when their contract is taken. HUD requires a buyer to submit with the purchase contact earnest money of $1,000 if the purchase price is over $50,000 and $500 if the purchase price is under $50,000.
Important Program Notes:
- The minimum credit score requirement is currently 620+ with Coast 2 Coast Mortgage.
- Buyers will need to document sufficient stable income to support their monthly payment, just like a standard FHA mortgage. Housing payment (with taxes, mortgage insurance and home insurance) generally should not exceed 35% of your gross monthly income. Please find the FHA payment calculator on this page to understand realistic monthly payment amounts.
- The HUD 100 down program is strictly for HUD owned properties as stated above. Buyers that are interested in other properties (regardless of the seller) can contact us to learn about standard FHA loans and/or 100% down payment assistance programs that may be available in your area. Many of these programs allow eligible buyers 100% FHA financing nationwide.
- Please note this is not a government subsidy program, buyers will need to meet FHA qualifying guidelines and be able to support the monthly (PITI) housing expense.
Homebuyers that have questions about the HUD/FHA programs, or would like to start an application, please call us above, or just submit the Quick Request Form here. We serve home buyers throughout GA- including Atlanta, Valdosta, Albany, Columbus, Savannah, Thomasville and Macon.