Get a Foreclosed Home for $100 Down

NEW YORK (MainStreet) -- Got $100?

That's enough for the Department of Housing and Urban Development to approve you to buy a new foreclosed home.
A HUD program allows certain consumers from eligible states to buy a foreclosed home with a mere $100 down payment.

The deal isn't good for everyone -- just certain states are green-lit for the program -- but the $100 down payment is a clear sign that the federal government is getting aggressive, maybe even desperate, to unload the foreclosed properties. Insiders say the government is bracing for a new wave of foreclosed homes that were owned by Countrywide Mortgage, which was bought out by Bank of America ( BAC). That alone could mean up to 40,000 new foreclosures on the market.

Here's the deal: From now until October 2012, consumers can plop down $100 and buy a HUD-owned foreclosed home (the previous minimum down payment amount was 3.5% of the home's assessed value). If you buy, you have to actually live in the residence (that's to discourage house flippers) and get financing for the home through the Federal Housing Administration.

There isn't necessarily a discount on the home purchase, though, as HUD says buyers have to pay the full current list price for the property. According to the HUD website there are three steps to the process:
  1. Find a HUD home for sale -- check the HUD Web site for eligible properties.
  2. Find a HUD-registered real estate agent.
  3. Find an FHA lender.

HUD will also make the $100 down payment eligible for the FHA 203(k) loan program, which allows borrowers to access FHA loans to repair and renovate run-down homes. A review of the HUD Web site doesn't reveal any strict rules on what actually constitutes a renovation, so homeowners may get wide latitude on funds borrowed under the 203(k) loan program.

The $100 down payment may be especially helpful to first-time homebuyers, a demographic the federal government wants to see in owner-occupied homes. But even if you're not a first-time homebuyer and are just short on cash, the HUD deal could be a great option worth considering.

Foreclosed homes owned by HUD in the following states are eligible for the $100 down-payment deal:
  • Arkansas
  • Colorado
  • Iowa
  • Kansas
  • Louisiana
  • Missouri
  • Minnesota
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Oklahoma
  • South Dakota
  • Texas
  • Wisconsin
  • Wyoming
  • Utah
  • Alabama
  • Florida
  • Georgia
  • Kentucky
  • Illinois
  • Indiana
  • Mississippi
  • North Carolina
  • South Carolina
  • Tennessee

You might be attracted to a foreclosure's low price, but if you live in a state where the deal isn't on, timing might be your best bet at scoring a deal. Check out MainStreet's look at 3 Signs Your Housing Market Hit Bottom to start planning your purchase.

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