You Need To Understand The Listing Codes For Buying HUD Homes

HUD has many listing codes that you will need to understand when buying HUD Homes.

The first one is IN which means Insured.

All HUD homes properties listed as "INSURED" are eligible for FHA loan mortgage financing. These properties are eligible for insurance under Section 203(b) of the National Housing Act which is a straight FHA loan mortgage. It is also called a FHA 203(B). An interest rate will be charged on the loan and is negotiable between the purchaser and lender. The mortgage may include some mortgage insurance payments. The originating lender is responsible for making final determination whether a property meets Minimum Property Standards and, consequently, is eligible for FHA insurance.

The next code is IE which means Insured with Escrow Repairs.

This code means that are some repairs needed before you can get a FHA loan mortgage on the HUD homes.

Properties listed as "Insurable with Repair Escrow" are eligible for an FHA 203(b) insured loan. The lender making the new FHA loan mortgage establishes an escrow for the amount of the repairs which includes a 10% contingency, not to exceed $5,500. The identified repairs are required to meet FHA's "minimum property standard" (MPS) and the total repair costs should be equal to or less than $5,000. If a 203(b) FHA insured loan is used for financing, the repair escrow must be used for the needed work specified in the listing.

This code does not apply if you are buying HUD homes with a conventional loan or paying cash

Repairs must be accomplished within 90 days of closing and be monitored by an FHA lender. The lender will inspect work as it is completed on the house and distribute the repair monies as appropriate within ninety (90) days of closing. The costs of repairs are included in the loan amount and repaid by the borrower as part of the monthly payment.

Any funds in the escrow account not used for the repairs will be applied to reduce the unpaid principal balance of the loan.

The next code is UI which means Uninsured.

Properties listed as "UNINSURED" means that certain repairs and or improvements are required to be eligible for an FHA 203(k) mortgage when buying HUD homes. The required repairs on most of these properties exceed $5000.00.

Purchasers of these HUD homes have the option to purchase "as-is" with cash or conventional financing. These properties maybe eligible for a FHA 203(k) mortgage if the required repairs and or the improvements are completed in accordance with FHA guidelines.

This photo is an example of Indiana HUD homes. It is HUD homes Indianapolis. Indiana HUD homes range is price from $5,000 up to $200,000. I have sold a lot of HUD homes Indianapolis. As you can tell by this photo, there are some nice Indiana HUD homes.