What is a HUD home? When someone with a FHA (HUD) insured mortgage can't meet the payments, the lender forecloses on the home. FHA then pays the lender what is owed; and HUD takes ownership of the home. Then they sell it at market value as quickly as possible.

HUD uses an outside service to sell the homes via a auction format. Prior to making a bid you should be pre-approved for a FHA loan and will typically need a letter of commitment attached with your offer.

If you are interested in purchasing a HUD home you will first need to learn about FHA Loan Qualifying