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We’ll show you two paths to making it happen via the HUD or Habitat for Humanity.

How To Buy An Affordable Home From The HUD

The HUD or U.S. Department of Housing and Urban Development may be famous for its Section 8 rental program, but it also helps people buy homes without breaking the bank. How? It all has to do with FHA loans.

As its name suggests, an FHA loan comes from the Federal Housing Administration. These loans offer easier approval since they typically don’t require a high credit score, a significant down payment, or copious closing costs. People with low credit scores can secure FHA loans with just 3.5 percent down payments. And they may also get assistance with any closing costs to reduce their out-of-pocket expenses even more.

If someone defaults on their FHA loan, the HUD enters the picture and pays the lender whatever is left on the loan. In doing so, the HUD becomes the new homeowner.

Does the HUD hold on to the home it just purchased? No. Instead, it tries to sell it as quickly as possible. And it does this by putting that home on the market for a very affordable price.

You can find these HUD homes online. If interested, know that you will need to live in the home for at least one year and use a HUD-approved real estate agent to close the deal at auction. Win the auction, and you will have two months to close on the HUD home. Financing can be attained via conventional loans, or you have bad credit, you can try for an FHA loan.

As for the down payment, look into the HUD’s $100 Down Program to avoid forking over a ton of cash. And as for the closing costs, the HUD may pay up to five percent of the home’s purchase price to cover those.

How To Buy An Affordable Habitat For Humanity Home

You can get a safe, energy-efficient, and affordable home from Habitat for Humanity. Their mortgages are often cheaper than typical offerings, and you can avoid large down payments via “sweat equity,” where you volunteer with the organization to work towards having your own home.

To buy a Habitat home, you will first need to be screened by your local office, which you can find here. Pass that screening, and you will need to complete a written application and pass a background check.

If all goes well, your next step is to interview with a Habitat for Humanity team member. If approved, you will have to perform sweat equity to get closer to owning that home, including tasks like assisting with construction, attending classes on homeownership, performing administrative duties, and more.

Once your sweat equity is complete and the home is constructed, your local Habitat office may hold a dedication ceremony. This is where you will be handed the keys to your new home.