HUD homes are foreclosed homes that HUD owns after an FHA-insured loan defaults. In Virginia Beach, they're listed on HUD Homestore, sold as-is and bid on through a HUD-registered broker like me. Owner-occupant buyers get the first chance to bid before investors, and many listings work with FHA financing.
Key facts
- HUD homes are listed on HUDHomestore.gov, and bids must be submitted by a HUD-registered real estate broker.
- Exclusive listing period: Owner-occupants, HUD-approved nonprofits and government entities get first priority. HUD Homestore describes this period as 15 days for insured properties and 5 days for uninsured properties.
- HUD Mortgagee Letter 2025-13 restored the earlier exclusive listing period rules after HUD had expanded the period to 30 days in 2022.
- Investors can bid only in the extended listing period.
- Good Neighbor Next Door offers eligible buyers 50% off list price in designated revitalization areas, with a 36-month occupancy requirement.
- Homes are sold as-is, with no repairs by HUD.
What is a HUD home, exactly?
When a homeowner with an FHA-insured mortgage defaults and the home is foreclosed, the lender may convey the property to HUD in exchange for an insurance claim. HUD then hires asset managers to secure, market and sell the home to recover its losses. These homes are one-to-four-unit properties, and they can be anywhere in the city, from older ranch homes to townhomes.
How does the bidding process work?
HUD homes don't work like a normal listing. Here's the process:
- Find a HUD-registered broker. Only registered brokers can submit bids. I can bid on your behalf.
- Get pre-approved, or show proof of funds for cash.
- Review the listing, including the property condition report and the financing code.
- Inspect the home if you can, within HUD's rules.
- Submit your bid online through HUD Homestore, along with whether you'll be an owner-occupant.
- Wait for results. HUD reviews bids at the end of each bid period. The highest acceptable net bid wins.
- Sign the contract and deposit earnest money if your bid is accepted.
- Close within HUD's required timeframe.
My older posts on HUD homes for sale, eligibility criteria for HUD home purchases and finding HUD homes for sale near you cover some of these steps too.
Who gets priority?
| Listing period | Who can bid | Length (per HUD Homestore) |
|---|---|---|
| Exclusive period, insured property | Owner-occupants, HUD-approved nonprofits, government entities | 15 days |
| Exclusive period, uninsured property | Owner-occupants, HUD-approved nonprofits, government entities | 5 days |
| Extended period | All buyers, including investors | Until sold |
As an owner-occupant, you must certify that you'll live in the home as your primary residence. HUD also says you're generally not eligible to buy as an owner-occupant if you've bought a HUD home as an owner-occupant within the past two years. Making false certifications is a federal offense.
What do the financing codes mean?
Each HUD listing shows a code. HUD Homestore defines them this way:
| Code | Meaning | Typical financing |
|---|---|---|
| IN | Insurable | Eligible for an FHA-insured loan in its current condition |
| IE | Insurable with repair escrow | Repairs estimated at no more than $10,000; FHA-eligible if the lender sets up a repair escrow at closing |
| UI | Uninsured | Repairs estimated at more than $10,000; not FHA-eligible unless a 203(k) loan can be arranged |
For uninsured homes, buyers usually pay cash, use a conventional or renovation loan, or use an FHA 203(k) rehabilitation loan, which combines the purchase price and repair costs into one mortgage. Talk with a lender who handles 203(k) loans before you bid.
How does HUD pick the winning bid?
A few details from HUD Homestore surprise first-time HUD buyers:
- List price is based on a recent appraisal. You can bid under or over it.
- Bids are ranked by net to HUD. That's your price minus costs you ask HUD to cover, such as closing costs. A higher price with big seller credits can lose to a cleaner bid.
- Bids are opened on the Bid Open Date, the first business day after the bid deadline. Bids placed during a period aren't reviewed until then.
- An accepted bid ends the period. If the asset manager accepts an earlier bid, the home goes under contract right away.
- Results are public. Accepted bids show under Bid Results for 14 days after the home goes under contract.
Some homes start with a 7-day lottery period. HUD Homestore says all uninsured homes begin there, along with insured single-unit homes in revitalization areas. That period is used for Good Neighbor Next Door and certain nonprofit and government buyers.
Are there special incentives?
HUD has offered incentives from time to time, such as $100 down payment FHA financing for owner-occupants on eligible homes and help with closing costs. These aren't always available, so check the listing and ask me what's current.
Good Neighbor Next Door (GNND) is another option. Eligible buyers include:
- Full-time law enforcement officers.
- Pre-K through 12th grade teachers.
- Firefighters.
- Emergency medical technicians.
They can buy eligible homes in HUD-designated revitalization areas at 50% off the list price, with a commitment to live in the home for 36 months. GNND homes are offered through a short lottery listing period. Availability in Virginia Beach is limited and changes often.
What are the risks of buying a HUD home?
HUD homes can be good values, but they come with tradeoffs:
- As-is condition. HUD won't fix anything. Budget for repairs.
- Unknown history. HUD never lived there, so it can't tell you much about the home.
- Utilities may be off, which can complicate inspections.
- Competition. Good homes in popular areas draw multiple bids.
- Strict deadlines. HUD contracts have firm timelines and penalties for delays.
That's why I always recommend a licensed inspection. See are home inspections required in Virginia?
How do HUD homes compare with other foreclosures?
HUD homes are just one type of distressed property. Others include bank-owned (REO) homes and homes sold by Fannie Mae, Freddie Mac or the VA after foreclosure. Each has its own process and rules. Bank-owned homes usually use the bank's own addenda, and the timelines can be long. Short sales are a different situation, because the seller still owns the home and the lender has to approve the price.
What should I check before bidding in Virginia Beach?
Virginia Beach adds a few local checks:
- Flood zone. Look up the address and price insurance. My flood insurance guide explains how.
- AICUZ noise zones near NAS Oceana, which must be disclosed in sales.
- HOA or condo status. Some HUD homes are in associations with dues and rules.
- Property taxes. Check the assessment and rate in my Virginia Beach property taxes guide.
- Repair costs. Get contractor estimates for big items like roofs and HVAC.
Ready to bid on a HUD home?
Browse Virginia Beach foreclosure listings, check HUD Homestore for Virginia Beach, and contact me or call or text (757) 919-8874. I'll help you review the listing, line up financing and submit your bid on time.
Barry Jenkins, Legacy Home Team at LPT Realty
Sources
- HUD Homestore
- HUD Homestore Help and FAQ
- HUD Mortgagee Letter 2025-13: REO Exclusive Listing Period (PDF)
- HUD: Good Neighbor Next Door
- HUD: 203(k) Rehabilitation Mortgage Insurance
- 24 CFR § 291.205: Competitive sales of individual properties
Frequently asked questions
What is a HUD home?
A HUD home is a one-to-four-unit property that HUD owns after a foreclosure on an FHA-insured mortgage. HUD lists these homes for sale on the HUD Homestore website and sells them as-is.
Who can buy a HUD home?
Owner-occupant buyers, HUD-approved nonprofits and government entities get first priority during an exclusive listing period. If the home doesn't sell then, investors can bid in the extended period. All bids go through a HUD-registered real estate broker.
Can I buy a HUD home with an FHA loan?
Often, yes. HUD marks each listing as insurable (IN), insurable with repair escrow (IE) or uninsured (UI). IN and IE listings can generally use FHA financing. Uninsured homes usually need more repairs, so buyers often use cash, a conventional loan or an FHA 203(k) rehabilitation loan.
Can I inspect a HUD home before buying?
Yes, and I strongly recommend it. HUD sells homes as-is and won't make repairs, so schedule a licensed home inspection. Ask your agent about the inspection terms in HUD's contract.
What is the HUD Good Neighbor Next Door program?
Good Neighbor Next Door offers eligible law enforcement officers, pre-K through 12th grade teachers, firefighters and emergency medical technicians a 50% discount off list price on homes in designated revitalization areas. Buyers must live in the home for 36 months.
How do I find HUD homes in Virginia Beach?
Search HUD Homestore for Virginia Beach, Virginia, or ask me to set up an alert. You can also browse foreclosure listings on my search site. Inventory is limited and changes often.
Do investors get to buy HUD homes?
Only after the owner-occupant exclusive period ends without an accepted bid. Then the home enters the extended listing period, when investors can also bid.