How Long Do you Have to Live in a HUD Home as an Owner Occupant?

owner occupant HUDI am a HUD listing broker and I have written many articles on buying HUD homes. I cover many topics in my HUD articles, but I am asked over and over about the owner occupant rules. HUD has very unique and specific rules on who can bid on their homes and when they can be bid on. For more detailed information on the HUD process check out the owner occupants guide to HUD homes and the investors guide to purchasing HUD homes.

When can owner-occupants bid on HUD homes?

Owner occupants have a distinct advantage when bidding on HUD homes. HUD allows owner-occupants to bid on HUD homes before investors can bid on HUD homes. On FHA-insured HUD homes, there is a 15-day owner occupant only bid period. Without going into the detail that I do in my other articles, FHA-insured HUD homes can get an FHA loan if the property needs less than $5,000 in repairs. On FHA-uninsured HUD homes, there is a 5-day owner occupant bid period. FHA-uninsured HUD homes have more than $5,000 in repairs needed and cannot go FHA unless you use an FHA 203K loan.

When can investors bid on HUD homes?

With FHA-insured HUD homes, investors can bid on the 16th day after the home has been listed. On FHA-uninsured homes, investors can bid on the 6th day after the home has been listed. Investors need to be careful when bidding on HUD homes because HUD has serious penalties for investors pretending to be owner occupants. An investor who is caught pretending to be an owner occupant can face up to 2 years in federal prison and up to a $250,000 fine. For more information on my investing strategy which includes fix and flips and long-term rentals check out this article.

Who does HUD consider an owner-occupant?

HUD has very specific rules on who an owner occupant is. To buy a HUD home as an owner occupant you must live in the home more than 50% of the time. You can’t buy a HUD home as an owner occupant if you are buying a second home or using the home as a vacation house unless you will live there more than 50% of the time.

Not everyone who will be buying the HUD home has to occupy the home for at least a year. Just one person who is on the deed at the time of the purchase has to occupy the home. If parents are buying a HUD home for their child, they would be considered owner-occupants if the child was on the deed and would be an owner occupant.

How long do owner-occupants have to live in a HUD home?

An owner-occupant must live in a HUD home for at least one year before they can sell or rent the home. HUD does allow an owner occupant 60 days to repair a home before they move into the home, but they still must occupy the home for at least a year after they move into the house. In certain circumstances such as a medical emergency or a job relocation, you an owner occupant may be allowed to move sooner than one year.

How to get a loan with little money down.

Under what circumstances can an owner-occupant sell a HUD home prior to living in it a year?

HUD allows owner-occupants to move out of a HUD home prior to living in the home for a year if they meet certain guidelines. It is always best to call HUD if you have to move out of a HUD home early as an owner occupant. If an owner occupant has a change in location for a job, a death in the family, divorce, loss of a job or other extenuating circumstances, HUD may ease the owner occupancy requirement.

How to get a great deal on a house.

Why does HUD give priority to owner-occupants over investors?

HUD homes are homes that were bought by someone using an FHA mortgage. The mortgage was foreclosed on and since FHA is a government program, the property went back to the government. FHA is a program sponsored by the government that is meant to allow more owner-occupants to buy homes. The government transfers the idea of getting more owner occupants buying homes into the HUD home program. HUD would prefer if all of their homes were bought by owner occupants, but that is not possible.

Can investors still get a good deal on HUD homes?

Even though owner occupants are given priority on HUD homes, investors can still get a great deal. FHA-uninsured homes are a great opportunity for investors to get a great deal. These homes usually need a lot of work and many owner occupant buyers cannot get a loan on these properties.

Investors also need to be aware that many owner occupants cancel on their HUD contracts. If an owner-occupant cancels on their HUD contract, that may allow an investor to bid on the home.

The Investors Guide to Purchasing HUD homes

The Owner Occupants Guide to Purchasing HUD homes

79 thoughts on “How Long Do you Have to Live in a HUD Home as an Owner Occupant?”

  1. This article has made my day. Thank you so much, Mark! I am a real estate agent in Miami. I am just starting this career and I have a clients wanting to purchase an HUD REO. The home will become available to owner occupants bids in October 25th (so I am hoping I can get an answer from you before) but these people aren’t really the ones who are buying the property. A friend will put the money and will sell it to them for the same price later. As per the comments section I understood the person bidding (the one that is making the cash offer in this case) does not necessarily have to live the house for more than one year. As long as one of the persons in the deed is living in the house for more than one year, it is enough. I am right?
    My broker told me that at the time of closing we can just add the other two people (my clients) who plan to live in the house for a long time, and that it will be ok.
    I am overwhelmed with all the information I’ve read in the last days and still so confused. I’ll appreciate if you can clarify me. Thank you

    • One person who is on the Deed, meaning they bought the home from HUD has to be an owner occupant. They need to be on the contract with HUD and buy the home from HUD.

  2. FAIR MARKET VALUE ON MY HOME IS $42.192. I OWE $73.902…I”M 61 YEARS OLD THS HOUSE NEEDS SO MUCH WORK ON IT. ORGIN JUST TOLD ME THE CRAW SPACE NEEDS $3.OOO WORTH OF WORK..THE FLOORS ARE FALLEN IN FROM THE DAMPNESS UNDER HOUSE..I FEEL LIKE WALKING OUT..BUT IF THE BANK CAN TURN TIS HOUSE INTO A HUD HOME MAYBE I CAN GET IT REPAIRED..CAN SOMEONE OUT THERE ADVISE ME WHAT I SHOULD DO? I PRAY I CANWORK ANOTHER FIVE YEARS..I”M SO WORRIED…THANKS SO MUCH FOR YOUR ADVISE.

  3. Oh I am praying you will respond to this question!!! I have a delapidated hud Home next to the house I own. Since I bought my house I have dreamed of the day that house would go on sale so I could buy it and add it to my property (eventually tearing it down and building a garage). I don’t know if I would be able to deed them together right away but I do not intent to sell or rent the property ever. Could I qualify as an owner occupant in this case? Even if I have to sleep there every other night until the time was up I would!! Any idea? Or know who I need to ask? Thanks so much!

  4. Is there any tax or other penalties for selling a HUD your home before a 10 year mark for living in it? We have lived in it for 9 years now and are needing to move.

  5. Is there an asset limit when buying HUD homes?
    I already own a home and want to purchase a HUD property (to live in).
    Do they evaluate the value if your assets or just income?
    Thanks

  6. my mom and I want to buy a Hud multi family with OO. It has 3 units, she plans on living in one of the units, and wants to rent the other 2 units. For liability reason we want to put it into an LLC how would you recommend doing this? how would the bid be presented? bid personally the transfer to LLc after?
    Thanks for any input you can give on this matter

  7. I am a 71 yr old widow, and have owned my home for 40 yrs. But in the last 5 yrs things have changed drastically. My husband passed away, decreasing my income, my daughter and her 3 children moved in, and for the most part, I am supporting them, because my daughter collects disability, and only works 20 hours a week. She is suppose to be paying rent, but because she doesn’t, I can’t meet my mortgage payments. I have applied for a modification, but my husband met the number of times you can modify. We also owe more than the house is worth. My husband and I both were on the deed, and after he passed, I had him removed, so that I am the only owner. What I want to know, is can I somehow have my house listed as a section 8 housing, to get my mortgage payments lower, or get supplemental income to help pay the mortgage. Where would I go to do that? Would I sell my house to HUD first, if they agreed, and then rent it from them? Someone told me to look into this, so I would appreciate any help you can give me.

    • Section 8 is for people who need help with rental income. It does not apply to those who already own houses. HUD does not buy houses, they simply take back foreclosures. I would pursue the loan modification or convince your daughter to pay rent or you will lose the house

      • My home WILL be going into foreclosure. I have not been able to pay the mortgage in several months, and due to the fact that I owe more on the house than it is worth, and I can not make the payments, I will be going into foreclosure. I did apply for a modification a few months ago, but was refused, because, as I said, my husband had already met the number of times you can modify your mortage.. Do you mean that if I go into foreclosure, I can apply to HUD for a section 8 , and be able to stay in my home and continue to pay a certain amount to the bank, and Hud will come to an agreement with the bank?

  8. Hello, Mark I appreciate your article! I have a question though. I’m an agent and I’m representing my husband’s LLC which i don’t have any ownership interest. Can I stil get a commission from HUD?

  9. Dear Mark, in the example of parents acquiring the property with a child (both on deed at date of acquisition) as owner occupants, and children are to occupy indefinitely, is there a requirement that the children stay on the deed for a certain amount of time after closing? Would it be a problem if children quitclaim to parents within 30-60 days after closing? Thanks in advance.

  10. We purchased the property (apartment) for primary residency in August 2016 and moved immediately. The registration was done on August 01, 2016. This was a property from HUD foreclosure. Now we need to move out to a different country. Hence can we sell the property in August 2017 as we have occupies it for little more than 1 year.

  11. Hi Mark I am in the process of buying a HUD property as home for my family, but as of now only my sons would be moving in. We have NO intention of flipping, selling or renting out.
    Now my lender is insisting this is an investor deal, not owner occupant and wants the contract changed. MY position is, just as YOU write in your article, that we DO qualify as owner occupant, when my sons, who will be living there, are on the DEED. Is that correct? Can you confirm that please? Or am I wrong? Best regards

    • HUD would consider that being owner occupied, but the lender might not. If you are getting a loan on the property the person whose name is on the loan will have to live there as well. So if your sons are not on the loan it might not work.

        • Yes, the loan and buying from HUD are two different things. HUD does not care how you pay for it, but they want to make sure if you bid as an owner occupant someone is living there on the deed. The bank does not care about the owner occupant bid period, but they want to make sure if it is an owner occupant loan, whoever is on the loan is living there.

  12. Hi Mark,
    I have owned a HUD home for just over 1 year. I changed my DL to the home about 5 months after the closing. Time issue. Problem now is that I would like to change my address again. My son is living in the HUD home. As soon as he can demonstrate responsible for a home, I will sign the deed you him. Can I change my address now or do I need to have my DL show HUD address for 1 year?

  13. Hi Mark! I purchased a HUD house last year and I rent it before 1 year is a multifamily. I rent one floor after 6 months and the other after 9 months cause my husband lost his job and I can’t afford to pay the bills but the house is a cash deal. Do we still have to pay a penalty of the HUD finds out that we rented?

    • If you bought an owner occupant there is a chance you could get in trouble. if your husband lost his job they may not make a big deal of it.

  14. Who should I contact if I believe the owner of a hud house is taking advantage of the 16 day time limit for investors to buy the house. The owner of this said house owns the property next door to it. He bought the house before the 16 day time limit. Thanks

  15. Question: after a year from buying and occupying the hud house; will there be issues to have one of the two names removed off of the deed if both parties agree?

  16. i am so thankful to you for this article.
    I have cash to buy a hud home for my 18 year old daughter who will be the owner occupant.
    I want to be on the deed with her, but my realtor says that i have to sign a paper saying that i will also be an owner occupant.
    From reading your article, I feel that the house could be deeded to her and me jointly and she be the only occupant. I tried to find this on the hud website, but was totally overwhelmed.
    Is there anything that you can point me to from hud that answers this question that i can give to the realtor?

  17. Hi there , I purchased a HUD in August of 2016 with full intent of the home being my primary residence. Unfortunately, my mother suffered from a heart attack two weeks ago. This leaves me needing to relocate to be closer to my parents. What are the chances I will be permitted to sell the house and how long doesn’t that decision Typically take.

  18. Hi I am a first time home buyer and I want to purchase a hub home with cash… Any tips on winning the bid? If I win do you know how long does it takes to close on the home?

    • If you are the highest bidder you will get it. They give you 30 days to close with cash, but you might be able to get it done sooner.

  19. My wife as owner occupant and her daughter as flipper purchased HUD property July 2016 if daughter quits claims her interest then adding me to deed and my wife and I husband have lived in House since remodeling was done Sept 1, 2016. How long do the wife and I have to wait to refinance this HUD property In Ohio either by VA or FHA loan?

    • AS long as the person who bought it is living there you can refinance as soon as you want. You just can’t sell it in less than a year or move out in less than a year.

      • I need help. My mom and dad have a HUD home. They paid for the land before the home was built. The have been living there for about 3o years. I need to know if My parents can leave the home to me when their time comes. Can HUD homes be left for the family even if its not paid for….I can take over those payments. Thank you

          • seriously? okay for some reason they think the government will take it back. I suppose my parents need to transfer the deed into my name? I was wondering too , if I would then be responsible for any debts they owe?

          • As far as HUD is concerned when they live there a year, they fulfill their obligation to HUD. Any loans or debts they have against the home would not be with HUD but a bank or lender. That would be a separate issue and those debts will be against their name until they pay them off. Even transferring title of the house, does not remove the debts from their name.

  20. I have won the bid on a HUD Home…my Realty Estate reported I would be the owner occupant but I will not, my daughter will live there full time.. I am just buying it for her. Can I put her on the deed if she’s been on Bankruptcy but is off and do not have the money to buy it?

    • You need to ask HUD if you can add your daughter as a buyer before you close. Otherwise you should cancel your bid and rebid as an investor.

  21. What if it takes mort than 90 days tofixup the house to live in it? Can we hust work on it throughout the winter and move in in the spring?

  22. Hi I am interested in purchasing a HUD home and living there while I make the necessary repairs but then after a year I would like to put it up for sale to make a profit. Is this allowed?, and do I have to Market it as A HUD Hime still and are there limits to fixing it up? Thanks

  23. HELLO,

    I WAS WONDERING IF IT IS POSSIBLE TO CO-PURCHASE A OWNER OCCUPANT HUD HOME. I WOULD BE A CO PURCHASER AND WOULD LIVE THERE BUT MY MOTHER WOULD ALSO BE A CO PURCHASER AND SHE WOULD NOT BE LIVING THERE. IT WOULD BE A CASH PURCHASE AND SHE WOULD BE PROVIDING THE MAJORITY OF THE CASH WHILE I WOULD BE A MINORITY CONTRIBUTOR. THANKS IN ADVANCE FOR ANY INSIGHT.

  24. Hi Mark,
    What happens if you buy a HUD home and then you get a job transfer? Are you punished or is there a waiver? Thanks

  25. Hi Mark- great post, as is all your content. Question about meeting the requirements of owner occupancy, especially this statement: “Not everyone who will be buying the HUD home has to occupy the home for at least a year. Just one person who is on the Deed at the time of the purchase, has to occupy the home. If parents are buying a HUD home for their child, they would be considered owner occupants if the child was on the Deed and would be an owner occupant.”

    I’m looking a buying a HUD house as owner occupant with this exact scenario. My son would be on the deed, and move in to the house full-time for 12 months or more. The question is, do you have an official HUD source for this statement ? I’ve searched high and low and cant seem to find any info on this on the HUD website.

    Thanks

  26. Hello,

    I was wondering what happens if you decide not to do anything with the hud home that you buy? Not fix it up and leave in it but not rent it out or sell it either?

  27. If I own a home in CA in which my wife, son, and in-laws live in and have a house in TX I just bought and in the process of renting out, can I bid on a HUD house as an “owner occupied” and with the intention to live there for over a year?

    • You can buy a hud home as an owner occupant as long as you live there over 50 percent of the time and for at least one year. You can buy one HUD home as an owner occupant every two years.

  28. Hi Mark. I appreciate your articles. I have just won the bid on my first HUD owner occupied home and am moving through the process to close. I have read extensively but remain unclear about the extent of renovations allowed. Is it possible to remove the structure from its existing foundation and have a prefab home placed on the same foundation so long as its done within the 60 day allowable period?

Leave a Comment