What is HUD and what does it do?

If you’re in the process of buying a house, you’ve probably come across several unfamiliar acronyms, like HUD. For many prospective home buyers, the U.S. Department of Housing and Urban Development (HUD) can be the key that unlocks the door to homeownership.

With the stroke of a pen on September 9, 1965, President Lyndon B. Johnson would transform the nation’s housing market and expand federal housing programs by founding HUD.

HUD unified five agencies committed to helping the federal government address the nation’s crumbling housing stock. Since its creation, the agency has created affordable housing, insured mortgages and funded community development projects for millions of Americans.

We’re here to tell you everything you need to know about HUD – and, most importantly – how it can help you as a home buyer.

What is the Department of Housing and Urban Development (HUD)?

One crucial mission of the Department of Housing and Urban Development (HUD) is to ensure that people living in urban areas have fair and equal access to affordable housing. The president nominates the HUD Secretary, who leads the agency after Senate confirmation and serves as a member of the president’s cabinet.

What does HUD do?

HUD's mission is to "create strong, sustainable, inclusive communities and quality affordable homes for all.” The agency aims to achieve its multipronged mission by:

• Fighting housing discrimination
  
  
• Making homeownership more accessible and affordable
  
  
• Creating safe and affordable rental housing
  
  
• Providing homes for the unhoused
  
  
• Supporting minority and underserved communities

In 2023, the president prepared a $71.9 billion budget request to support HUD initiatives.

HUD programs and initiatives

The agency oversees several different programs and initiatives to achieve its goal of providing housing support and uplifting communities.

Fair Housing Act

HUD is responsible for enforcing the Fair Housing Act. Passed in 1968, the Fair Housing Act bans housing discrimination and ensures equal opportunity housing. The Act outlaws discrimination based on race, color, sex (including gender identity and sexual orientation), religion, national origin, disability and familial status when renting or buying a home, getting a mortgage, applying for housing assistance or participating in other housing-related activities.

The Fair Housing Act enables HUD to investigate complaints of housing discrimination.

Federal Housing Administration

The Federal Housing Administration (FHA) is an agency within HUD and is best known for providing mortgage insurance on FHA loans. Thanks to mortgage insurance, lenders are more willing to offer mortgages to home buyers with lower credit scores, limited savings or past credit issues.

Community Development Block Grant

The Community Development Block Grant Program provides annual grants to cities, states and counties to support community development. The grant money goes to developing safe housing and providing economic opportunities for low- to moderate-income residents.

HUD housing

HUD allows home buyers to purchase HUD homes. HUD homes are foreclosed homes that were originally purchased with an FHA loan. HUD reclaimed the properties after their mortgages went into default. The agency sells the homes to cover their loss from foreclosure.

HUD homes are sold at competitive prices and can come with prepaid closing costs, making these homes an affordable option for lower-income home buyers.

Housing Choice Voucher Program (Section 8)

Another HUD initiative is the Housing Choice Voucher program, also known as Section 8. Authorized under the 1937 Housing Act, the program provides safe and sanitary housing to qualified lower-income households, older adults and people with disabilities and issues monthly housing vouchers for up to 15 years.

Other HUD home buying assistance programs

From down payment help to homeownership courses, HUD offers other incentives and assistance for home buyers, including:

Good Neighbor Next Door program

This program provides public servants, including police officers, firefighters, EMTs and teachers, the opportunity to get 50% off the purchase price of a home in a revitalization area. Home buyers must commit to living in the home for at least 3 years.

One Dollar program

The One Dollar program enables local governments to buy HUD-qualified homes for $1, repair them and then sell them to low- to moderate-income families at affordable prices. Eligible homes must have been on the market for more than 6 months.

HUD $100 Down program

Buyers in the market for a primary residence can buy a home with a $100 down payment through this program, making the upfront cost of homeownership more affordable.

HUD FAQs

Still looking for more information on HUD and how it works? Here are answers to some frequently asked questions.

Why was HUD created?

The Department of Housing and Urban Development (HUD) was created to help the federal government better manage the country’s housing needs, uplift communities and prevent housing discrimination.

What’s the difference between HUD and FHA?

The Federal Housing Administration (FHA) falls under HUD’s jurisdiction. The FHA was established in 1934 and then merged with HUD in 1965. The FHA insures mortgages to help make homeownership a more affordable and attainable goal for home buyers.

What’s a HUD home?

A HUD home is a foreclosed home originally purchased with an FHA loan that’s up for resale. HUD reclaims these properties after they’ve gone into foreclosure and then sells them to recover their losses.

The bottom line

The Department of Housing and Urban Development works to ensure safe and affordable housing for all Americans. The agency strives to achieve its goals through several agencies, programs and initiatives, including the FHA, Section 8 and Community Development Block grants.

Are you interested in purchasing a HUD home? If so, start your mortgage application online today with Rocket Mortgage® and take the first step in your home buying process.