What is a down payment?
A down payment is the difference between the purchase price of a house and the base amount of the mortgage you use to buy it. When you make an offer to HUD to buy a home -- either in the HUD $100 Program or outside of the Program -- HUD requires that you give them an earnest money deposit of $1,000. This deposit is held in an account for you, and is credited to you at your closing.
When we structure purchases in the HUD $100 Program, we ask HUD to pay your closing costs. At the closing, which takes place 45 days after you HUD signs their acceptance of our offer, HUD refunds to you $900 from the initial earnest money -- which means that the difference between your purchase price and your base loan amount is $100.