The HUD bid form has a line where you ask HUD to pay part of your closing costs. It is one of the few things in a HUD purchase you can negotiate, and it works differently from a seller concession on a normal Colorado contract. Ask for the wrong amount and you lose the house to a bid with a lower price.
What you can ask for
You may request that HUD pay closing costs up to 3 percent of the purchase price. The amount is a dollar figure you write on the bid, not a percentage, and it is paid at closing from HUD’s proceeds toward the buyer’s allowable costs: lender fees, title and settlement charges, prepaid interest, recording fees and the like. It cannot be used for the down payment, and anything you asked for but did not use at closing goes back to HUD, not to you.
How it changes your bid
HUD does not accept bids on price. It accepts them on net to HUD: price, minus the closing costs you request, minus the buyer-broker compensation shown in the listing documents. Two bids on a $300,000 list:
- Buyer A bids $300,000 and asks for $9,000 in closing costs. Net to HUD before broker compensation: $291,000.
- Buyer B bids $294,000 and asks for nothing. Net: $294,000.
Buyer B wins, and Buyer A never finds out why. HUD then compares the winning net to a threshold percentage of the As-Is value that it does not publish.
When to ask for the full 3 percent
When you need it to close and the alternative is not buying. FHA allows the seller to pay up to 6 percent of closing costs, so HUD’s 3 percent fits inside the FHA rules, and a buyer using down-payment assistance often needs every dollar. In that case bid a price high enough that the net still works, which usually means bidding above list if the house is worth it.
When to ask for less
When you are in a competitive first round on an insured home and you can cover your own costs. Every dollar you do not request is a dollar of net, and net is the whole scoreboard. A buyer who can bring $6,000 to closing and asks for zero help often beats a higher-priced bid that asked for 3 percent.
Closing costs versus repair escrow versus price
People mix these up. The repair escrow on an IE home is part of your loan, not a HUD concession. Closing-cost help is a HUD concession that lowers HUD’s net. The price is the price. Only two of the three affect the bid comparison, and the escrow is not one of them. Financing codes and the repair escrow.
What we do on every bid
Run the net three ways (no help, half, full 3 percent) against the As-Is value, then pick the combination that gets you the house at the lowest total cash outlay. The extension fee, the earnest money and the inspection cost also come out of your pocket, so the closing-cost line is not the only cash question. How buyer-broker compensation works on a HUD home covers the other line on the net calculation.
Questions people ask next
Can HUD pay my down payment?
No. Closing-cost help covers allowable closing costs and prepaids only. The down payment comes from you or from a down-payment assistance program such as CHFA or metroDPA.
What happens to closing-cost help I do not use?
It stays with HUD. Ask for the amount your lender estimates you will actually need, because unused help lowered your net for nothing.
Does asking for closing costs affect the buyer-broker compensation?
They are separate lines. HUD typically offers buyer-broker compensation as shown in the property’s listing documents; both it and the closing-cost request reduce HUD’s net, and we explain both before you sign anything.
Can I ask for closing-cost help on a cash purchase?
Yes, up to the same 3 percent, but on a cash bid it usually makes more sense to lower the price by the same amount; the net to HUD is the same and the paperwork is simpler.
The listing controls. HUD changes its procedures from time to time and every property has its own dates, codes and conditions on HUD Home Store. Where this page and the official listing or current HUD rules differ, the listing and HUD’s current rules control. We check this page regularly; ask us to confirm anything before you rely on it.
Looking at a specific HUD home? Call or text 303-955-4220. A HUD-registered agent answers, reads the listing with you, and the answer is free.
Written and reviewed by
Brian Lee Burke, Colorado HUD home specialist and team leader
Licensed Colorado real estate professional since 2002 · REALTOR® · Team leader and licensed broker of the Kenna Real Estate Group at Keller Williams DTC, a HUD-registered group that regularly bids on HUD homes · Author of The Real Estate Playbook and Mastering Real Estate. Brian’s full HUD biography.
Last reviewed: September 20, 2026 · Sources: HUD Home Store (hudhomestore.gov) and HUD program guidance, HUD Handbook 4000.1, REcolorado MLS data via kennarealestate.com, and the Kenna Real Estate Group’s own HUD transaction files.
Contact: call or text 303-955-4220 or homes@kennarealestate.com. During office hours you reach a live local Kenna real estate professional, not a robot or a national call center. Brokerage: Kenna Real Estate Group at Keller Williams Realty DTC, LLC, 6300 S Syracuse Way, Suite 150, Centennial, CO 80111. Each Keller Williams office is independently owned and operated. The Kenna Real Estate Group is an independent real estate team and is not affiliated with or endorsed by HUD or any government agency; official property information comes from HUD Home Store. Equal Housing Opportunity.
Free guide, PDF
The Colorado HUD Home Buyer's Playbook
How HUD bidding really works, the nine ways buyers lose, and the bid worksheet. 18 pages, free.
Why you want it before you bid:
- The 15-day owner-occupant window, day by day, so you never miss a deadline
- The net-to-HUD math HUD actually scores, with a one-page bid worksheet
- The nine ways buyers lose a HUD home, and how each one is avoided
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