Colorado HUD closing-cost requests: asking HUD to pay your closing costs, and what it does to your bid

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 request it on Item 5 of the HUD sales contract (form HUD-9548): the dollar amount of financing and closing costs you are asking HUD, as the seller, to pay. HUD notices have set the limit at 3 to 5 percent of the purchase price, depending on the Homeownership Center, and we confirm the current limit on each listing before we write the bid. It is paid at closing from HUD’s proceeds toward your allowable costs: lender fees, title and settlement charges, prepaid interest, recording fees and the like. It cannot be used for the down payment, anything you asked for but did not use goes back to HUD, not to you, and investors cannot receive it (HUD-9548 instructions).

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 amount

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 closing-cost help 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 the full amount.

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, the full limit on that listing) 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.

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 2003 · REALTOR® · Team leader and licensed broker of the Kenna Group at Keller Williams DTC, a group that regularly bids on HUD homes through Keller Williams Realty DTC, LLC, a HUD-registered brokerage · Author of The Real Estate Playbook and Mastering Real Estate. Brian’s full HUD biography.

Last reviewed: November 4, 2026 · Sources: HUD Home Store (hudhomestore.gov) and HUD program guidance, HUD Handbook 4000.1, REcolorado MLS data via kennarealestate.com, and the Kenna 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: Keller Williams Realty DTC, LLC (the Kenna Group is a group of brokers there), 6300 S Syracuse Way, Suite 150, Centennial, CO 80111. Each Keller Williams office is independently owned and operated. The Kenna 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.

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