This is a good question. When HUD initially offers a property for sale they almost always offer the property for the FHA appraised value of the home. If you offer over this amount for the property and wish to use an FHA loan; the lender will only lend up to the amount on HUD’s appraisal of the home minus your $100 down payment and you will have to come up with the difference. Numerous HUD deals are falling apart now because uninformed Purchasers are finding out after having the "winning" offer that they have to come out of pocket for the difference between their offer and the FHA appraised value provided on HUD’s appraisal. Example: The home is appraised and offered for $100,000 and the "winning" Purchaser offered $110,000. This Purchaser will need $10,100 to for the down payment of the home when using HUD’s FHA appraisal.