Just as there is more than one kind of home, there is morethan one way to finance it. Mortgage lenders have come up with many differentmethods of helping you pay for a home--each one with its own advantages anddisadvantages.

First of all, you should know that HUD itself does not provide financing.You can obtain financing through a bank or mortgage lender. Since many HUDHomes are eligible for FHA-insured mortgage loans, this often makes financingeasier to obtain. However, you are not required to get an FHA loan to buy a HUDHome.

Fixed-Rate Mortgage. With a fixed-rate mortgage, your interest rate staysthe same for the term of the mortgage, which is usually 30 years. Yourprincipal and interest payment remains stable, making it easier to plan amonthly budget. However, initial interest rates tend to be higher than withother types of loans.

Adjustable-Rate Mortgage. With an ARM, your interest rate and monthlypayments start out lower than with a fixed-rate, but your rate and payments canchange either up or down, depending on where interest rates in general aregoing. (If they're going up, your monthly payments will probably go up as well,sometimes significantly.)

FHA-Insured Mortgage. In this type of loan, the Federal Government insuresthe lender against loss in case the home buyer defaults on the loan. Thisprogram was set up so that Americans who can't afford the 10% to 20% downpayment required by most lenders can still buy a home. Many HUD homes can be boughtwith FHA-insured mortgages, which allow you to purchase the home with as littleas 3.5% down. You do not have to be a first-time buyer in order to qualify foran FHA loan.

VA Loan. Under this program, the Department of Veterans Affairs guaranteesthe lender against loss. HUD Homes may be purchased with a VA loan or any otherloan.

Assumable or Non-Assumable. You may find a home with a mortgage loan you canassume from the previous owner. This means that the lender is willingto transfer the old loan on the home to you. These loans can be wonderfulbargains, and the paperwork is usually not very complicated.