What is a HUD-1 Settlement Statement?
Disclaimer: This article is for educational purposes only and does not constitute legal, tax, or financial advice. Federal and state regulations change frequently. Consult a qualified attorney, CPA, or licensed professional before making decisions based on regulatory requirements discussed here.
The HUD-1 Settlement Statement is a standardized real estate closing document that itemizes all charges and credits for both the buyer and seller in a property transaction. Developed by the Department of Housing and Urban Development (HUD), the HUD-1 was the standard closing document for all residential real estate transactions from 1974 until October 2015, when the TILA-RESPA Integrated Disclosure (TRID) rule replaced it with the Closing Disclosure for most financed residential purchases.
Despite being replaced for conventional residential transactions, the HUD-1 is still used in certain contexts: cash transactions that do not involve a federally regulated lender, commercial real estate closings, 1031 exchanges, and reverse mortgages. Many title companies continue to use HUD-1-style settlement statements for cash closings because the format is well-understood by real estate professionals.
Structure of the HUD-1
The HUD-1 is a two-page document divided into sections. Page 1 shows a summary of the borrower's (buyer's) and seller's transactions, with total charges and credits resulting in the "cash due from borrower" and "cash due to seller" bottom lines. Page 2 provides line-by-line detail of every charge, organized into sections: commissions, items payable in connection with the loan, items required by lender to be paid in advance, reserves deposited with lender, title charges, government recording and transfer charges, and additional settlement charges.
Each line item has a standard number (e.g., line 101 is the contract sales price, line 201 is the deposit/earnest money, line 801 is the loan origination fee). This standardization made it easy for investors and professionals to compare closing costs across transactions by referencing specific line numbers.
HUD-1 vs. Closing Disclosure
| Feature | HUD-1 | Closing Disclosure |
|---|---|---|
| Used for | Cash deals, commercial, pre-2015 residential | Financed residential since Oct 2015 |
| Format | 2-page line-item form | 5-page summary with details |
| Timing | Provided at closing | Must be provided 3 business days before closing |
| Comparison | Compare to Good Faith Estimate | Compare to Loan Estimate |
Why investors should understand the HUD-1
Even though the HUD-1 is no longer the standard form for financed residential purchases, investors encounter it regularly. Cash purchases (which are common in wholesale and investment transactions) often still use HUD-1-format settlement statements. Historical property records reference HUD-1 line items. And the conceptual framework -- understanding how transaction costs are itemized and allocated -- is identical whether you are reading a HUD-1, Closing Disclosure, or ALTA settlement statement.
For wholesalers, the HUD-1 or its equivalent is where your assignment fee appears. In an assignment closing, the fee is typically listed on the HUD-1 as an additional charge to the buyer. In a double close, you will have two HUD-1s -- review both carefully to verify that your proceeds match expectations.
Common HUD-1 line items for investors
Key line items to review: 101 (sale price), 201 (earnest money credit), 303 (existing loan payoff), 700 (broker commission), 801 (loan origination), 1101-1108 (title charges), 1201-1203 (recording fees and transfer taxes), and 1301-1305 (additional charges including assignment fees, transactional funding costs, or inspection credits). Verify every number against your contract terms before signing.