What Is the HUD-1 Settlement Statement?

By

Updated on November 24, 2022

Reviewed by

Two people looking at paperwork — Photo:
Skynesher / Getty Images

Definition

The HUD-1 Settlement Statement is a standard closing document that breaks down fees and credits in certain real estate transactions. The document is provided to the borrower to help them understand the charges before the mortgage details are finalized.

Key Takeaways

The HUD-1 Settlement Statement breaks down costs of certain real estate transactions.
Most federally-insured mortgages before Oct. 3, 2015, required a Settlement Statement.
The consolidated Closing Disclosure has replaced the Settlement Statement and Truth in Lending Disclosures for most home loans.
Home loans that don't involve real property, such as reverse mortgages, also use the HUD-1 Settlement Statement.

How the HUD-1 Settlement Statement Works

The HUD-1 Settlement Statement is a standardized document that lists the fees and credits involved with settling real estate transactions. You'll receive a HUD-1 before closing if you're applying for a reverse mortgage or mortgage refinance, or if you applied for a mortgage before Oct. 3, 2015. The three-page document is required under the Real Estate Settlement Procedures Act for certain federally-insured mortgages.

Note

Transactions that don't involve a seller use form HUD-1A, a shortened version of the HUD-1. This includes mortgage refinances or subordinate mortgages.

The settlement agent is responsible for completing the HUD-1 Settlement Statement and providing a copy to borrowers upon request. Borrowers have to act quickly if any issues are discovered since the Settlement Statement only has to be provided one day before closing. Borrowers do have the option to waive the right to receive the statement.

The HUD-1 Settlement Statement was standard for nearly all real estate transactions before Oct. 3, 2015. After the Dodd-Frank Act was enacted in 2010, mortgage disclosures were combined to make them easier to prepare and understand. The HUD-1 Settlement Statement was combined with Truth in Lending Disclosure forms to create a single closing document referred to as the Closing Disclosure. At five pages long, the Closing Disclosure is slightly longer than the HUD-1, but borrowers have the benefit of three business days to review the document.

Example of the HUD-1 Settlement Statement

The HUD-1 Settlement Statement is a three-page document that lists costs and credits in a real estate transaction.

Page 1 includes details about your loan type, your name and address, the address of the home you’re purchasing, and a summary of costs for both the borrower and the seller.

Page 2 contains a list of charges from the initial Good Faith Estimate separated based on whether each was paid from the borrower’s or seller’s funds. Charges listed on the second page of the settlement statement include:

Commission and how it will be divided
Loan costs such as the origination charge and appraisal fee
Prepaid interest and insurance costs required by the lender
Reserves provided to the lender
Services charged by the title company and title transfer fees
Government recording and transfer fees
Inspection, survey, and other miscellaneous fees

Page 3 compares your initial Good Faith Estimate to the final settlement costs. Here, you'll also find a breakdown of which costs are allowed to increase and by how much. For example, your interest rate can increase if it wasn't locked, but fees paid to the lender for required costs can't increase at all. Prepaid interest can increase by any amount, while recording fees can only increase by a maximum of 10%.

Important details about your loan terms are also listed on page 3 of the Settlement Statement. This includes the loan amount, interest rate details, any prepayment penalty or balloon payment, and monthly amount to be paid to escrow for taxes and insurance.

Note

You should keep an original copy of your HUD-1 Settlement Statement after closing.

HUD-1 Settlement Statement vs. Closing Disclosure

HUD-1 Settlement Statement	Closing Disclosure
Itemizes costs for both borrower’s and seller’s real estate transactions that don't involve real property and mortgages applied for after Oct. 3, 2015	Focuses more on the borrower's mortgage details and is used with most home loans applied for after Oct. 3, 2015
Provided along with a separate Truth in Lending Disclosure	Includes final Truth in Lending disclosures as a single document
Provided one business day before closing	Provided three business days before closing
Presents estimated monthly payment on the last page	Presents estimated monthly payment on the first page

Frequently Asked Questions (FAQs)

Is a HUD-1 the same as a closing statement?

Generally speaking, the HUD-1 is a type of closing statement, or a list of charges provided prior to mortgage closing. However, in most of today's home loans, buyers will receive a document called a Closing Disclosure. The HUD-1 Settlement Statement and Truth In Lending disclosures are replaced by the Closing Disclosure for most mortgages applied for after Oct. 3, 2015.
The Closing Disclosure statement includes a simpler breakdown of the mortgage terms and projected monthly costs and payments. The statement is provided at least three business days before closing.

Is a HUD-1 settlement statement required?

A HUD-1 Settlement Statement is required in two general scenarios: the mortgage was applied for before Oct. 3, 2015, or the mortgage doesn't involve real property. This includes reverse mortgages, refinance mortgages, and chattel mortgages. When a HUD-1 Settlement Statement is used, a separate Truth in Lending Disclosure is also provided.

What is the difference between a HUD-1 and a HUD-1A?

Both the HUD-1 and HUD-1A were used in almost all real estate transactions prior to Oct. 3, 2015. The HUD-1 is a longer form used in transactions involving a seller. The HUD-1A is a shortened form used optionally for transactions without a seller, such as a mortgage refinance or subordinate lien loans.

Was this page helpful?

Thanks for your feedback!

Tell us why!

Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

Consumer Financial Protection Bureau. “What Is a HUD Settlement Statement?”
U.S. Department of Housing and Urban Development. “HUD-1.”
Consumer Financial Protection Bureau. “CFPB Consumer Laws and Regulations.”
Consumer Financial Protection Bureau. “Integrated Mortgage Disclosures.”
Consumer Financial Protection Bureau. “What Is a Closing Disclosure?”
Consumer Financial Protection Bureau. “Can My Final Mortgage Costs Increase From What Was on My Loan Estimate?”