What Is 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.

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.

HUD-1 Settlement Statement vs. Closing Disclosure

Frequently Asked Questions (FAQs)