First of all, you need to find a mortgage broker/bank that is reputable. I see too many companies taking advantage of people who do not understand the mortgage business. The HUD loan you are referring to is commonley called an FHA loan.
The mortgage broker/bank has to be approved to do FHA loans. Any reputable company will be approved.
Secondly, make sure the loan officer you are dealing with has done FHAloans before. If they have not, there might be some problems.
Finally (this is general information), an FHA loan is an option, just as a conventional loan or VA loan is an option. For each of these types of loans, you must qualify under the criteria used for each loan.
Unless you have been in the military, a VA loan is out.
FHA loans require less money down from the buyer (3%) than a conventional loan (usually 5%).
Find a good mortgage broker/bank and they should be able to walk you through all of this. If the person you are dealing with is not willing to spend the time with you to make sure you understand what is going on, find another mortgage company
I am a licensed Texas real estate broker