Originally known as Du Pre, Buda was founded along a line of the International and Great Northern Railroad. Cornelia A. Trimble gave land for the townsite in 1881. The name "Buda" was adopted in the late 1880s, although its origin is unclear. According to popular legends, it was either related to Budapest, Hungary, or evolved from the Spanish word for widow viuda and honored the women who cooked in one of the local hotels. Buda was once the site of a variety of businesses, including a theater, skating rink, newspaper, and two banks. The town was incorporated in 1948.
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