The Good Neighbor Next Door loan program was created from the Department of Housing and Urban Development in an effort to reward the good neighbors of our nation with its If you are a teacher, police officer, or firefighter, you may be eligible for buying a HUD home for 50% off the list price. And if you are qualified as a Good Neighbor by HUD, you may be able to buy any HUD home at 50% of its listing price with only a $100 down payment! The Good Neighbor Next Door program is a community driven program that through HUD identifies certain revitalization areas where properties are made available under this initiative.
FHA & HUD Form Good Neighbor Next Door Program
HUD has been launching a variety of these FHA Neighbor Next Door programs in recent years. This is a collection of home sales programs through FHA that promote owning a home and building stronger communities.
Keep in mind that FHA itself is not a mortgage lender. Rather, it is an insurer of mortgages and is within HUD. The role of FHA is to promote home ownership among those with average to poor credit as well as a low-down payment. FHA programs have encouraged lenders to offer mortgage loans for people with bad credit.
FHA has a major role in the promotion of the Good Neighbor Next-Door program. These homes are sold at a 50% discount to qualifying buyers. Note that the zero down home loan program is only available to people in certain professions, and only certain homes in certain neighborhoods.
The Good Neighbor Next Door (GNND) program is a unique initiative by the U.S. Department of Housing and Urban Development (HUD) designed to promote community development and homeownership in specific areas. This program, established to foster stronger ties between law enforcement officers, teachers, firefighters, and emergency medical technicians and the communities they serve, provides eligible participants with the opportunity to purchase homes at a substantial discount.
Eligible properties are offered at a 50% discount from the list price, making homeownership more accessible for those who contribute significantly to the well-being and safety of the community. However, there are specific criteria that participants must meet to take advantage of this unique opportunity.
One of the essential requirements is that participants must commit to residing in the purchased home as their primary residence for a minimum of 36 months. This residency requirement ensures that the professionals who benefit from the program actively contribute to the neighborhood’s growth and stability. Additionally, participants must sign a silent second mortgage note and mortgage, which essentially means that they agree to live in the property for the required duration without selling or renting it.
The process of acquiring a home through the GNND program involves several steps. First, eligible participants must locate a property in a designated revitalization area that interests them. These properties are listed on the HUD website, making it easy for potential buyers to identify available homes. Once a suitable property is found, participants can submit a bid through a registered real estate agent. It’s worth noting that the bidding process is competitive, and if multiple eligible buyers express interest in the same property, a lottery system is used to determine the successful bidder.
The key participants in the GNND program include law enforcement officers, teachers, firefighters, and emergency medical technicians who are employed full-time in qualifying roles.
Upon successfully securing a property, participants must fulfill their commitment to residing in the home for at least 36 months. This duration ensures a long-term impact on the community, fostering a sense of stability and continuity. While the discounted purchase price is a significant incentive, it is essential to recognize the broader implications of the program, such as the positive influence these professionals can have on local schools, safety, and emergency response times.
The Good Neighbor Next Door program has received praise for its innovative approach to addressing community development challenges. By integrating professionals who play vital roles in community safety and education, the program aims to create a symbiotic relationship between residents and the local workforce. This not only benefits the individuals who secure homes at a discount but also contributes to the overall improvement of the designated revitalization areas.
More About the Good Neighbor Next-Door Loan Program
Any single-family home that is located in a HUD revitalization area is eligible for the Good Neighbor Next Door program. A revitalization area is so designated according to income of the household, rate of home ownership, and how many foreclosures are in that area. All properties that are for sale must be owned by HUD.
All Good Neighbor Next-Door homes are sold at a 50% discount, no matter what the original price was. All eligible homes are sold to buyers who are eligible with this discount.
The Good Neighbor Next-Door program is available to many public-sector employees, such as police officers, teachers, firefighters and EMTs. Most people who work in law enforcement are eligible for this program, including law enforcement who are not regular police officers in the neighborhood. Correctional officers also are usually eligible. Most law enforcement who work for local, state and federal government will qualify.
Regarding teachers, most of them will be eligible for this program. HUD does require that the teacher is employed full time as a teaching professional by a public or private school and serves students from K-12. Also, the school where the teacher works needs to work with students from the neighborhoods where the HUD homes are located.
Regarding firefighters, most of them also are eligible for the program. To qualify, the firefighter has to be employed on a full-time basis in a fire department run by the local, state or federal government.
Common Questions About the Good Neighbor Next Door Program
Read the following frequently asked questions with answers.
Is it necessary to use FHA financing with this program?
No. Buyers who are interested in Good Neighbor Next Door do not have to use mortgages insured by FHA. You have the option of using FHA, VA, USDA and conventional loans. You also may want to look for financing from a bank.
Many buyers do use the FHA program because of the ease of qualifying for an FHA loan. Credit scores and debt to income ratio requirements are very reasonable, and down payments are as low as 3.5%.
Does the home have to be a primary residence?
Yes, you have to live in the home that you buy. No rental or vacation homes are allowed. Also, the home has to be a primary residence for at least 36 months. After that period is expired, you can sell the property, keep it or rent it out. But you must have lived in the home for 36 months.
How many days after buying it do I have to move in?
After you have closed on the home, you may move in within 30 days, 90 days, or 180 days. This comes down to HUD’s view of the condition of the property. If the home is ready for occupancy, you should be able to move in within 30 days. If the home needs to be repaired, you may wait up to 180 days.
If I sell the home after 3 years, do I get to keep all profits?
Yes, if the home has been your primary residence for 36 months at least, when you sell, you can keep all proceeds and equity. No repayment to HUD is needed.
Do I need to use a real estate agent to buy the house?
Yes. The Good Neighbor Next Door program requires you to use an agent to facilitate the purchase. A real estate broker is also fine.
Do I need to be a first time buyer?
No! You do not need to be buying a home for the first time. But you cannot currently own a home when you submit an offer to buy a HUD home. You also may not have owned a home in the last 12 months.
Bottom Line on Good Neighbor Next Door Loans
If you are interested in the Good Neighbor Next Door program, you should talk to your real estate agent about the program. He should be able to show you the HUD homes available for purchase in your neighborhood. Your mortgage lender also can help you to see if you qualify for the program. The Good Neighbor Next Door program is a symbol to the importance of community engagement and the positive impact that dedicated professionals can have on the neighborhoods they serve. This a unique initiative offers discounted housing opportunities and a commitment to residency. As these professionals become ingrained in the fabric of revitalization areas, the Good Neighbor Next Door program continues to be a valuable instrument in fostering safer, more stable neighborhoods across the United States.
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About RefiGuide.org
Bryan Dornan is a financial journalist and currently serves as Chief Editor of RefiGuide.org. Bryan has worked as a mortgage loan officer in the industry for over 20 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. Bryan's continual focus is to promote affordable home-ownership to consumers like you across the United States. He also writes for RealtyTimes, Patch, Buzzfeed, Medium and other national publications. Find him on Twitter, Muckrack, Linkedin and ActiveRain.
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