The Department of Housing and Urban Development is making big efforts to reward the good neighbors of our nation with its Good Neighbor Next Door loan program.

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!


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 program is only available to people in certain professions, and only certain homes in certain neighborhoods.

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

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.