HUD’s Good Neighbor Next Door Program: Here’s What to Know
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If your full-time profession falls into one of a handful of categories, you may have the opportunity to save big on a home purchase, thanks to the Good Neighbor Next Door program. The initiative helps make homeownership more affordable to certain public servants with a 50% discount off a home’s listing price.
- What is the Good Neighbor Next Door program?
- Good Neighbor Next Door program requirements
- Pros and cons of the GNND program
- Alternatives to GNND program
What is the Good Neighbor Next Door program?
The Good Neighbor Next Door (GNND) program is a Department of Housing and Urban Development (HUD) initiative that encourages members of certain professions to participate in community revitalization through homeownership.
Homebuyers who qualify for the GNND program can receive a 50% discount off a home’s listing price. For instance, if you purchase a home listed for $200,000, you would have a first mortgage equal to $100,000, minus your down payment, and make monthly payments to your lender based on that loan amount.
There’s also a “silent” second mortgage for the discounted amount — $100,000 in this case — though you wouldn’t be required to make any payments on it as long as you fulfill the program requirements.
Good Neighbor Next Door program requirements
Homebuyers must meet the following Good Neighbor Next Door qualifications to be eligible for the program:
- Public service. Must be a full-time pre-K through 12th-grade teacher, emergency medical technician, firefighter or law enforcement officer.
- Mortgage type. Must qualify for a conventional mortgage or a home loan through the Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA).
- Location. Must buy a home in a HUD revitalization area, which is determined by household income, homeownership rate and foreclosure activity for homes with FHA-insured loans.
- Purchase timeline. Must make an offer on a home through the HUD Homestore within seven days of the listing being posted.
- Residency requirement. Must live in the home as your primary residence for at least three years.
- Annual certification. Must sign, date and return an annual certification form to verify that you’re still living in the home. HUD mails out the form close to the anniversary of your home purchase date each year.
It’s important to note that if you choose and qualify for an FHA loan under the GNND program, you’d only have to put down $100, rather than the minimum 3.5% down payment that’s typically required.
Pros and cons of the GNND program
- Deep home price discount. The Good Neighbor Next Door program offers a hefty discount on home sales, giving eligible homebuyers a lower-cost entry point into homeownership.
- More affordable mortgage. Since you’re getting a home for 50% off the sales price, you won’t need a large loan amount.
- Lending flexibility. You can use a conventional, FHA or VA loan for your home purchase.
- A limited number of professions are eligible. Only a select few public service professions qualify to participate in the GNND program.
- Available only in certain neighborhoods. You can buy homes in designated revitalization areas only, which limits your options.
- Three-year residency requirement. You must live in the home for at least three years to avoid repaying the silent second mortgage. This may not be ideal if you need to move sooner.
Alternatives to the GNND program
If the HUD Good Neighbor Next Door program isn’t the right fit for you, here are several alternatives to consider:
- Local homebuying programs. Your state, county or city may offer first-time homebuyer programs, down payment assistance or other types of help. Reach out to your local housing authority for more information.
- HomePath Ready Buyer. Fannie Mae offers an opportunity for first-time buyers to receive closing cost assistance toward the purchase of a foreclosed home after they’ve participated in a homeownership education course.
- HUD Dollar Homes. The HUD Homestore also offers the Dollar Homes program, through which low- to moderate-income buyers can get a foreclosed home for $1, plus closing costs.