Who Qualifies For The Good Neighbor Next Door Program

Good Neighbor Next Door program:

The Good Neighbor Next Door program is a U.S. Department of Housing and Urban Development (HUD) initiative designed to promote homeownership in revitalization areas. It offers eligible law enforcement officers, teachers, firefighters, and emergency medical technicians the opportunity to purchase homes in designated areas at a significant discount, typically 50% off the list price. In return, participants agree to live in the home as their sole residence for at least three years, contributing to the stabilization and improvement of the community.

Mortgage Type	Description	Minimum Credit Score Required
FHA Mortgage	Default low-down payment mortgage option. Allows $100 down payment instead of standard 3.5% down payment.	500
FHA 203k Construction Loan	Allows financing of repairs for HUD homes, including major and minor repairs such as roofing and HVAC.	500
HomeReady Mortgage	3% down conventional mortgage for homebuyers in low-to-moderate income neighborhoods. Offers reduced mortgage rates and simpler qualifications compared to standard conforming loans.	620
Home Possible Mortgage	3% down conforming mortgage for homebuyers in low-to-moderate income areas. Provides lower rates and easier qualifications compared to other conforming loans.	660
USDA Mortgage	No-down payment mortgage backed by the USDA for homes in rural and less-dense suburbs. Offers low rates and inexpensive mortgage insurance.	620
VA Mortgage	100% mortgage for military veterans, active duty members, and surviving spouses. Backed by the Department of Veterans Affairs. Does not require mortgage insurance.	580

Who can Apply for Good Neighbor Next Door program:

Teachers:

Must teach full-time for a state-accredited public or private pre-kindergarten through 12th-grade school.
The home to be purchased must be within the school’s district.
If employed by a private school, the principal must provide proof that at least one student from the school lives in the neighborhood where the home will be purchased.

Who can Apply Among School Teachers :

Eligible Occupations	Eligible	Not Eligible
Teachers	✓ (in any state-accredited public or private school)	Administrators, coaches, and other school employees

According to the criteria, teachers in any state-accredited public or private school are eligible for the Good Neighbor Next Door program. However, administrators, coaches, and other school employees are not eligible.

Law Enforcement Officers:

Must work full-time in law enforcement for a federal, state, local, or Indian tribal government.
Must have been sworn in and have the authority to uphold the law.
Must serve in the locality where the home will be purchased.
- Jurisdictional Coverage: Law enforcement agencies eligible for participation may be federal, state, local, or tribal, including entities such as the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, and other U.S. territories.
- County, Parish, or Political Subdivision Officers: Law enforcement officers serving within a county, parish, or political subdivision are also eligible for the Good Neighbor Next Door program.

Who can Apply Among Law Enforcement Officers:

Eligible Occupations	Eligible	Not Eligible
Law Enforcement Officers	✓ (federal, state, local, tribal)	Civilian personnel

Law enforcement officers from federal, state, local, or tribal agencies are eligible for the Good Neighbor Next Door program. However, civilian personnel are not eligible.

Firefighters:

Must be employed full-time as firefighters by a fire department within a federal, state, local, or Indian tribal government.
Must serve in the locality where the home will be purchased.

Who can Apply Among Firefighters:

Eligible Occupations	Eligible	Not Eligible
Firefighters	✓ (federal, state, local, tribal)	Part-time employees

Firefighters working for federal, state, local, or tribal governments in any firefighting role, including technician, engineer, inspector, and ranger, are eligible for the Good Neighbor Next Door program. However, part-time employees are not eligible.

Emergency Medical Technicians (EMTs):

Must be full-time EMTs working for an emergency medical services unit within the locality where the home will be purchased.
Must be employed by a federal, state, local, or Indian tribal government agency in that jurisdiction.

Who can Apply Among Emergency Medical Technicians (EMTs):

Eligibility Criteria	Eligible	Not Eligible
Employment Hours	Must work at least 40 hours per week as an EMT	Part-time employees
Service Area	Must serve the local area in which the home is located
EMT Roles	✓ (e.g., federal, state, local, tribal)	Civilian personnel

Additional Requirements for All Participants:

Cannot be a past participant in the Good Neighbor Next Door program.
Do not need to be a first-time homebuyer, but cannot have purchased or owned a home in the past 12 months.
The purchased home must be the primary residence.
Must live in the home for the next three years and certify residence annually during this period.

It’s important to note that civilian personnel, dispatchers, and volunteers are not eligible for the program.

Advantages of the Good Neighbor Next Door program

Substantial Savings:
- Save 50% on the price of a home if you qualify for the program.
Low Down Payment:
- Put as little as $100 down if you use an FHA loan to buy the home.
Financing Options:
- Finance the closing costs.
- Roll repair costs into the mortgage with renovation loans like the FHA 203(k) loan.
Wealth Building:
- Build wealth quickly by becoming a homeowner at a significantly discounted cost.
Community Revitalization:
- Help revitalize a neighborhood.
- This, in turn, could help improve home values.

Disadvantages of the Good Neighbor Next Door program

Limited Housing Stock:
- The program is restricted to HUD-owned properties in designated revitalization areas, resulting in a limited selection of available homes.
Time Sensitivity:
- Qualifying homes are listed for only seven days, requiring participants to act quickly to secure a property.
Potential Financial Loss:
- If participants move out before completing the three-year tenure requirement, they may be required to repay a prorated balance of the discount received, resulting in potential financial loss.
Competition:
- Participants may face competition from other buyers, and the buyer is selected through a random lottery if multiple bids are placed on a house.
Refinancing Challenges:
- Refinancing options may be limited, with HUD agreeing to refinance only under certain conditions, such as using an FHA 203(k) loan or seeking a lower interest rate.

Alternatives to the Good Neighbor Next Door program:

Program/Option	Eligibility/Description
Teacher Next Door program	Grants of up to $8,000 available for teachers and school personnel. Down payment assistance of up to $10,681 also offered.
Private and nonprofit programs	Programs like Homes for Heroes provide housing assistance to first responders, military members, veterans, medical professionals, and teachers.
Government loans	FHA loans, VA loans, and USDA loans offer low- or no-down payment options for first-time homebuyers, military members, veterans, and others.
Down payment assistance programs	Grants and loans available from private lenders and government programs to cover all or part of a down payment, often targeted at first-time homebuyers.
Union assistance	Some labour unions, like the United Federation for Teachers, offer partnerships to assist members in becoming homeowners.
Assistance for nurses	Programs like the Everyday Hero Housing Assistance Fund provide aid to nurses, police officers, firefighters, and similar professionals.

How to apply for the Good Neighbor Next Door program:

Get Preapproved for a Mortgage:

Start by getting preapproved for a mortgage from a lender. While it’s not necessary to get an FHA loan, this type of financing may qualify you for a $100 down payment. Ensure you have enough funds to cover closing costs and broker fees.

Find a HUD-Registered Broker:

Contact a HUD-registered real estate broker. Only HUD-designated brokers can submit bids for HUD homes. You can find a suitable representative through HUD Home Store.

Find an Eligible Home:

Visit the HUD Home Store and search for homes listed in designated revitalization areas available through the GNND program. Ensure the property is eligible under the program, which typically includes single-unit properties.

Submit a Bid for the Property:

Work with your HUD-registered broker to submit a bid for the property you’re interested in. Your bid should be for the full purchase price of the home, but if you’re eligible under the GNND program, you’ll only need to pay 50% of the purchase price. You’ll also need to provide an earnest money deposit, which is typically 1% of the list price.

Complete Necessary Paperwork and Close:

If HUD accepts your bid, complete the necessary paperwork and prepare for closing. The closing process typically takes 55 to 80 days after your bid is selected, but it may be faster in some cases.

By following these steps, you can apply for the Good Neighbor Next Door program and potentially purchase a home at a significant discount in a designated revitalization area.