Good Neighbor Next Door Home Buying & Mortgage Program

By Brad Yzermans on February 2, 2014 in Mortgage Programs

The US. Dept. of Housing and Urban Development (HUD) offers a home buying and mortgage program for Teachers (Pre-K-12), Police and Law Enforcement, Firefighters, and EMT/Emergency Responders, called the Good Neighbor Next Door Program (GNND).

The Good Neighbor Next Door program allows eligible buyers to purchase homes in targeted revitalization areas for 50% off the listed price of the HUD home!

EXAMPLE: If you found a HUD home listed for sale at $300,000, you could purchase the home for just $150,000 and the other $150,000 would become a ‘silent second’ mortgage that will be forgiven after three years of primary residence occupancy.

What is a HUD Home? (click to read)

A home that was foreclosed on by HUD where the owner had an FHA loan on the home. Homes can be found on the HUD Home Store Listings. Buying a HUD home is very different than buying other homes. You can read more about buying a HUD home here.

The GNND is often referred to as the homes for heroes program, teacher next door, police next door, or firefighter next door program.

Purpose of Good Neighbor Next Door Program

HUD’s goal of GNND is to promote home ownership, strengthen communities, and revitalize neighborhoods in HUD targeted areas. HUD believes if they financially reward and encourage teachers, police, firefighters, and EMT’s to buy and live in a HUD owned home , that it will bring stability to the community.

Conditions of Buying

Eligible buyers can purchase homes for 50% off the list price
Buyers accept a ‘silent second’ mortgage equal to 50% of the sales price
Must agree to live in the home for a minimum 3 years as their primary residence
Buyers must go through an annual certification process to ensure primary occupancy
Do NOT have to be a first time home buyer
Cannot own any other properties at the time of buying.
Single family residence only

More Options ==> Don’t want to live in a ‘targeted‘ community but still want special financing? Check out the new CalHERO loan program for Teachers, Police, Firefighters/EMT’s & Public Employees

Good Neighbor Next Door Eligibility

Police/Law Enforcement/Teachers must be employed full time by the federal, state, county, municipal, Indian tribal government, pre-k-12 public or private school.
Firefighters and EMT’s must be be employed by a fire department or emergency medical responder unit by federal, state, county, municipal, or Indian tribal govt.
Buying the home must be with-in a reasonable commute of where you work.

You can read more details on eligibility here.

==> Teachers Only: Home Buyer Assistance program for Teachers!

Good Neighbor Next Door Mortgage

The GNND program is not an actual loan program. It’s more of an incentive to help HUD sell homes that may not be the most desirable, but the 50% of the home is technically a mortgage even though the buyer is not repaying it. This is the ‘silent second’ mortgage.

Buyers can use any type of loan like FHA, VA, USDA, Conventional financing, or cash to purchase a Good Neighbor Next Door home. Since HUD homes are sold ‘as is’, and in need of repair, buyers often use the FHA 203(K) Streamline renovation/rehab loan to purchase.

FHA does have a special financing $100 Down Payment payment program when buying a HUD home but currently is not available in California. You can see HUD sales incentives here here.

You can read more about the silent second mortgage here. Frequently Asked Questions, please refer to HUD’s site here.

Consider All Your Options

If you are a teacher, police officer, in law enforcement, are a firefighter, or emergency medical technician/EMT and want to explore all of your home loan options with a mortgage lender who specializes in affordable home financing programs, contact me or call 951-215-6119.

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