The U.S. Department of Housing and Urban Development (HUD) offers such a deal if you qualify. It’s called the Good Neighbor Next Door Sales Program, and it’s designed to encourage members of certain professions to move into and put down roots in particular areas. If you’re a teacher, law enforcement officer, emergency medical technician, or firefighter, you might be eligible to participate. Here’s what you need to know.
What Is the Good Neighbor Next Door Program?
Single-family homes, townhouses, or condominiums located in zones designated as revitalization areas can be listed for sale in the program and are available for purchase for up to seven days. The program is designed to attract certain professionals to become part of these neighborhoods. If you meet the requirements of the program, you can submit your interest in the home. (Follow the instructions for that specific property.) After HUD verifies that you qualify, you can buy the home at 50% off. So, if the home’s listing price is $150,000, for example, you can buy it for $75,000. However, if more than one eligible buyer submits an application through the program for the same home, a random lottery is used to determine who will receive the opportunity to make the purchase. Revitalization areas are those that receive the designation based on the National Housing Act, which is determined by household income in the area, the rate of homeownership, and the amount of foreclosure activity on mortgages insured by the Federal Housing Administration (FHA). The idea is to encourage expanded homeownership in a revitalization area in the hopes that other economic opportunities will follow.
Who Is Eligible for the Program?
To be eligible for the Good Neighbor Next Door program, you must be engaged in one of the following professions:
Law enforcementFirefighterTeaching (grades pre-K through 12)Emergency medical technician
You also have to agree to live in the home as a primary residence for 36 months. Depending on the situation, you will have to move into the home within 30, 90, or 180 days. If you can comply with these requirements, on top of being a member of one of the eligible professions, you are likely eligible to participate. Additionally, you can’t own residential property at the time you apply for the program. You also can’t have owned a home for a year prior to your offer to purchase a home in this manner. The house you’re purchasing must be your primary residence. There are no income limits or minimums for the Good Neighbor Next Door program. You only have to meet the requirements for the mortgage financing program you’re participating in. The good news is that once you’re in an eligible residence, if you leave your profession, you won’t have to give up the home. You just have to complete the required occupancy period to avoid having to make payments on the discounted portion of the home purchase price.
How To Apply
If you meet the eligibility criteria for the program, your next step is to apply. Here are the steps you need to take to move forward. It can help to have financing lined up ahead of time, as well as to consult with a knowledgeable real estate broker about your options and which lenders offer to finance for this program. With the right broker in your corner, you’re more likely to successfully navigate the process.
Pros and Cons of Participating
Before you move forward, it’s important to understand the advantages and disadvantages of being involved. If you meet the program requirements and qualify for financing, it may make sense to take advantage of this offer, especially because you can sell the home and keep the profits after you meet the occupancy requirement. However, you are subject to spot checks at any point during that period to verify that the home is your primary residence.
Alternatives to the Good Neighbor Next Door Program
If you don’t meet the requirements of this program, there are other options available to you. First, check with your state and local government to see what they offer. Some states, counties, and cities provide help when it comes to purchasing a home. You might be surprised by what’s available. Realize that HUD doesn’t offer direct grants or loans to individuals, so anyone claiming that you can get a direct HUD grant might be scamming you. Check with your local government before accepting help from someone claiming to offer HUD grants or loans. Additionally, you can bid on HUD homes, even if you don’t qualify for a specific program. These are single-family, real estate–owned (REO) homes that HUD is responsible for. You can see listings at the HUD Home Store and ask your real estate broker or agent to place a bid on your behalf. Finally, consider looking into nonprofit organizations, like Habitat for Humanity, that can help you buy a home at an affordable price in exchange for performing certain duties, including helping to build your home or other people’s homes. This is known as sweat equity and might help reduce the overall cost involved with buying a home.
The Bottom Line
If you’re looking for help buying a home or want a good deal and work in a qualifying public-service profession, you might qualify for a program like Good Neighbor Next Door that can offer a steep discount on your house. Carefully consider your budget and your options, and see what you qualify for. With the right approach, you might be able to save up to 50% on your next home purchase.
