HUD Good Neighbor Program: How Does It Work?

The HUD Good Neighbor Next Door Program offers incentives for certain government employees to purchase a home at 50 percent off the list price. Certain qualifications need to be met to participate in the program. Here’s how the program works:

Eligibility

To be eligible to purchase a home, you must be employed full time in one of the following professions:

• Law enforcement (federal, state, county, city or tribal government)
• Elementary or high school teacher (public or private school)
• Firefighter
• Emergency medical technician

Purchasing a Home

The homes sold through the HUD Good Neighbor Program are located in designated revitalization areas. The houses will go up for sale at a 50 percent discount through the program. There’s a catch, though: The homes are only for sale for a period of five days. You can check the listings through the Housing and Urban Development website for your state and submit a letter of interest in purchasing a property. If more than one person expresses an interest in the same house, the approved buyer will be chosen at random from among them.

Second Mortgage

The HUD Good Neighbor Program requires you to take out a second mortgage on the house you buy, in addition to the original mortgage. The second mortgage covers HUD’s interest in the home for the duration of the program (three years). However, you don’t have to pay anything toward the second mortgage. As long as you fulfill the occupancy requirements, the mortgage is released after three years.

Occupancy Requirement

You have to agree to live in the home and use it as your primary residence for three years as part of the HUD Good Neighbor Program. At the end of this period, the second mortgage is released and you have no more obligations to the program.