How Teachers, Cops, Firefighters and EMTs Can Buy a Home for 50% Off
If you’re a teacher, firefighter, law enforcement officer or EMT, you definitely know a thing or two about hard work. But as challenging as your position is, hopefully you also consider it rewarding: You’re performing an invaluable public service.
It turns out, it’s not entirely impossible to put a monetary value on the work you do. Thanks to the HUD Good Neighbor Next Door program, you could receive a 50% discount off the list price of your next home purchase, provided that you and the property meet several requirements.
Here’s what you need to know about this one-of-a-kind opportunity.
HUD’s Good Neighbor Next Door Program: How Does It Work?
Half off the purchase of a home is a big deal, so it’s not surprising that there are some restrictions. Here’s how it works.
To qualify for the Good Neighbor Next Door Program, you must be one of the following:
- A law enforcement officer employed full time by a federal, state, local or tribal government agency.
- A K-12 teacher employed full time by a state-accredited public or private school serving students who reside in the area where the purchase home is located.
- A firefighter or emergency medical technician (EMT) employed full time by a fire department or emergency medical services responder unit of the federal, state, local or tribal government serving the area where the home you’re purchasing is located.
Once you know that you’re qualified, it’s time to find a qualified home. The property must be a single-family house, condo or townhouse located in one of the program’s designated “revitalization areas,” which are authorized by Congress for the deal based on criteria like level of homeownership, foreclosure rate and householder income.
This is where you may be raising your eyebrows, we realize. Exactly what kind of “revitalization” are these areas in need of? In short, is your new home going to be in a place you actually want to live?
Anna DeSimone, a long-time industry professional and award-winning housing finance author, suggests consumers save their skepticism. HUD owns “thousands and thousands” of properties, she says, many of which are in very attractive neighborhoods. “You might go and see one house boarded up, but everything else is pristine,” she said.
In other words, while it’s important to check out the property in person and get a professional inspection, this deal can often be a total steal.
Eligible homes are owned by HUD and listed for sale exclusively through the program for seven days. You can find them by using this online tool, which works in much the same way other popular real estate search platforms do, displaying photos, details, and the asking price along with the full property address.
Just one thing: Be sure you’re looking in the same geographical location where you’re planning to work, advises DeSimone. Bringing public servants to the area is the whole point of the program — hence the name.
Purchasing a Home Through the Good Neighbor Next Door Program
Let’s say you find your dream home available for half off . What comes next?
When you purchase a home through the Good Neighbor Next Door program, you’ve got plenty of funding options. You can pay in cash — an often-out-of-reach option the 50% discount may just bring to the table. Otherwise, you can apply for a conventional, FHA loan or VA mortgage, and you can even use down payment assistance funds, as well.
You will, however, be required to put down 1% of the list price as an “earnest money deposit,” which is cash that must come out of pocket. That said, these homes are selling for about $80,000 on average, said DeSimone, so you’re only looking at a cost of about $800 — and no more than $2,000, per the program’s stated rules. (The minimum earnest money deposit for a HUD home is $500.)
You’ll also be required to live in the home for three years, and your residency will be confirmed each year by mail. After this three-year period, you’re free to sell the house if you wish, and keep any equity or appreciation you earn in the bargain.
One important caveat: As a failsafe for the three-year residency requirement, Good Neighbor Next Door buyers are required to sign a second mortgage in the amount of the discount they receive — which is, in a half-off deal, equivalent to the purchase price of the house. This “silent” second mortgage doesn’t require any payments or accrue any interest, and it’s dissolved so long as you meet the three-year residency requirement.
Is the Good Neighbor Next Door Program Worth It?
Like any incentive program, the Good Neighbor Next Door program can be immensely helpful for those who qualify… but it’s not for everyone.
That said, there are plenty of other options available to homebuyers of all backgrounds and experience levels.
For instance, many states offer special homebuyer assistance to veterans, target-area buyers and other select demographic groups, often including public servants. (Here’s a great resource to find out what’s available where you live.)
And if you’re a first-time buyer, there are even more options out there to help you get set up. (Psst: Here’s a pretty thorough beginner’s guide.)
Jamie Cattanach’s work has been featured at Fodor’s, Yahoo, SELF, The Huffington Post, The Motley Fool and other outlets. Learn more at www.jamiecattanach.com.