Frontline Worker? Here’s How to Buy a Home at a Deep Discount | The Motley Fool

HUD’s Good Neighbor Next Door Program serves a dual purpose: To provide homes to frontline workers at a 50% discount and help revitalize communities around the country.

Who’s eligible?

The Good Neighbor Next Door Program is available to law enforcement officers, firefighters, emergency medical technicians (EMTs), and teachers.

How deep is the discount?

Eligible participants can purchase a home at 50% off the current appraised value. For example, if a home appraises for $300,000, the buyer will pay $150,000. The other $150,000 becomes a “silent” second mortgage that is forgiven after 36 months of residency.

Specific eligibility

Not every police officer, firefighter, EMT, or teacher qualifies for the Good Neighbor Next Door Program. Here are the specifics.

Law enforcement

Officers must be employed full-time by a federal government, state, parish, local government, or Indian tribal government. As part of your job duties, you must be sworn to make arrests. Law enforcement agents of private companies are not eligible.

Firefighters and EMTs

Like law enforcement officers, you must be employed full-time by a federal, state, parish, local government, or Indian tribal government. First responders working for privately owned companies are not eligible.


You must be a classroom teacher for pre-kindergarten through 12th grade and employed full-time by a state-accredited public or private school. Members of support staff are not eligible.

What’s the catch?

Eligible applicants must purchase a home in the community they work in, and the home must be used as their primary residence. There is an annual certification process to ensure that participants live on the property for three years. After three years, the “silent” second mortgage is forgiven, and the homeowner is free to sell the property. When the home is sold, the homeowner keeps all the proceeds.

How to buy

When a HUD home hits the market, it is only available to participants in the Good Neighbor Next Door Program for seven days, meaning you must act quickly. Check the listings for HUD homes in your state.

Once HUD knows you’re interested, you will be assigned a real estate agent to assist you with the process. The agent provides you with the information you need to get pre-qualified with a mortgage lender and places your name in a lottery drawing. The name HUD pulls from that drawing is the “winner.” While that may sound like a frustrating process, HUD insists that the odds of winning a home are high and that many homes go unclaimed in the seven-day period. Also, because you’re competing against a select group of buyers, there are rarely many names in the drawing at the same time.

The amount of money you need for a down payment depends on the type of loan you choose.

The minimum credit score required also depends on the type of mortgage you get.

What if a home is a mess?

All properties for sale are HUD-owned and frequently located in areas considered in need of revitalization. Although HUD homes are sold “as is,” buyers can use any loan type to purchase the property, including:

Buyers often use a program like the FHA 203(k) renovation loan to purchase and rehab their properties. In other words, the cost of upgrading the home gets added to the mortgage.

By providing the Good Neighbor Next Door Program, the federal government makes homes affordable to hardworking frontline workers, allowing them to keep more money in their bank accounts.

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