Help Your Community with the Good Neighbor Next Door (GNND) Mortgage

February 11, 2016

Help those that make our communities stronger by offering the FHA Good Neighbor Next Door program to the law enforcement officers, pre-K through 12th grade teachers, firefighters, and emergency medical technicians purchasing homes in HUD revitalization areas.

The benefits are significant to all involved. HUD revitalization areas (designated as such due to household income, homeownership rate, and FHA-insured mortgage foreclosure activity) attract residents who are already committed to the community as law enforcement, educators, and emergency personnel, to become even more fully invested as residents and homeowners. The home buyers receive a 50% discount off the purchase price of the property, allowing these local heroes to become homeowners with a drastically reduced financial commitment.

Good Neighbor Basics

  • 600 minimum qualifying credit score (580 Correspondent Delegated).
  • Available in 10, 15, 20, 25, and 30 year fixed terms – 5/1 Hybrid ARM option available.
  • Eligible property must be a HUD owned single family residence and includes 1 unit primary residences, Manufactured Housing, FHA approved Condominiums and PUDs.
  • All participants must be employed full time by a federal, state, county, municipal government, Indian tribal government, division of local government, or public/private school.
  • Current homeowners cannot participate.
  • Only $100 required for down payment.
  • Customary and reasonable closing costs may be financed.

How It Works
Eligible buyers find a home within a designated revitalization area (find the link to the HUD Home Store which makes it easier to identify qualifying properties at They are then given a reduced cost of 50% of the purchase price, as long as they agree to live in the home a minimum of three years, and to occupy it as their sole residence.

The discount is given in the form of a second mortgage and note for the reduced amount, which is forgiven when they fulfill the commitment of living in the home for three years.

Finance Repairs
Many of the eligible properties are in need of repairs, but there is an excellent potential solution should buyers be concerned about the cost renovating their new home. The Good Neighbor Next Door program can be used in conjunction with the FHA 203(k) Rehabilitation Mortgage or the FHA 203(b) Repair Escrow, allowing them to finance both the reduced purchase price and the cost of work on the property.

If using this option causes the LTV to exceed 100% the up-front mortgage insurance premium required by the FHA cannot be financed as part of the loan. When repairs are required the residency requirement is delayed to allow time for the work to be completed.

Photography by [Scott Betts] ©

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