The Good Neighbor Next Door: Buy a Home for Half Price and Only $100 Down

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News outlets across the country have reported for months that buyers face intense competition these days from other hopefuls for nearly every property for sale in the U.S. It’s a seller’s market. In fact, many homes sell very quickly, and end up selling for amounts far above the list price. But thanks to a government-run program, eligible buyers can purchase a home for 50 percent off and with a down payment of as little as $100. Really. The program isn’t a fit for most home buyers, but, for those that it is, it’s worth learning about.

The Good Neighbor Next Door program

The Department of Housing and Urban Development (HUD) runs the Good Neighbor Next Door program. The program aims to make certain communities stronger and safer by offering substantial incentives to certain members of the community who choose to take up residence there. Buyers who contribute value to the community with their skills can buy a single-family home for half price in an area being revitalized. Plus the down payment may be as little as $100.

Who is eligible?

The Good Neighbor program is open to teachers (pre-Kindergarten through high school), police officers, firefighters and emergency medical technicians (EMTs). More details about eligibility can be found here.

How to buy a home through the Good Neighbor program

Visit HUD’s website to search for eligible properties in your area. (Enter “Good Neighbor Next Door” as the buyer in the search form and only eligible properties will appear in the results.) Properties are in a variety of conditions, including outstanding.

When you purchase a home through the Good Neighbor program, you can use any traditional lender, so long as your loan value meets the lender’s minimum. You may use any financing program you qualify for, such as FHA, VA or 203(k) loans.

What’s the catch?

The program is only available for homes in designated revitalization areas, and listed exclusively for sale by the program. Listings change daily.

Buyers must agree to live in the home for 36 months. Stated another way, buyers agree to own and live in the property as their sole residence for a minimum of three years. You will be required to certify annually that you live in the home, and enforcement is strict. After the three years have passed, you are free to do as you wish, including sell the home and pocket any profit.

Buyers are also required to sign a second mortgage and note for the discounted amount. At the end of the three year period, the second mortgage is released. No interest or payments are required on the “silent second” mortgage at any time, provided you fulfill the residency requirement. If you do not, then a pro-rata portion of the discounted amount becomes a debt that you must repay.

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Kimberly Rotter
Kimberly Rotter is a writer and editor in San Diego, CA. She and her husband have an emergency fund, two homes, a few vehicles, a handful of modest investments and minimal debt. Both are successfully self-employed, each in their own field. Learn more at RotterWrites.com.

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