What Are the Requirements of the Good Neighbor Next Door Program?

To use HUD's Good Neighbor Next Door (GNND) program, you must work full time as a law enforcement officer, a pre-K through 12th grade teacher, a firefighter, or an emergency medical technician (EMT) serving the area where the home is, and neither you nor your spouse can have owned a home in the 12 months before you bid. In exchange, HUD sells you one of its foreclosed homes in a designated revitalization area at 50 percent off the list price. You must live in the home as your only residence for 36 months, and you sign a "silent second" mortgage for the discount that HUD forgives if you meet that term.

For the conventional loan rules that most buyers use, see what a Fannie Mae or Freddie Mac loan requires.

Who qualifies

You must hold one of these jobs full time, both when you submit your bid and on the day you close:

• Law enforcement officer. Employed by a federal, state, local, or tribal law enforcement agency, sworn to uphold the law and make arrests, in a job that directly serves the community where the home is located.
• Teacher. A full-time teacher at a state-accredited public or private school serving pre-K through 12th grade, whose students come from the community where the home is.
• Firefighter or EMT. Employed full time by a federal, state, local, or tribal fire department or emergency medical services unit that serves the community where the home is.

You also must:

• Certify that you intend, in good faith, to stay in that job for at least 12 months after closing. If you later leave the job, HUD does not demand the discount back, but you still must finish the 36-month occupancy term.
• Not have owned any residential property, alone or through your spouse, during the year before your bid. You do not have to be a first-time buyer.
• Never have bought a home, and have a spouse who never bought one, through GNND or its predecessors, the Officer Next Door and Teacher Next Door programs.

If both spouses qualify and bid on the same home, HUD will approve only one of the bids.

The 50 percent discount and the silent second mortgage

You bid the full list price. HUD's asset manager then applies the 50 percent discount, so you pay half. At closing, you sign a second mortgage and note payable to HUD for the discount amount. It charges no interest and needs no monthly payments.

The second mortgage shrinks by 1/36 at the end of each month you live in the home, and it reaches zero after 36 months. If you sell or stop living there earlier, you owe HUD the balance left on that date. After the term ends, HUD's contractor sends a lien release to your county recorder, generally within 30 days (county recording can take longer), and you keep any equity when you sell.

Worked example

• HUD lists a home at $200,000. You bid $200,000 and pay $100,000.
• You sign a $100,000 second mortgage. It drops by $100,000 / 36 = $2,777.78 for each month you live there.
• If you move out after 24 months, you owe HUD 12/36 of $100,000, or $33,333.

Occupancy and certification rules

The 36-month term starts after closing, on a date set by how much repair work HUD determines the home needs before you can move in:

During the term:

• The home must be your sole residence. You cannot rent it out.
• Each year, HUD's loan servicing contractor mails you form HUD-9549-D, which you sign and return to certify that you still live there. If you do not return it, HUD may send an investigator to check occupancy and refer the case to HUD's Office of Inspector General. Falsifying occupancy is a felony.
• If you need to be away temporarily, send HUD's servicing contractor a signed written request at least 30 days in advance, stating the reason and dates and certifying that you will return and finish the term. HUD approves interruptions at its discretion.
• If you are called to active military duty, you can rent the home while you serve, and that time counts toward the 36 months. You must notify HUD's servicing contractor and move back in when your duty ends. HUD's updated handbook, required for all cases by November 10, 2026, sets that deadline at 30 days after your release from duty or the end of the rental period.

How HUD lists homes and picks a buyer

GNND homes are HUD-owned single-unit homes (detached houses, townhouses, and condos) in revitalization areas that HUD designates. Homes are sold "as is," with no warranty and no seller-paid repairs. Teachers, firefighters, and EMTs must buy in the community where they work.

1. Find a home. Eligible homes are listed on HUD Home Store (hudhomestore.gov) for a 7-day period during which only GNND buyers, government agencies, and HUD-approved nonprofits can bid. The list changes weekly, and federal rules cap GNND sales at 5 percent of the number of foreclosed homes HUD took back through FHA insurance claims in the prior fiscal year, so few homes are available at any time. See where to find bank-owned and HUD homes for other listing sources.
2. Hire a HUD-registered broker. You cannot bid on your own. The broker submits your bid at the full list price with forms HUD-9549 (personal information), HUD-9549-E (employer verification), and the questionnaire for your job: HUD-9549-A (law enforcement), HUD-9549-B (teacher), or HUD-9549-C (firefighter/EMT).
3. Put down earnest money. The deposit is 1 percent of the list price, at least $500 and no more than $2,000. It is credited at closing, refunded if your bid loses, and can be forfeited if you win and fail to close.
4. Lottery. If more than one eligible buyer bids, HUD picks the winner at random and draws two backup bidders in case the winner cannot close. HUD does not negotiate the price.

Financing options, including FHA

You can pay cash or use FHA, VA, or conventional financing:

• FHA. The down payment is $100, and reasonable closing costs can be added to the loan. You still must meet FHA's borrower requirements for credit and income. The loan can be a standard FHA loan, an FHA loan with a repair escrow of up to $11,000, or an FHA 203(k) rehabilitation loan that also pays for repairs.
• Conventional. The loan cannot exceed the discounted sales price.
• State or local help. Down payment or repair assistance from government programs can be combined with GNND.

HUD does not pay your closing costs or your broker's commission on a GNND purchase. With FHA financing, the lender adds the commission and your closing costs to the discounted price when it sets the loan amount.

GNND's 36-month term is separate from FHA's own occupancy rule; see how long you must live in a home bought with an FHA loan.

Refinancing during the 36 months

You can refinance your first mortgage, but the new loan plus the remaining second mortgage cannot exceed 95 percent of the home's appraised value. HUD keeps its second mortgage ahead of the new loan unless it agrees to subordinate (move behind) it, which it does only if the refinance lowers your APR, funds an FHA 203(k) rehabilitation, or prevents a default on your first mortgage. To request subordination or a payoff figure, contact HUD's loan servicing contractor.