The Good Neighbor Next Door Program: Pros, Cons, & How It Works

Written by Jordan BlansitUpdated: 19th Jul 2022
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Have you ever heard a housing offer that’s too good to be true and is not a scam?

Well buckle in because you’re about to. With the Good Neighbor Next Door (GNND) program, you can slash 50% off housing prices if you work in a qualifying field. Better yet, with the right loan, you’ll only need $100 down.

Sounds way too good to be true, right?

Well, it isn’t – and it is.

Under the Good Neighbor Next Door program, all of these perks are possible. However, you’ll have to fit several parameters, including profession, location, and choosing from a limited supply of homes.

Here’s what to know.

What Is the Good Neighbor Next Door Program?

Good Neighbor Next Door is a program sponsored by the U.S. Department of Housing and Urban Development (HUD). 1

GNND helps homebuyers in certain community-oriented professions afford housing and bring much-needed services to run-down locales called “revitalization areas.” These economically distressed communities are marked by: 2

  • Low total household income
  • Lower homeownership rates
  • A higher number of FHA mortgages in foreclosure

Eligible participants willing to live and work in these areas receive 50% off a GNND-qualifying home. Note that prices are already steeply discounted to move units quickly. Due to the double-discounts, some homebuyers may qualify for a new home for under $50,000.

Who Qualifies for the Good Neighbor Next Door Program?

Only certain professionals qualify for the GNND program. These include: 3

  • Teachers: Individuals who work pre-K-12th grade at state-accredited public or private schools
  • Law enforcement officers: Individuals employed by a federal, state, local, or tribal law enforcement agency
  • First responders: Firefighters or EMTs employed by federal, state, local, or tribal fire departments or emergency medical responder units

But that’s not all. You must meet other criteria as well, such as working for an agency, school, or department that serves the area where you live. For example, teachers must work in the district that includes their home. 3

Additionally, you must: 1

  • Certify your intention to continue full-time in your profession for at least another year
  • Annually recertify that you’re using your home as your primary residence for three years after purchase*
  • Not have owned property in the year before submitting your bid
  • Never have purchased a GNND-eligible unit before
  • Not use the property for rental income*

*Exceptions apply for military personnel called away to active duty.

On the other hand, the GNND program does provide some leniency.

For instance, you don’t have to meet the minimum or maximum income requirements. You can also use a mortgage financing program of your choice (though FHA loans confer special benefits). And if the home requires repairs, you can delay your move-in date up to 180 days. 1

Good Neighbor Next Door Houses

To participate in the Good Neighbor Next Door program, the house and buyer both have to qualify. Due to strict requirements for what counts as a “GNND home,” the program may have no or a small handful of homes available in your state.

All GNND properties start as properties financed by FHA mortgages. When a borrower defaults on their FHA loan, the agency moves to foreclose. After that point, HUD takes ownership of the property and offers them for sale. 2

What separates GNND homes from other HUD-offered properties is their area status. All GNND homes are located in regions or neighborhoods designated “revitalization areas.”

Revitalization areas exist nationwide and in Puerto Rico (though some states may not offer these programs). The goal is to determine which neighborhoods have low homeownership rates, high foreclosures, and low household incomes. By drawing community-oriented professionals to these areas, HUD hopes to build them up for future success. 2

Unfortunately, while many revitalization areas exist, the number of GNND-eligible properties remains relatively low.

How to Buy a Good Neighbor Next Door Home

Before you start applying for Good Neighbor Next Door properties, you may want to get preapproved for a loan. This process lets you know the rates and terms you may qualify for. Bear in mind that not all mortgage lenders work with GNND or FHA loans, so you may need to shop around for one who does.

Next, you can search for homes for sale through the HUD Home Store website. Once you select the “Good Neighbors Next Door” link to the left of the map, the site will show you available homes. (Dark blue states have available properties; light blue states currently have no homes for sale.) You can see more information about a property by clicking the case number.

Remember that inventory refreshes weekly, and all homes are sold-as is. In other words, you’re responsible for all fixes and refurbishments. If you find a property you want to purchase, you’ll have to act quickly.

The next step is to find a HUD-registered broker to put in your bid. The broker will bid the full list price of the home to start. You may also have to submit paperwork showing you live and work in a qualifying profession in the area. HUD also requires earnest money totaling 1% of the list price with a minimum of $500 and maximum of $2,000. 4

At the end of the bid period, if more than one family is interested, the winner will be chosen by random lottery. If your bid is chosen, HUD will apply the 50% discount by taking out a second “silent” mortgage in their name. 5

Generally, GNND homes close within 45 days after winning the lottery.

Good Neighbor Next Door Mortgages: Rates & Loan Options

The Good Neighbor Next Door program allows you to use a mortgage program of your choice (as long as you meet the lender’s requirements.) Bear in mind that not all lenders work with the GNND program or FHA loans.

That said, FHA loans confer special benefits, including a down payment as low as $100 and the ability to finance your closing costs. You can also take out an FHA 203(k) loan to roll the cost of needed repairs into your mortgage. 6

Under the GNND program, you technically take out two mortgages: one through your chosen lender and one through HUD. The HUD mortgage is equal to 50% of the purchase price and does not require you to make principal or interest payments. As long as you meet the program’s requirements, the HUD mortgage will be forgiven after three years. 1

Good Neighbor Next Door Pros and Cons


  • GNND homes are deeply discounted before applying the 50% off
  • Can take as little as $100 down and finance closing and repair costs with an FHA loan
  • Once the second silent mortgage is forgiven, you’ll receive the difference as additional home equity
  • Help revitalize a neighborhood and potentially improve neighborhood home values


  • Housing stock is extremely limited and sold as-is
  • Eligible homes must be HUD-owned in declared revitalization areas
  • Homes are only listed for seven days before going to market at full price
  • Winners are selected by lottery if more than one person applies
  • Refinancing is only possible under certain conditions
  • Must remain in the home at least three years to have the silent mortgage forgiven
  • Only individuals in certain professions can apply

Are There Any Alternatives to the Good Neighbor Next Door Program?

Homes for Heroes

Homes for Heroes programs help current or former first responders, teachers, military members, and healthcare professionals get into a home. This network of real estate agents, inspectors, and other service providers offers free or discounted services, rebates, or grants to help you save on your down payment, closing costs, and purchase price. 7

Teacher Next Door

Teacher Next Door is a network of federal, state, local, nonprofit, and for-profit agencies that aims to streamline the homebuying process. Originally only available for teachers, the program has since expanded to include police officers, some medical professionals, government-workers, and first responders. 8

The goal is to help community-oriented individuals get into a home by matching with programs that offer grants and down payment assistance and negotiate housing prices. And unlike the GNND program, eligible professionals can bid on any home in the market. 8

First-Time Home Buyer Programs

Many states also offer first-time homebuyer programs to assist buyers with closing costs, down payments, tax deductions, or mortgage eligibility. Some are specifically geared toward certain professions, while others assist anyone who hasn’t owned a home in the last three years.

Is the Good Neighbor Next Door Program Worth It?

If you’re an eligible professional looking to purchase property for cheap, then the Good Neighbor Next Door program can help you get into a home. However, the program does come with trade-offs, including limited availability.

Bottom Line: Good Neighbor Next Door Program

The Good Neighbor Next Door program makes homeownership accessible for folks who work in vital community-oriented careers. If you meet the requirements, the program can help you get ahead in an increasingly competitive housing market.


Jordan Blansit
Jordan Blansit

Jordan Blansit is a Senior Writer, Researcher, & Product Analyst for SimpleMoneyLyfe with an inexplicable predilection for mortgages, investing, and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her in the California Redwoods or Oregon Siskiyous. Jordan’s areas of expertise are mortgages, personal loans, credit cards, and investing.