One of the most common obstacles to home ownership is the down payment. It is often difficult for first-time homebuyers to put up the initial funds necessary to satisfy the standard 20% down payment, or perhaps even the 3.5% down required by popular Federal Housing Administration (FHA) loans.
As a result, there have been a number of government programs designed to provide low down payment loan options for first-time home buyers and those who otherwise struggle to overcome the hurdle of a high down payment. Through participation in the Federal Good Neighbor Next Door program (GNND), it is possible to purchase a single-family home with a down payment as little as $100.
GNND builds upon the "Officer Next Door" (OND) and "Teacher Next Door" (TND) programs of years past and continues the Department of Housing and Urban Development's (HUD) policy of advancing the rejuvenation of specially designated "Revitalization Areas."
Designed to enhance the quality of distressed neighborhoods, qualified residents can enjoy a 50% discount from the list price of an eligible home in return for a commitment to stay in the property and use it as a primary residence for at least 36 months.
Good Neighbor Next Door eligibility extends to local law enforcement officers, teachers of pre-K through 12th grade, firefighters and emergency medical technicians.
Full-time law enforcement officers who work for federal, state, local or Indian tribal governments are qualified for the program. The same requirements for full-time work in a government unit hold for firefighters and emergency medical technicians.
Meanwhile, only full-time pre-K through 12th grade teachers working at state-accredited public or private schools are eligible for discounted homes, and only in the area in which the school is located.
It is not necessary to be a first-time home buyer to take advantage of the GNND program, but it is required that you do not own any residential property at the time of your application and have not done so at any point within the last calendar year.
Participation in the GNND program require eligible home buyers to sign a silent second mortgage at the discounted amount. However, payments on this mortgage are waived so long as the terms of the occupancy requirement are met. Note that you will be responsible for a prorated portion of the mortgage if you move out of the home before the three year requirement is completed.
Once the three years of continuous residence are completed, all restrictions are lifted and the home is completely yours to sell, rent out, or live in for as long as you would like.
You can search for available homes in your area at the HUD Homes webpage. Check back often if you can't find one in your neighborhood at first, as GNND properties are available for only seven days. In the case of multiple claims on a single home, participants are selected by random lottery, giving all parties an equal chance at the property.
Purchasing a home through the GNND program is a great choice for eligible individuals who can benefit from the large discount and incredibly low $100 down payment. While it may require persistence to find a suitable property in the right area, the 50% home price discount $100 down payment justify the effort in the end.
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