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How to Buy a House for Half Price

How to Buy a House for Half Price

Want to get HALF OFF the biggest purchase of your lifetime? Who wouldn’t?! The US Department of Housing and Urban Development (HUD) offers the Good Neighbor Next Door program for qualifying buyers who work as law enforcement officers, PK-12th grade teachers, firefighters and emergency medical technicians (EMT) who help revitalize certain communities.


What is the HUD?

The US Department of Housing and Urban Development (HUD) was established in 1965 to address housing needs within the United States. The goal of this agency is to develop and improve communities and housing for all Americans. They do this through a variety of programs, including low income housing initiatives and the Good Neighbor Next Door program.

What is the Good Neighbor Next Door program?

The Good Neighbor Next Door program provides HALF OFF the home purchase of qualifying buyers who purchase homes in HUD-designated “revitalization areas.” With this program, you will get 50% off the HUD appraised value and your down payment may be just $100!

These areas are determined based on the average household income, home ownership rate and the FHA-insured mortgage foreclosure activity. It is believed that by expanding home ownership opportunities, these communities will be strengthened and improved.

The only catch? You have to be a law enforcement officer, PK-12th grade teacher, firefighter or emergency medical technician (EMT) and you cannot own any other real estate. You also have to live in the home for three years (36 months) as your only residence. That’s it!


Should I use the Good Neighbor Next Door program?

The Good Neighbor Next Door program is an excellent way to save a lot of money on your home purchase. A house is the most expensive purchase most people make in their lifetimes, so a 50% discount is a pretty sweet deal! Also, you could move in with just a $100 down payment.

However, there are some reasons you may not want to consider the Good Neighbor Next Door program.

The biggest problem is that there’s a limited supply of eligible homes and they are located in specific areas. If location is important to you and you definitely want to live in a certain city or state, this program may not be a good fit for you.

In order to participate in the program, you cannot own any other real estate and you cannot have owned any real estate within the previous 12 months. If you are a current or recent homeowner, this program is not for you.

How does the program work?

You can find the current list of available homes on the HUD website.  I recommend using the map instead of the search feature. The map clearly colors the states where homes are available, making it easy to identify areas where homes are available. At the time of this writing (Jan 3, 2018), there are homes available in Kansas, Maryland, Michigan, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania and Texas.

As you search for homes, remember that you will pay just half of the HUD’s listing price. If you qualify for a FHA-insured mortgage, your down payment will be just $100 and you can finance your closing costs. You will, however, be expected to pay between $500 and $2,000 in earnest money (usually 1% of the home’s list price).

When you purchase your home through this program, you will obtain two mortgages. The first mortgage can be any type you choose, such as a FHA, VA or conventional mortgage. This is the mortgage you will pay every month.


The second mortgage is a “silent second” from HUD. You will not pay on it and it will not accrue interest. As long as you live in the home for three years (36 months), this second mortgage will disappear. However, if you do not stay the entire three years, you will have to pay a pro-rated portion of this second mortgage back to HUD.

You will have 30, 90 or 180 days to move into your home, depending on the level of repairs required. Because some of these homes do require repair, you may want to consider a FHA loan that allows you to include the cost of repairs in your mortgage.

What happens if I leave or lose my job?

If you leave the employment that made you eligible for this program, nothing happens. The original terms still apply and you must live in the home for 36 months or you will have to repay the prorated amount of the silent second mortgage back to HUD.

However, when you apply for the program, you must certify that you intend to remain employed in an eligible field for at least one year following your home purchase. You should not willfully leave your employment before you have fulfilled that obligation.

What happens when I sell the house?


As long as you’ve lived there for three years, you can sell the home and keep any equity or profit you receive from the sale of your home! Since you only paid half the home’s cost, there could be a hefty profit involved.

However, if you sell the home before the three year period, you will be required to repay a pro-rated amount of the “silent second” HUD mortgage. The amount you will owe can be determined by dividing the second HUD loan by 36. That’s the monthly amount. Multiply that by the amount of months you have left on your 36 month obligation to find out how much you will owe HUD if you leave.

The only exception to this is if the homeowner is called to active military duty. In this case, the homeowner does not have to occupy the home and may rent it out until they return.