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Here’s How Teachers and First Responders Can Buy a Home for Half Price
If you’re a law enforcement officer, pre-kindergarten through 12th-grade teacher, firefighter or emergency medical services technician, you may be eligible to get a 50% discount on the purchase of a new home.
Through the U.S. Department of Housing and Urban Development’s Good Neighbor Next Door Program, qualified candidates can buy a house for half off the list price as long as the buyer agrees to live there for 36 months.
The program is a great opportunity for teachers and first responders who want to live in the community where they work but can’t afford the available homes.
Eligible buyers are limited to purchasing homes in what HUD calls “designated revitalization neighborhoods.” These congressionally approved geographic areas are slated for rejuvenation in a variety of ways, including expanded homeownership opportunities.
Let’s take a look at the 2017 average yearly salaries of workers eligible for the Good Neighbor Next Door program:
- Law enforcement officer: $62,960
- Kindergarten and elementary school teachers: $56,900
- High school teachers: $59,170
- Firefighters: $49,080
- EMTs and Paramedics: $33,380
Yet, the median sales price for an existing home in March, 2018 was $250,400.
With a 20% down payment of $50,080 on a house at that price point, the monthly payment on a 30-year fixed mortgage loan at 5% interest clocks in at $1,469.
Buying a house at half price through the Good Neighbor Next Door program could have a significant impact on monthly mortgage payments and put a new home within reach for teachers and first responders across the country.
Here’s what you need to know about HUD’s Good Neighbor Next Door Program.
Qualified applicants must:
- Be a law enforcement officer, pre-kindergarten through 12th-grade teacher, firefighter, or emergency medical services technician.
- Live in the property for 36 months as your sole residence.
- Sign a second mortgage and note for the discounted amount.
- Use a real estate broker or agent to buy the home.
- Purchase a home located in a HUD designated Revitalization Area.
If you’re interested in purchasing a new home through this program, you’ll want to get all your pre-qualification paperwork together before you start shopping. Homes are available only for seven days.
To make an offer on a house, buyers are required to pay an earnest money deposit in an amount equal to one percent of the list price. If more than one eligible person is interested in the house, a selection will be made by random lottery. The chosen buyer’s earnest money will be credited to the purchaser at closing or returned if the offer is rejected.
You can read the rest of the official rules and guidelines here.
Lisa McGreevy is a staff writer at The Penny Hoarder.