VA loans

Are VA Loans Available For The Good Neighbor Next Door Program?

June 14, 2013

Are VA Loans Available For The Good Neighbor Next Door Program?

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There is a program offered by the Department of Housing and Urban Development known as the Good Neighbor Next Door program, or GNND for short. Under this HUD program, the government “offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount.”

A half-price home is very enticing to many veterans, so naturally there are many frequently asked questions about who is eligible for the GNND program. According to the HUD official site, those eligible include, “Law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program are eligible to purchase an available home” under GNND program guidelines.

The HUD official site adds, “You can get a 50 percent discount off the HUD appraised value. For example, if HUD lists a home at $100,000, you can buy it for $50,000 provided, you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your downpayment is only $100 and you may finance closing costs.”

Many assume that a HUD program would be limited to those purchasing with FHA insured loans or conventional mortgages, but the HUD site reminds borrowers that qualified VA borrowers can also apply.

“You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Second Mortgage and Note on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this “silent second” mortgage if you live in the home for the entire 36 month occupancy period. You may be required to pay a pro-rata portion of the discount to HUD should you fail to fulfill the three year occupancy requirement.”

That means that qualified VA loan applicants could also take advantage of the program if they are fire fighters, EMTs, teachers, etc. You may need to contact HUD to learn if active duty military members who have such duties are also eligible, or whether the rules apply to those serving in local fire departments, police stations, etc. only. But for those who do qualify, the option to use VA financing may be a strong incentive to consider the program.

Do you have questions about VA home loans? Ask us in the comments section.

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