Updated November 4, 2026
HUD’s Good Neighbor Next Door program lets full-time law enforcement officers, pre-K through 12th grade teachers, firefighters and EMTs buy an eligible HUD-owned home at 50% off the list price. If you use an FHA loan, the down payment is only $100. The catch is that you have to live in the home for 36 months, and only a limited number of homes qualify.
Good Neighbor Next Door at a Glance
| Item | Rule |
|---|---|
| Who qualifies | Full-time law enforcement officers, pre-K–12 teachers, firefighters and EMTs |
| Discount | 50% off the list price |
| Eligible homes | HUD-owned homes in revitalization areas: detached, townhouse or condo |
| Down payment | $100 with FHA financing; closing costs may be financed |
| Other financing | VA, conventional or cash are also allowed |
| Occupancy | 36 months as your principal residence |
| Other property | You and your spouse can’t own other residential property now or in the 12 months before your offer |
| First-time buyer? | Not required |
Who Qualifies
You have to work full-time in an eligible job and intend in good faith to stay in that job for 12 months after closing. Your job also has to connect to the area where the home sits:
- Law enforcement: employed full-time by a federal, state, local or tribal agency, sworn to uphold and make arrests for violations of the law, and directly serving the locality where the home is located.
- Teachers: full-time at a state-accredited public or private school serving pre-K through 12th grade, and serving students from the area where the home is located.
- Firefighters and EMTs: full-time with a federal, state, local or tribal fire department or EMS unit, with the home inside your service area.
How the 50% Discount Works
The discount isn’t simply taken off and forgotten. You sign a second mortgage and note to HUD for the discounted amount. No interest or payments are due on that “silent second” as long as you meet the 36-month occupancy requirement.
For example, on a home HUD lists at $120,000, you would pay $60,000 and sign a $60,000 silent second. With an FHA loan, your down payment would be $100. After 36 months, if you’ve met the requirements, HUD releases the second mortgage and you have no further obligation to HUD.
If you move out, rent the home or sell it during those 36 months, HUD requires you to repay the discount on a prorated schedule.
How to Buy a Good Neighbor Home
- Check the listings. Eligible homes appear on HUD Homestore for seven days. The list changes weekly, and there may be few or no homes in your part of Kentucky at any given time.
- Get pre-approved so you can move quickly when a home appears. Here are the Kentucky FHA requirements.
- Use a HUD-registered real estate broker. The broker submits your offer to HUD. Search for one here.
- Offer the exact list price. HUD doesn’t negotiate. If more than one eligible buyer submits an offer, the winner is chosen by random lottery.
- Move in on time. Your 36 months start at move-in, which may be 30, 90 or 180 days after closing depending on the home’s condition.
The Catches to Weigh First
- Homes are sold as-is with no home warranty. If repairs are needed, an FHA 203(k) loan may be an option.
- You certify every year that you live in the home, and HUD may check at any time. HUD says falsifying that certification is a felony.
- Leaving your job doesn’t trigger repayment, but you still have to live there for the full 36 months.
- Refinancing is limited. HUD will resubordinate its second lien only to get a 203(k) loan, lower your rate or change your term, or prevent default on the first mortgage.
- Military exception: if you’re called to active duty, you aren’t required to occupy the home and may rent it if necessary to minimize potential vandalism.
If No Good Neighbor Home Fits
Many Kentucky buyers won’t find an eligible home in the neighborhood they want. State or local government assistance may be used with this program, and the same help is often available on a regular purchase. See Kentucky Housing Corporation programs, including KHC down payment assistance of up to $12,500, or my guide to Kentucky FHA loan requirements.
Frequently Asked Questions
Do I have to be a first-time buyer?
No. But neither you nor your spouse can own other residential property when you make the offer or in the 12 months before it.
Do I have to use an FHA loan?
No. You can use FHA, VA or conventional financing, or pay cash. The $100 down payment applies to FHA financing.
Can a nurse or other healthcare worker qualify?
HUD’s list is law enforcement officers, pre-K through 12th grade teachers, firefighters and emergency medical technicians. Other occupations aren’t on it.
Sources: HUD’s Good Neighbor Next Door page and consumer fact sheet.
Are You a Kentucky Teacher, Officer, Firefighter or EMT?
Call or text Joel Lobb at 502-905-3708, email kentuckyloan@gmail.com, or send me your question here.
Joel Lobb — Mortgage Loan Officer
NMLS #57916 | EVO Mortgage, Company NMLS #1738461
Equal Housing Lender. This information is for educational purposes only and is not a commitment to lend. All loans subject to credit approval, underwriting, property approval, and program guidelines, which can change without notice. Not affiliated with or endorsed by FHA, HUD, or any government agency.
