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FHA offers a special home loan program for firefighters, EMTs, police officers, and teachers of grades pre-k through 12. Borrowers choose from eligible homes that qualify for a 50% discount from their list price and receive home loans with affordable terms.

FHA Loans for "Good Neighbors" Offer Affordable Home Financing

FHA home loans offered under HUD's Good Neighbor Next Door program (GNND) offer low mortgage rates and provide qualified firefighters, emergency medical technicians, police officers, and teachers of grades pre-k through 12 with an opportunity to buy a home at a deep discount. GNND helps reduce FHA's inventory of single family homes while offering affordable housing options to qualified public service personnel.

  • Redcing Real Estate Owned Properties (REO): REO refers to homes that have been foreclosed and taken over by mortgage lenders. When an FHA mortgage is foreclosed, the lender files a claim for its losses with FHA and conveys title to the property to FHA. FHA reimburses the lender for its losses, then repairs and sells the foreclosed home through its approved network of real estate agents and brokers. To address mounting inventories of REO properties, and to provide affordable home loans for eligible public service employees, FHA developed the GNND program. Here's a basic rundown of how this program works:
  • Eligible homes: FHA REO properties designated for GNND can be located through local real estate professionals and FHA-approved mortgage lenders.
  • Program Benefits: Eligible participants can buy allotted homes for up to 50% less than their listed prices, and can receive FHA home loans at favorable rates and terms. This creates much lower mortgage payments for borrowers, who are required to sign a note for a "silent" second mortgage. The second mortgage covers the discounted amount, but is not repaid until the home is sold or the borrower otherwise retires the first mortgage or vacates the property purchased through the GNND program.

The GNND program encourages the presence of public service "good neighbors" in areas undergoing revitalization, and enhances the quality of these neighborhoods by providing affordable home loans.


Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.