There are a wide range of low down payment mortgage programs and closing cost assistance programs available to all eligible borrowers as well as a smaller number of programs that are targeted to firefighters, emergency medical technicians (EMTs), law enforcement officers and teachers. We review some of your mortgage options below.
HUD Good Neighbor Next Door Program
The Department of Housing and Urban Development (HUD) offers the Good Neighbor Next Door Program to enable firefighters, as well as EMTs, teachers and law enforcement officers to buy homes in designated “revitalization areas” at a 50% discount to the list price of the property. For example, if a property is for sale for $200,000, you can buy the home for only $100,000.
You receive the discount on the purchase price through a silent second mortgage. You are not required to pay interest on the silent second as long as you live in the property as your sole residence for 36 months. You can learn more about the program by visiting the HUD website below.
HUD Good Neighbor Next Door Program Website
If you sell the property after the required occupancy period, you are required to repay the silent second principal but you are not required to pay interest. If you move out of the property before the end of the occupancy period you are required to repay the silent second on a prorated basis.
To qualify for the program, you must buy a one unit property listed for sale by HUD in a revitalization area at the list price -- there is no negotiating the purchase price. Additionally, all properties are offered on an “as is” basis which means you buy the property in its current condition with no warranty if you find an issue or defect with the property.
Check the HUD Homes website for property listings
You do not need to be a first time home buyer to qualify for the program but you cannot own any other properties for the year prior to submitting your offer to buy a home.
To finance the remainder of the purchase price not covered by the silent second discount you obtain a mortgage through a traditional lender such as bank, mortgage broker or credit union. You can use a conventional, FHA or VA mortgage to buy a home offered through the Good Neighbor Next Door Program. If you use an FHA mortgage, you are only required to make a down payment of $100.
The table below shows mortgage rates and fees for FHA lenders in your area. We recommend that you contact multiple lenders to understand the mortgage you can afford and to find the best loan terms.
Low Down Payment Mortgage Programs
There are also numerous no and low down payment mortgage programs that make owning a home more affordable. While these programs are available to all applicants and not just firefighters or first responders, they enable you to buy a home with a down payment of 3.5% or less. In many cases you can combine these programs with a down payment assistance program or closing cost grant to buy a home with minimal personal financial contribution.
No and low down payment programs have different qualification requirements for borrower credit score, debt-to-income ratio, mortgage limits, applicant income limits, property type and loan type. Popular low down payment mortgage programs include the HomeReady, HomeOne, FHA and USDA programs. We recommend that you review our informative comparison below to find the program that best meets your financial profile.
Review our Comparison of Low Down Payment Mortgage Programs
No and low down payment mortgage programs are offered by participating lenders such as banks, mortgage brokers and credit unions.
Closing Cost Assistance Grants
Closing cost assistance programs help you pay for all or part of your closing costs when you buy a home. Most closing cost assistance programs are structured as a grant that you are not required to repay as long as you own the home for a specified period of time.
Review How a Closing Cost Assistance Grant Works
Closing cost grants are typically provided by HUD-approved state and local housing departments or commissions in conjunction with participating lenders. Your local housing commission may also offer additional homebuyer assistance programs specifically for firefighters, EMTs, other first responders and teachers.
Visit the HUD website below and select your state to be directed to information about local home buying programs that are available to you.
HUD State Resources Web Site
HUD Good Neighbor Next Door Program: https://www.hud.gov/program_offices/housing/sfh/reo/goodn