The Teacher Next Door program was established by the Department of Housing and Urban Development (HUD) to offer single-family houses, townhouses and condominiums for sale to a teacher at a 50 percent discount. The goal through the Good Neighbor Next Door program is to encourage teachers to buy homes in low and moderate-income neighborhoods better known as revitalization areas.
The Teacher Next Door program is open to any person "employed full-time by a public school, private school, or federal, state, county, or municipal educational agency as a state-certified classroom teacher or administrator in grades K-12." Participants must certify that they are employed by an educational agency that serves the school district/jurisdiction in which the home they are purchasing is located. A teacher wishing to purchase a home under the Teacher Next Door program must be in good standing with their employer. Your employer must certify that you are a full-time teacher or school administrator. You don't have to be a first-time homebuyer to participate. However, you cannot own any other home at the time you close on your Teacher Next Door home. You must agree to live in the HUD home as your only residence for 3-years after you move into it.
The selected bidder may purchase the property at a 50 percent discount from the list price. For example, if a HUD home is listed for $100,000, an teacher can buy it for $50,000. To make a HUD home even more affordable, you may apply for an FHA-insured mortgage with a down payment of only $100 and you may finance all closing costs.
Qualifying homes are restricted to specifically designated single family homes, townhomes and condominiums that are located within the revitalization areas. Other types of properties, such as a duplex or triplex, do not qualify for this program. In addition, the homes must be HUD acquired homes and cannot be other real estate for sale in the area (i.e. VA foreclosure homes, resale homes or new construction). HUD sells all qualifying homes as-is. In other words, HUD does not provide any guarantees or warranties.
If the home you want to purchase needs repairs, you may use FHA's 203(k) mortgage program. This program allows you to finance both the purchase of the home and the cost of needed repairs. You have the benefit of one loan for both costs and one monthly payment.
Properties listings are single-family homes located in Revitalization Areas and can be found at Hud Homes Store. Properties available through the program are marked with a special Teacher Next Door button. Presently, none of the 23 Hud homes in El Paso are specifically designated for the Teacher Next Door program. Winning bids are awarded once each week.
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In all cases, HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this "silent second" provided that you fulfill the three-year occupancy requirement.
Depending upon the circumstances, failure to fulfill the three year residency requirement may have serious consequences. HUD may restrict the home owner from selling the property for no more than 110% of the original sales price. In addition, HUD may require all or part of the discounted amount to be repaid. Generally the pro-rated repayment amount goes as follows: repayment of 90% of the discounted amount during the first year, repayment of 60% of the discounted amount during the second year, and repayment of 30% of the discounted amount during the third year. Should fraud or other serious charges suspected, HUD may file criminal charges against the Teacher, ban the teacher from further participation from any HUD, FHA, and other Federal programs, and may face the possibility of serious fines and potential prison time. HUD will conduct "spot checks" during the first three years to insure that the residency requirement is being fulfilled.
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