What we verified in “HUD homes and Good Neighbor Next Door: how to buy one”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. Under HUD's regulation (24 CFR §291.205), when HUD sells homes one at a time to individual buyers, it generally sells them as-is, without repairs or warranties, through local real estate brokers; for homes offered with insured financing, it gives priority to buyers who will live in the home for a period of up to 30 days; the bid period is generally 10 days, though HUD may lengthen or shorten it; and HUD accepts the bid that gives it the greatest net return, with priority for owner-occupant buyers.

   Sources 1 · 24 CFR §291.205: 'it will generally sell the properties on an "as-is" basis, without repairs or warranties'; '(a)(1) Properties that are sold on an individual competitive bid basis are sold through local real estate brokers'; '(a)(2) ... priority will be given to owner-occupant purchasers ... for a period of up to 30 days'; '(d)(1) Generally, the bid period will be 10 days, but may be lengthened or shortened by HUD'; '(c) HUD will accept the bid producing the greatest net return to HUD' · Checked October 31, 2026

2. Under the same regulation, the net offer is the bid price minus the financing and closing costs and the broker's commission; if an owner-occupant buyer asks for it in the bid, HUD may pay all or part of those financing and closing costs, up to a percentage of the price HUD sets for the area; investors get no such help; if an owner-occupant and an investor submit identical bids, HUD picks the owner-occupant's; and a bid that does not say the buyer will live in the home is treated as an investor bid.

   Sources 1 · 24 CFR §291.205(b)(1)–(2): 'The net offer is calculated by subtracting from the bid price the dollar amounts for the financing and loan closing costs and the broker's sales commission'; 'HUD may pay all or a portion of the financing and loan closing costs, not to exceed the percentage of the purchase price determined appropriate by the Secretary for the area'; 'No assistance for financing and loan closing costs ... will be provided to investor purchasers'; (j) 'HUD will select the bid submitted by the owner-occupant purchaser'; (g)(1) 'All bids not indicating that the purchaser will occupy the property will be considered as offers from investor purchasers' · Checked October 31, 2026

3. Under the regulation (24 CFR §291.205(h)), the earnest money deposit is $500 if the sales price is $50,000 or less; for higher prices the local HUD office sets it between $500 and $2,000; it is credited to the buyer at closing if HUD accepts the bid, returned if HUD rejects it, and may be forfeited in whole or in part if the buyer fails to close.

   Sources 1 · 24 CFR §291.205(h)(1)–(2): 'for a property with a sales price of $50,000 or less is $500'; 'set by the local HUD office, in an amount not less than $500 or more than $2,000'; 'If a bid is accepted by HUD, the earnest money deposit will be credited to the purchaser at closing; if the bid is rejected, the earnest money deposit will be returned'; 'subject to total or partial forfeiture for failure to close a sale' · Checked October 31, 2026

4. Under HUD's regulation (24 CFR §291.100), anyone, regardless of race, color, religion, sex, national origin, familial status, age or disability, may offer to buy a HUD home, with exceptions such as a non-occupant borrower whose default caused the insurance claim; when listing a home, HUD may say whether it is eligible for FHA-insured financing; a home not flagged as uninsurable can be financed with FHA in three ways: insured, insured with a repair escrow of no more than $10,000, or with a 203(k) rehabilitation loan; and an uninsurable home can be financed with FHA only through a 203(k).

   Sources 2 · 24 CFR §291.100(a)(1): 'Anyone ... regardless of race, color, religion, sex, national origin, familial status, age, or disability may offer to buy a HUD-owned property'; '(ii) No nonoccupant mortgagor ... who has defaulted ... is eligible to repurchase the same property'; (c) 'HUD may elect to include information to indicate whether the property is eligible for FHA-insured financing'; (d)(1)(i) 'Insured'; (ii) 'Insured with repair escrow ... no more than $10,000 for repairs'; (iii) 'Insured with rehabilitation loan in accordance with section 203(k)'; (d)(2) 'REO properties that have been identified as uninsurable ... can be purchased and financed with a mortgage insured under section 203(k)' · Checked October 31, 2026

5. According to HUD Homestore, to bid on a HUD home you need a HUD-registered selling broker, and the site has a broker search; Good Neighbor Next Door bids are also submitted by a HUD-registered broker; and under Dollar Homes, government agencies may buy for $1 certain single-family homes that FHA acquired as a result of foreclosure and that have been on the market for an extended time.

   Sources 4 · HUD Homestore, home page: 'You'll need to use a HUD-registered Selling Broker to submit your bid on a HUD Home'; 'Find a Broker'; 'Bids for the property must be submitted by a HUD-registered Real Estate broker'; 'Government Agencies may have the opportunity to purchase qualified HUD-owned homes for $1 each'; 'Dollar Homes are single-family homes that were acquired by the Federal Housing Administration (FHA) as a result of foreclosure and have been on the market for an extended time' · Checked October 31, 2026

6. Under HUD's regulation (24 CFR §291.510), Good Neighbor Next Door lets a full-time law enforcement officer, teacher, or firefighter/emergency medical technician buy a designated HUD home in a HUD-designated revitalization area at a 50% discount from the list price, with a $100 down payment only if the home is financed with an FHA-insured mortgage; eligible homes are single-unit; when several bids come in on one home, HUD picks the winner by lottery and randomly picks two backup bids; and bids go through a participating real estate broker.

   Sources 3 · 24 CFR §291.510(a): 'a full-time law enforcement officer, teacher, or firefighter/emergency medical technician to purchase a specifically designated HUD-acquired home located in a HUD-designated revitalization area'; '(1) At a 50 percent discount from the list price'; '(2) With a downpayment of $100, but only if ... finances the home through a Federal Housing Administration (FHA) insured mortgage'; (b) 'single-unit properties'; (c) 'HUD will randomly select a winning offer by lottery and will also randomly select two backup bids'; (d) 'must submit bids through a participating real estate broker' · Checked October 31, 2026

7. According to HUD's Good Neighbor Next Door page, eligible single-family homes in revitalization areas are listed only through this program for seven days; you must sign a second mortgage and note for the discount amount, with no interest or payments if you meet the three-year occupancy requirement; the number of homes is limited and the list changes weekly.

   Sources 5 · HUD Good Neighbor Next Door Program: 'Properties are available for purchase through the program for seven days'; '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'; 'The number of properties available is limited and the list of available properties changes weekly' · Checked October 31, 2026

8. Under the regulation (24 CFR §291.515), to buy through Good Neighbor Next Door you must work in one of those professions when you bid and when you close; certify that you intend to stay in that job for at least one year after closing; make an earnest money deposit; own the home and live in it as your sole residence for the whole term; sign a second mortgage and note for the difference between the list price and the discounted price; neither you nor your spouse may have owned residential property during the year before the bid; neither of you may have bought before through this program or the earlier Officer Next Door and Teacher Next Door programs; and HUD approves a bid from only one spouse.

   Sources 3 · 24 CFR §291.515(a)–(h): 'at the time he/she submits a bid ... and at the time of closing'; 'for at least one year following the date of closing'; 'must make an earnest money deposit'; 'live in as his/her sole residence, the home for the entire duration of the owner-occupancy term'; 'execute a second mortgage and note ... for the difference between the list price and the discounted selling price'; 'Neither the person (nor his/her spouse) may have owned any residential real property during the year prior to the date of submitting a bid'; 'Officer Next Door Sales and Teacher Next Door Sales Programs'; 'HUD will approve a bid from only one spouse' · Checked October 31, 2026

9. Under the regulation (24 CFR §§291.520 to 291.530), a law enforcement officer works full-time for a federal, state, local or tribal law enforcement agency and is sworn to uphold the law and make arrests; a teacher teaches full-time at a state-accredited public or private school, pre-kindergarten through grade 12; a firefighter or emergency medical technician works full-time for a federal, state, local or tribal fire department or emergency medical services unit; and in all three cases the job must serve the locality where the home is.

   Sources 3 · 24 CFR §291.520: 'Employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government'; 'sworn to uphold, and make arrests'; 'directly serve the locality in which the home is located'; §291.525: 'full-time teacher by a state-accredited public school or private school ... grades pre-kindergarten through 12'; 'serve students from the locality'; §291.530: 'Employed full-time as a firefighter or emergency medical technician' · Checked October 31, 2026

10. Under the regulation (24 CFR §291.535), the Good Neighbor Next Door earnest money deposit equals 1% of the list price, but no less than $500 and no more than $2,000; it is credited at closing if the offer is accepted, returned if it is rejected, and fully forfeited if you fail to close.

    Sources 3 · 24 CFR §291.535(b): 'an amount equal to one percent of the list price, but no less than $500 and no more than $2,000'; (c) 'the earnest money deposit will be credited to the purchaser at closing'; 'Earnest money deposits are subject to total forfeiture for failure of the participant to close a sale' · Checked October 31, 2026

11. Under the regulation (24 CFR §291.540), the owner-occupancy term is 36 months and starts 30 days after closing if HUD finds the home needs $10,000 or less in repairs before move-in, 90 days if it needs more than $10,000 and up to $20,000, or 180 days if it needs more than $20,000; HUD may allow an interruption to prevent hardship if you ask in writing at least 30 days ahead, with the reason, the dates and your certification that you are not abandoning the home; service members protected by the SCRA may ask as soon as they know.

    Sources 3 · 24 CFR §291.540(b): 'The owner-occupancy term is 36 months, commencing either: (1) Thirty days following closing if HUD determines that the home requires no more than $10,000 in repairs'; '(2) Ninety days ... more than $10,000, but not more than $20,000'; '(3) One hundred and eighty days ... more than $20,000'; (c)(1) 'if it determines that the interruption is necessary to prevent hardship'; (c)(2) 'at least 30 calendar days before the anticipated interruption'; 'Military service members protected by the Servicemembers Civil Relief Act' · Checked October 31, 2026

12. Under the regulation (24 CFR §291.550), the second mortgage is payable to HUD for the difference between the list price and the discounted price; it is reduced by 1/36 on the last day of each month you live in the home and reaches zero at the end of the 36th month; and if you sell or stop living in the home as your sole residence before the term ends, you owe HUD what is left on that second mortgage on that date.

    Sources 3 · 24 CFR §291.550(a): 'payable to HUD ... in the amount of the difference between the list price of the home and the discounted selling price'; (b) 'will be reduced by 1/36th on the last day of each month of occupancy'; 'At the end of the 36th month of occupancy, the amount of the second mortgage will be zero'; (c) 'he/she will owe HUD the amount due on the second mortgage as of the date the property is either sold or vacated' · Checked October 31, 2026

13. Under the regulation (24 CFR §§291.545 and 291.555), with a conventional loan the mortgage may not exceed the discounted price; with an FHA loan you may finance reasonable closing costs and, with a 203(k), the cost of repairing the home; HUD does not pay the buyer's closing costs or the broker's commission in this program; and if you refinance, the new loan plus what is left on the second mortgage may not exceed 95% of the value as appraised at that time.

    Sources 3 · 24 CFR §291.545(a): 'the amount of the mortgage may not exceed the discounted sales price'; (b)(1) 'may finance reasonable and customary closing costs with the FHA-insured mortgage'; (b)(2)(ii) 'the costs of rehabilitating and/or improving the home, where purchase of the home is being financed with an FHA-insured 203(k) rehabilitation loan'; (c) 'In no event will HUD pay a buyer's closing costs on the purchase of a property or a selling broker's commission'; §291.555(a) 'may not exceed 95 percent of the value of the property, as appraised at the time of the refinancing' · Checked October 31, 2026

14. Under the regulation (24 CFR §291.565) and HUD's page, for the whole term you must keep owning the home and living in it as your sole residence, and certify that at the start and every year; HUD mails the form around the purchase anniversary; if you fail to return at least one certification a year, HUD refers the case for investigation and an investigator may visit; if occupancy is not verified, the case goes to the Office of Inspector General; and falsifying the certification is a felony.

    Sources 5 · HUD Good Neighbor Next Door Mortgages, 'Annual Certifications': 'Participants are required to certify every year that they are living in the property'; 'mailed to participants, ready for signature, around the anniversary of the purchase'; 'If participants fail to return at least one annual certification per year, HUD refers the case for investigation'; 'Office of Inspector General for further investigation and possible prosecution'; 'Falsifying information on this certification is a felony'; 24 CFR §291.565(b) 'Certify initially and once annually thereafter' · Checked October 31, 2026

15. According to HUD's page, if you are called to active military duty you do not have to live in the home during that time and may rent it only while on active duty, but you must notify HUD; if you need to sell before three years, for example for a job relocation, HUD's contractor processes the payoff of the second mortgage; and at the end of three years, if you returned the certifications and follow the rules, HUD files the release of its second mortgage with the county recorder's office no later than 30 days after the term ends, after which you have no further obligations to HUD.

    Sources 5 · HUD Good Neighbor Next Door Mortgages: 'Military Duty': 'are not required to occupy the property and are allowed to rent the property (only while on active duty)'; 'Participants must notify HUD'; 'Pay Offs': 'If a participant needs to dispose of the property before expiration of the three-year occupancy period (for job relocation ...)'; 'Releases': 'A mortgage satisfaction will be filed with the participant's local county recorder's office'; 'no later than thirty days after the end of the required occupancy period'; 'there is no further obligation to or restrictions imposed by the Department' · Checked October 31, 2026

16. According to the CFPB, the counseling agencies on its list are approved by HUD and can offer independent advice about whether a set of mortgage loan terms fits your goals and situation, often at little or no cost.

    Sources 6 · Find a housing counselor: 'approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you' · Checked October 31, 2026