Mortgage Loan Programs for First Responders | Ways to Save

Last Updated on September 19, 2024 by Luke Feldbrugge

Among the mortgage loan programs for first responders, there are two existing initiatives (and one proposed change) to know about and watch. If you are a first responder – police and law enforcement, EMS professional or firefighter – looking to buy a home, these discounted home loan programs for first responders are designed for you. Knowing how they work is a good step in the right direction of finding a home.

Key Takeaways

• The Good Neighbor Next Door program offers homes at 50% off for first responders in revitalization areas.
• Homes for Heroes provides reduced lending fees and Hero Rewards® savings on home purchases for first responders.
• The proposed HELPER Act could introduce a zero-down-payment loan similar to VA loans and USDA loans for first responders.

What are the best mortgage loan programs for first responders seeking to buy a home? The Good Neighbor Next Door, Homes for Heroes, and the proposed HELPER Act stand out as significant opportunities, offering financial advantages to ensure those serving our communities can afford homeownership.

Good Neighbor Next Door

One of the mortgage loan program for first responders is Good Neighbor Next Door from the U.S. Department of Housing and Urban Development (HUD). One of its goals is to make homes more affordable for:

• Firefighters
• Law Enforcement Officers
• EMS workers
• Teachers

The houses available through the Good Neighbor initiative are reduced in price by 50%. That’s right–half off for these homes.

The houses in the Good Neighbor Next Door program are in revitalization areas. That means they are in areas where:

• Incomes are lower than average.
• Homeownership is lower than the surrounding areas.
• Foreclosure activity is higher than surrounding areas.

Revitalization neighborhoods need economic and community development, and HUD thinks the way to do that is make foreclosed properties available to first responders at a deep discount. Home buyers who land one of these homes agree to live there for at least three years.

HUD used to sell blocks of these foreclosure homes to organizations, but now it is moving toward sales to individuals. As Jake Akervik, a deputy director for HUD, puts it, “We are trying to make sure that the properties get into the hands of someone who is deserving before it goes on the general market.”

With the Good Neighbor program the properties that are going up for sale are offered exclusively to the first responder community for seven days before they go on the general market.

How it Works

There are two things you should do right away if you want to participate in the Good Neighbor Next Door mortgage loan programs for first responders.

• Get a real estate agent who can make offers for homes you are interested in. Things move pretty fast, so once you see something you would like to bid on, you should do it quickly.
• Get familiar with the website: the HUD Home Store is a search engine that helps you find HUD foreclosed properties.

At the Home Store, you can search for homes in the Good Neighbor Next Door program in the “buyer type” drop down menu. Full disclosure: you might not get much under that buyer type. If you broaden your search to include “all” properties, you will get more results. Those are not necessarily part of the Good Neighbor program (but you might still see something affordable).

Set Up a Search in the Home Store

You can come back to the site and search for properties frequently to see what comes up, but there’s a smarter way. You can set up a search function that delivers information right to your email. Getting that information delivered directly to you is a process that takes a few steps, so we tried it out to see how it works.

1. Register in the Home Store (upper right corner, click on public)
2. Give all your new login and password and email information
3. Go back to home, log in and conduct a search
4. You can save individual properties or save “recent searches”. Even if you don’t get any results, “recent searches” is what you want. Click on that blue box.
5. It will show what you’ve searched for. We tried Good Neighbor as the buyer type and Texas as the site. We clicked on the “recent searches” box and that search is identified in the popup screen.
6. Click on the save button. A popup will appear listing your saved searches.
7. Now go back up to the right corner of the home screen and click on “public functions.” That will take you to a screen that says you have no saved searches. Don’t believe it.
8. Above the banner that says “saved property list” is a series of tabs. Locate the one that says saved searches and click it.
9. Jackpot, there are your saved searches. Now go to the column that says “Alert Frequency” and click on the link that says “edit frequency”.
10. Now you can set up the email alerts that will come to your inbox.

Ok, that takes a little bit of work, but being able to jump on a property in the program is vital to possibly landing it. This up-front work could pay off in remarkable ways if you find a house through the Good Neighbor Next Door program.

While the current inventory of houses is low, the current market will probably change that. Akervik says, “I expect the foreclosure volume to go up with the current circumstances. This is as good a time as any to engage in this. If the volume goes up, there will be more properties available.”

Fixer Uppers

The Good Neighbor homes are foreclosed properties, so some of them will require some renovations and fixes. The good news is: there is financing for that too. Help comes in the form of 203(k) Rehab Mortgage Insurance, which allows you to finance the purchase of a home, plus any rehabilitation costs, and fold them together into one mortgage. There are two kinds of 203(k) loans:

• Limited 203(k) for homes that require less renovation
• Full 203(k) for more substantial fixer upper projects

Homes for Heroes

One of the other mortgage loan programs for first responders is offered by Homes for Heroes. We have local licensed mortgage specialists in every state who provide firefighters, police and EMS heroes reduced lending fees when they take on a new mortgage. When it comes to first responder mortgage programs, Homes for Heroes delivers. We have been working for 20 years to help first responders buy homes, sell their current homes, or refinance their homes.

“Our rep was an amazing real estate agent to work with. She went above and beyond for my family and I as we relocated across the country for a law enforcement job. She made the entire process seamless and made sure to look out for our best interest. I trusted her recommendations and judgment on our home purchase as we worked to purchase our house in Washington.” – Timothy in Law Enforcement bought a new home in Washington.

Homes for Heroes can provide first responders with home buying assistance in at least three ways.

• We help you find a real estate specialist.
• We help you find a mortgage lending specialist.
• We give you Hero Rewards® savings when you close on your house (average amount is $3,000).

There’s no catch, no fees and no extra paperwork. The process is the same as a normal real estate transaction. Our real estate specialists simply help you purchase or sell your home, and then we give you a check at the end.

Your hero status doesn’t end when you retire from your career as a first responder. We work with both current and former police, EMS professionals and firefighters.

On average, our heroes save $3,00 when using both our real estate and mortgage specialists. Our specialists can work with your schedule, credit, and budget to find a perfect home for you and your family. For more information and to talk to a specialist with no obligation, sign up today.

HELPER Act: Like a VA Loan Program for First Responders

A potential addition to the other mortgage loan programs for first responders to keep an eye on is not yet in place. It’s called the HELPER Act, and it is currently still a bill being considered by Congress. The title stands for: Homes for Every Local Protector, Educator and Responder. It is being compared to VA loans in that it provides zero-down-payment loan insurance for first responders and teachers.

Large down payment requirements are a constant obstacle for first home buyers, so being able to bypass these costs is a huge step forward for first responder loan programs. Under this act, first responders would also be able to skip paying monthly mortgage insurance premiums (though there would be one up front 3.6% mortgage insurance premium).

The bill has bi-partisan support in both the House and Senate, and President Biden also supports it. If you are a first responder, this is a bright spot in an otherwise tough housing market.

It’s important to remember that, in addition to the programs described here, there is mortgage help for first responders that is not necessarily “out there.” Whatever mortgage lender you choose, make sure to check with them to see if they have first responder home loan programs. They may have it but you will only know about it if you ask (hint: it may not be on their website).