Teacher Next Door (TND)
The TND 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. Teachers wishing to purchase a home under the TND 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 TND home.
You must agree to live in the HUD home as your only residence for 3-years after you move into it.
TND property is listed and sold exclusively over the Internet.
Properties are single-family homes located in Revitalization Areas.
Properties available through the program are marked with a special Teacher Next Door button.
Bids are awarded once each week.
Your bid must be the amount of the list price.
You may submit your bid directly or utilize the services of a real estate broker.
A computer randomly selects the winning bid.
The winning bid is posted each week on the web site where you made your bid.
You may also buy a home from a government agency or a nonprofit organization that bought the home from HUD. When an agency or nonprofit buys the house, HUD expects the full discount to be passed on to you.
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 you fulfill the three-year occupancy requirement.
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, a teacher can buy it for $50,000.
To make a HUD home even more affordable, you can apply for an FHA-insured mortgage with a down-payment of only $100 and you may finance all closing costs.
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.
Because homes sold through the TND program are located in Revitalization Areas there may be additional assistance from state or local government sources
General Questions – TND:
Question: How Do I Finance a Teacher Next Door Home?
Answer: You may use FHA, VA, or traditional mortgages, or cash. You may even qualify for one of several FHA-insured mortgage programs that require a down-payment of only $100. FHA also has a program to help homebuyers who have to make substantial repairs (more than $5,000) to a home. This FHA 203(k) mortgage program combines mortgage and repair costs into a single payment. (Call Ardain Mortgage Corp at 1-847-963-1000 for more information)
Question: Do I Need a Real Estate Broker?
Answer: Although we and HUD recommend that people use a real estate broker or agent when buying a TND home, it is not required. A TND home may be bought directly from HUD. HUD does not pay any closing costs or real estate commissions on top of the 50% discount.
Question: Is the Teacher Next Door Program Only for First Time Homebuyers?
Answer: No, but you must not own any other residential property at the time of the TND closing, and you must live in the TND home as your only residence for the required 3-year occupancy term.
Question: Will HUD Provide a Home Warranty?
Answer: No. All TND homes are sold “as is,” without any kind of warranty.
Question: Can I Purchase a Duplex?
Answer: No. Only single unit homes, townhouses, and condominiums are available through the TND Program.
Question: Is a Deposit Required?
Answer: No. If you choose an FHA insured mortgage, such as the FHA 203(b) or FHA 203(k), you only need a $100 down-payment. If you get a conventional mortgage, your mortgage lender sets the amount of the down-payment. You don’t have to pay any other earnest money deposits.
Question: Can I Offer Less than the Amount Determined by HUD for a TND Property?
Answer: No, you must always offer the exact HUD list price when “bidding” on any TND property.
Question: Can I Sell the Teacher Next Door Home after 3-years and Keep the Profit?
Answer: Yes. If you sell the TND home after living in it 3 years, you may keep any profit.
Question: What Happens if I Leave My School, for Any Reason, during the 3-year Required Residency Period?
Answer: Nothing, but you must continue to live in the home for the full 3-year required occupancy period or re-pay HUD on a prorated schedule.
Question: Some Schools Have Other Home-buying Programs. Can the Teacher Next Door Program Work Together with These?
Answer: Yes, as long as you can meet all the TND program rules while participating in these other programs.
Question: How Does HUD Enforce the 3-year Residency Requirement?
Answer: In the beginning, and once a year thereafter, you must certify that you are living in your TND home as your only residence. HUD will conduct “spot checks” to guarantee program compliance.
Question: What Happens if I Don’t Honor the 3-year Residency Requirement?
Answer: First of all, depending on the circumstances, HUD could demand re-payment of the discounted amount in full, or, on a prorated basis. The pro-rated re-payment is 90 percent of the discount during the first year, 60 percent during the second year, and 30 percent during the third year. Additionally, administrative action could be taken including, but not limited to, denial of further participation in any HUD/FHA programs, as well as other Federal programs.
Of course, in any case of fraud or abuse, there will be referral to HUD’s Office of the Inspector General for investigation and possible criminal prosecution. Your employing school may also be notified. Criminal prosecution and conviction for fraud and abuse concerning the TND Program could result in a fine of as much as $250,000 and/or two years in federal prison.