Explore the Mortgage101 Library
Check Local Mortgage Rates
Loan Program Choices
Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator
The Federal Housing Administration's (FHA's) Officer Next Door (OND) program was created in an attempt to improve security and safety in communities throughout the country. Statistics have shown that the level of crime decreases when a police officer is living in the neighborhood. The OND program makes home ownership more affordable for police officers or others serving in law enforcement.
The Department of Housing and Urban Development (HUD) subsidizes the home ownership for law enforcement officers by offering them homes at a 50 percent discount off appraised value. A participant is required to put down only $100 to purchase a property.
The program is open to anyone that is a full-time sworn law enforcement officer who works for a city, country, state or federal law enforcement agency. In addition, you must have the general power of arrest and not just arrest authority. Arrest authority is generally limited to people providing security for a building or facility. Security officers that work for either public or private universities or colleges can qualify.
Participants in the program do not have to be first-time homeowners. You are not allowed to own any other home at the time of closing. You must live in the home as your primary residence for at least 3 years after closing.
Qualifying properties are properties that have been foreclosed on by HUD. The properties can be purchased directly from HUD or from any other agency that purchased the property from HUD. The agency is required to offer the 50 percent discount to all law enforcement officers.
Properties must be in designated revitalization areas. These are usually downtrodden areas that are going through some form of revitalization. Qualifying properties can be single-family homes, condominiums or town homes.
Benefits for Officers
Law enforcement officers can purchase a home for a 50 percent discount off of the list price. If the home is purchased with a mortgage insured by the FHA, the participant is required to make a down payment of only $100. Participants may finance all of the closing costs, thus further reducing their out-of-pocket costs.
How to Participate
Homes that are included in the OND program are listed on HUD’s website. If you are interested in purchasing a listed property, you can submit a bid. Even though the actual purchase price will be 50 percent of the listed price, your bid must be for the full list price.
At closing, HUD will require the law enforcement officer to sign a second mortgage for the 50 percent discounted value. No interest or payment will be required on this second mortgage as long as the requirement of living in the home as a primary residence for at least 3 years is met.
Penalty for Failure to Meet Requirements
Any law enforcement officer that does not meet the three-year residency requirement may be required to pay a penalty. HUD may require the officer to repay some or all of the second mortgage. The amount that is owed is based on a sliding scale depending on when the property is sold. The year-one penalty is 90 percent, the year-two penalty is 60 percent and the year-three penalty is 30 percent of the discounted amount.
- 3 Factors that Can Negatively Affect Your Mortgage Application
- Low Down Payment Loan Qualification
- 3 Warning Signs of Loan Modification Scams
- Short Selling a Rental Property
- What Lenders Don't Reveal About Home Equity Loans
- Second Mortgages: Advantages and Disadvantages
- Home Equity Loans for People with Bad Credit
- 3 Common Short Sale Mistakes
- Alternatives to Getting a 2nd Mortgage