Transaction Process
This page will provide a step-by-step explanation of what a buyer utilizing the GNND program can expect to encounter
Finding and Bidding on a GNND Property
The GNND transaction begins with finding an eligible property, which is a distinct process compared to standard homebuying. HUD lists GNND-eligible homes—single-family properties in revitalization areas—on its official website (HUDHomestore.gov) for a limited seven-day period, exclusively for GNND participants before opening to the public. Unlike a typical home search, where buyers can browse listings on multiple platforms over weeks or months, GNND inventory is extremely limited, often with only a handful of homes available nationwide at any given time, requiring buyers to act quickly. To bid, buyers work with a HUD-registered real estate agent to submit an offer during the seven-day window; if multiple eligible GNND participants bid on the same property, HUD uses a random lottery to select the winner, a stark contrast to the standard process where negotiations or highest offers typically determine the buyer. Additionally, GNND homes are sold as-is, meaning buyers must conduct due diligence (e.g., inspections) within tight timelines, unlike standard purchases where negotiations often include repair contingencies. This step requires proactive monitoring of HUD listings and readiness to move fast, highlighting the program’s competitive and time-sensitive nature.
Securing Financing and Closing the Deal
Once selected as the winning bidder, the buyer moves to secure financing and close the GNND transaction, a process that differs significantly from standard homebuying due to the program’s discount structure. The buyer is responsible for a first mortgage covering 50% of the home’s list price, which can be obtained through an FHA, VA, or conventional loan, requiring them to meet the lender’s credit and income requirements—HUD does not provide the mortgage but partners with lenders to facilitate financing. Additionally, HUD issues a “silent” second mortgage for the remaining 50% (the discount amount), which accrues no interest and requires no payments, provided the buyer meets post-purchase requirements. This dual-mortgage system is unique to GNND, unlike standard purchases where buyers typically secure a single mortgage for the full purchase price. Down payments can be as low as $100 with an FHA loan, and closing costs can often be financed, making the program more accessible than a standard purchase, which often requires 3–20% down. Closing follows a similar timeline to a standard transaction (30–45 days), but buyers must sign a 36-month residency commitment at closing, a legal obligation not present in typical home purchases. This step underscores the program’s affordability benefits while introducing additional documentation and oversight.
Fulfilling Post-Purchase Requirements
After closing, GNND buyers must fulfill specific post-purchase requirements that set the program apart from standard homeownership. The primary obligation is to live in the home as their sole residence for 36 months, a commitment enforced through annual certifications submitted to HUD, verifying occupancy and employment status (buyers must remain in their eligible profession for at least one year post-purchase). This residency requirement ensures the buyer contributes to the revitalization area’s stability, a goal not present in standard homebuying where owners can rent out or vacate the property at their discretion. During this period, the silent second mortgage remains in place; if the buyer meets the 36-month residency requirement, the second mortgage is forgiven, securing the full 50% discount. However, if the buyer fails to comply—e.g., by moving out early or renting the property—they may be required to repay a prorated portion of the discount, a financial penalty not applicable in typical home purchases. Additionally, since GNND homes are sold as-is, buyers are responsible for all repairs and maintenance, which can be more burdensome in revitalization areas compared to standard purchases where sellers often address major issues before closing. This step emphasizes the program’s long-term commitment and potential challenges, requiring buyers to plan for both residency and property upkeep.