Teacher Home Buying Programs And Loans
Average pay for teachers in the United States has struggled to keep pace with inflation over the past decade, making it difficult for educators to afford the upfront cost of buying a home. Luckily, loan programs, down payment assistance programs and grants are available to help teachers become homeowners. Here’s a look at programs that can help educators buy a home.
Key Takeaways:
- Teachers who qualify can purchase homes at a discount, get assistance with the home buying process, and apply for down payment assistance.
- Programs that help teachers buy homes are available at the federal, state, and local levels.
- Teachers also may benefit from standard government-backed mortgage programs such as FHA loans, VA loans and USDA loans.
Good Neighbor Next Door Program
The U.S. Department of Housing and Urban Development offers the Good Neighbor Next Door Program to help teachers become homeowners and to develop specific revitalization communities. This assistance is also extended to law enforcement officers, firefighters, and emergency medical technicians.
This program can make it possible to get up to a 50% discount on the asking price of the home, but you’ll need to buy a house in a specific revitalization area and live in it as your primary residence for at least three years. During that time, HUD places a silent second mortgage on the property for the discounted amount and lifts it once you’ve fulfilled the three-year requirement.
To be eligible, you must:
- Be a certified, full-time pre-kindergarten through 12th-grade teacher, law enforcement officer, firefighter or emergency medical technician.
- Live in the home as your primary residence.
- Live in the home for at least three years.
- Purchase a home in a designated revitalization area.
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Teacher Next Door Program
The Teacher Next Door Program offers down payment assistance loans and grants to make buying a home more affordable for educators. Teacher Next Door is not a government agency or a lender – it provides eligible buyers with an agent to assist them in finding suitable homes and financing programs they may qualify for.
To be eligible, you must borrow within the program’s lender network. Financing is provided by direct lenders and select national banks. Assistance from this program can be used in conjunction with loans from HUD’s Good Neighbor Next Door program, the Federal Housing Administration, Veterans Affairs, U.S. Department of Agriculture, Fannie Mae, Freddie Mac and local agencies.
Some of the perks of the Teacher Next Door Program include:
- Grants do not have to be repaid
- Grants can be as high as $8,000
- Down payment assistance is available up to $10,681
- You don’t have to be a first-time home buyer
- You don’t have to live in the home for a minimum amount of time
- No upfront fees
- No application fee
- No broker fee
- Discounted title fee
- Free home appraisal
- You can use the program to refinance
- Optional credit counseling
Also, you don’t have to be a teacher to qualify, as this program has been extended to include other public service professionals such as medical professionals, firefighters, police and government workers.
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Homes for Heroes
Homes for Heroes helps teachers, medical professionals, firefighters, law enforcement officers, veterans, and active servicemembers buy homes.
While it’s not a lender, it maintains a team of real estate and mortgage specialists who help qualified buyers streamline the home buying process to find savings and discounts on costs such as lender fees, title services and home inspections.
Some of the perks of Homes for Heroes program include:
- Saves home buyers and sellers an average of $3,000
- A local expert will help you maximize savings
- Reduced closing costs
- Inspection discounts
- Reduced title fees
- Partnerships to help you save on purchases for your home
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Educator Mortgage Program
Supreme Lending offers an educator mortgage program to help teachers and school workers buy homes. Some of the perks of this loan program include:
- Reduced closing costs.
- Reduced real estate agent fees.
- Quick loan process.
- Donation to the school of your choice.
The Educator Mortgage Program is available to teachers, coaches, librarians, nurses, and other school faculty. You’ll need a credit score of at least 620 to be eligible.
Teacher Union Home Buying Program
Teacher unions also offer home buying programs to members. For example, the American Federation of Teachers partners with Amalgamated Bank to provide a loan option with the following perks:
- Fixed- and adjustable-rate mortgages
- Competitive interest rates.
- Down payment as low as 5%.
- $700 discount on origination fees
State And Local Home Buying Assistance Programs
There are many home buying assistance programs offered on the state and local levels to first-time buyers. Some are designed for low- to moderate-income buyers, while others are exclusively for public service professionals such as teachers, firefighters and medical professionals.
For example, Arizona’s Home Plus Down Payment Assistance Program offers a 30-year fixed-rate mortgage with a down payment grant. You can get a grant for as much as 5% of the purchase price, though you’ll need to meet income limits and have a credit score of at least 640.
You can explore the programs available in your area using this tool. Â HUD also keeps a list of local assistance programs that you can search by state.
Loan Programs Beneficial for Teachers
Teachers also can benefit from mortgage programs geared toward first-time home buyers. The government guarantees these loans, which reduces lenders’ risk and allows them to offer loans with generous eligibility requirements.
FHA Loans
FHA loans are geared toward low- to moderate-income home buyers. You’ll need a credit score of at least 620 to get a conventional loan, but you can qualify for an FHA loan if your credit score is as low as 500 and you can afford a 10% down payment. FHA loans are also available for a down payment as low as 3.5% if your credit score is at least 580.
USDA Loans
USDA loans help low- to moderate-income borrowers buy homes in specific rural areas of the country. USDA loans require no down payment, which can be helpful for teachers who’ve been unable to save enough to qualify for an FHA or conventional loan.
VA Loans
VA loans are available only to military service members, veterans, and their eligible spouses. VA loans are available for a low or no down payment and do not require mortgage insurance, though you will need to pay an upfront funding fee.
Fannie Mae’s HomeReady
The government-sponsored enterprise Fannie Mae offers a HomeReady mortgage option geared toward low-income, first-time home buyers who don’t have much saved up to buy a home. HomeReady mortgages are available for a low down payment and offer a $2,500 credit to very low-income borrowers.
Freddie Mac’s Home Possible
Freddie Mac offers a Home Possible loan option for low- and very-low-income first-time home buyers. Home Possible loans are available for a down payment as low as 3%, and you can use a second mortgage to cover it. This makes Home Possible mortgages a good option for home buyers who don’t have much savings.
FAQ
Here are answers to some common questions about homebuying programs that can benefit teachers.
The Bottom Line
Teachers can benefit from the different home buying programs that were created to help teachers become homeowners. Some are offered by private organizations, while others are available at the state and local levels. Thanks to down payment assistance, fee discounts and grants, teachers can save money on buying a home.
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