Check Out These 6 Teacher Mortgage Programs
Updated: Jun 8
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Teachers work hard days in tough environments, and oftentimes comes with sacrifices that go unspoken. Many do it to fulfill a passion.
We've written about teachers before, usually as it pertains to their options for student loan forgiveness and repayment. But this time, let's talk about the various mortgage programs available to teachers, a decidedly more positive topic for those that have taken control of their student loan debt and are ready for life's next financial challenge.
Related: A Guide for First-Time Home Buyers
Home loans and grants for teachers
Nationally, there a number of programs designed to spur homeownership available to teachers. Some programs offer special types of mortgages and home loans, while others are structured as down payment or closing cost assistance or grants.
Participating in these programs can be somewhat cumbersome, since you may need to find participating lenders or complete other tasks of processes not typical of the home buying process.
In this article, we will discuss the following home buying assistance programs for teachers:
Teacher Next Door
Homes for Heroes
Good Neighbor Next Door
Government-backed loans (3 programs)
1. Teacher Next Door program
The Teacher Next Door (TND) program is the largest national home buying program in the United States. Offering both grants and down payment assistance, TND offers grants up to $4,170 or $6,000, depending on your location.
In down payment assistance, teachers may qualify for upwards of $10,000, and may also be able to leverage other benefits too, such as slashed title fees, home appraisal rebates, and access to the TND credit builder program.
One of the most underrated parts of the TND program is that you can use it in conjunction with many other first-time buyer programs, such as:
Freddie Mac Home Possible
Fannie Mae HomeReady
To use the Teacher Next Door program, you'll need to be a pre-K-12th grade teacher. Really the only caveat to the program is that you'll need to work with a participating Teacher Next Door agent.
TND programs are free for you to use, so that mitigates the downside to not selecting your own lender.
2. Homes for Heroes for teachers
Homes for Heroes is a home buying assistance program for teachers and for those working in the following career paths:
Firefighters
EMS
Law enforcement
Military
Healthcare Professionals
The Homes for Heroes program has multiple different components to it, but Homes for Heroes, Inc. is the piece that will help you buy a new home. Qualifying teachers may be able to save on their closing costs, title company expenses, and inspection fees. In fact, the organization boasts that the average program participant saves over $2,400!
To qualify for the Homes for Heroes financing program as a teacher, you'll need to be certified and teach pre-K-12th grade, or at the post-secondary level.
3. Good Neighbor Next Door program
The Good Neighbor Next Door program helps those in public service careers to become homeowners in an area undergoing community revitalization. Those working in the following career paths may be eligible to receive 50% off the list price of a house:
Law enforcement
Pre-K-12th grade teachers
Firefighters
Emergency medical technicians
To take advantage of the program, you'll need to browse homes for sale through the Good Neighbor Next Door program: homes within the program are listed for seven days. Do note that the program mandates that you reside in your new home (as a primary residence) for a minimum of three years.
When you purchase a home through Good Neighbor, which is funded through the U.S. Department of Housing and Urban Development (HUD), HUD will issue you a second mortgage on your new home. This mortgage is only there to assure that you fulfill your three year commitment. If you sell your home within the first three years, you'll need to repay the full price of the property.
In addition to being a teacher (or other eligible career) and maintaining your residency for three years, you'll also need to teach/work in a designated revitalization area.
4. Federal mortgage programs
If, as a teacher, you decide that none of these three programs are right for you, do keep in mind that there are also some federally backed mortgage programs that could help you get into your dream home more quickly.
Government-backed mortgage programs serve two purposes:
Increase first-time homeownership rates nationwide
Help low to middle income Americans to buy homes
The three main types of home loans that you'll want to look into are:
USDA loans
FHA loans
VA loans
USDA loans
USDA loans can be used by anybody, teachers included, looking to purchase a home in a USDA designated rural area. USDA loans could come with the potential of not needing to have any down payment at all.
To identify if USDA loans may be an option for you,
Verify that your home meets location standards
Verify that your income qualifies (via Fannie Mae's Area Median Income Lookup Tool)
You'll also need to work with a USDA participating lender and meet its' credit score requirement.
FHA loans for teachers
Some educators will also qualify for FHA loans, backed by the United States Federal Housing Administration. Those with credit scores of at least 580 may be able to secure these special mortgages (again through participating lenders) with just 3.5% down payments.
VA loans
Teachers that are Veterans or military spouses may be able to secure a VA home loan, which comes with some or all of the following perks:
Below market mortgage interest rates
No down payment requirements
No PMI requirement
State-sponsored teacher mortgage programs
One last thing that you'll likely want to consider is the availability of any local state, county, or community based mortgage programs. There are too many to list here, but organizations such as teacher unions, credit unions, and local governments may also have options out there to help you.
One such example is Connecticut's Teachers Mortgage Program, offered by the Connecticut Housing Finance Agency.
No matter which programs, down payment assistance, or grants you utilize to purchase your home, it is nice to see such a wide array of programs designed to help America's educators.
Tips for teachers taking a mortgage
We're experienced in working with teachers that have student loan debt and are looking to buy a home. Over the past couple of years, we've come up with a number of tips and tricks designed to help make your choice of teacher mortgage programs easier.
First and foremost, you'll want to make sure that you balance your present day and future cash flow needs. Teacher salary steps and raises tend to be based on seniority and are written into contracts, so you'll likely know what you're going to make over the next few years or so.
We recommend that you use this advance knowledge to your advantage. If you know that you'll likely need a car in the next five years but have some extra cash on hand now, for instance, it may make sense to make a larger down payment, which will keep your monthly mortgage payments lower.
Another tip that you'll want to take to heart is to really think through which programs you'd consider using. If the idea of a low down payment solution sounds appealing, but you don't like the idea of paying annual mortgage insurance premiums (as is the case with FHA loans), you may consider a Conventional 97 loan or something else altogether. There is no shortage of mortgage options to consider, whether they are teacher oriented or not.
Finding a lender or loan officer that you trust to help you out here is extremely important. You may consider calling a few in your area that work for both local and national banks, and then evaluate the quality of the service you receive. And while customer service is important, it is not as crucial as the interest rate you receive, as even a 0.25% difference can add up to thousands on a 30-year mortgage.
Download our mortgage calculator
Teachers looking to join the ranks of homeownership should download our free mortgage calculator. This tool will help you to:
Gauge how much home you can afford
See how changes in your down payment, loan rate, term, and other variables will impact your monthly mortgage payments
Help you estimate you monthly mortgage payments, including amounts escrowed for property taxes and homeowners insurance
The mortgage calculator is compatible with all sorts of fixed mortgage programs, so we've built the perfect tool for teachers considering Conventional, FHA, USDA, and other mortgage programs!
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