What you should know about mortgage programs for teachers
There are special homebuying programs specifically for teachers
Teachers offer a valuable service to their communities, and there are many programs to help make homeownership a reality for them. While the specific benefits vary by program, you may receive down payment assistance, reduced fees or closing costs and even a discount on your home purchase.
In many cases, you simply need to be a teacher to qualify for these programs. However, for some, you might also need to agree to live in the home for a specified period to qualify.
Key insights
- Mortgage programs for teachers make homeownership more affordable by offering down payment assistance and reduced fees.
- The Good Neighbor Next Door program offers teachers a 50% discount off the list price of eligible homes.
- Teachers' unions and credit unions can be good places to find discounts on mortgages and mortgages with reduced costs or fees.
Teacher Next Door
The Teacher Next Door is a national homebuying program to help teachers buy any home. It’s open to public and private school teachers who provide classroom instruction to prekindergarten through grade 12 students.
Some of the features of the Teacher Next Door program include:
- Grants up to $8,000
- Help with a down payment of up to $10,861
- No application or broker fees
- No appraisal costs (credit of $545 at closing to cover these costs)
- Discounted title fees
- Free credit repair consultations through its Fresh Start Credit Repair Program
Financing for this program is offered by select direct mortgage lenders and national banks. You can find participating lenders and submit a pre-application by contacting Teacher Next Door.
Good Neighbor Next Door
The Good Neighbor Next Door program offered by the U.S. Department of Housing and Urban Development (HUD) is designed to help teachers (grades prekindergarten through grade 12) and first responders become homeowners.
Under the program, you’ll receive a discount of 50% off the home’s list price. So, if the home had a list price of $300,000, you would pay only $150,000. In exchange for receiving this steep discount, you must agree to live in the property as your primary residence for at least 36 months.
Only homes listed for sale through HUD’s Good Neighbor Next Door Sales program are eligible. All of these homes are located in designated revitalization areas. The criteria used by HUD to designate revitalization areas include household income, the rate of homeownership in the area and the number of foreclosures in the area on FHA home loans.
You can search for homes by state and revitalization area on HUD’s website. If you find a home you want to buy and other people also submit purchase offers, the buyer is randomly selected by HUD using a lottery system. If HUD accepts your purchase offer, you can apply for a mortgage to finance the purchase.
Homes for Heroes
The Homes for Heroes program is a nationwide network of real estate and mortgage experts designed to help teachers, law enforcement, firefighters, health care professionals, military members and other first responders buy and sell homes.
This program can help prekindergarten through postsecondary teachers save money on their homes by connecting them with a real estate or mortgage expert. These savings can apply to home purchases, home sales and mortgage refinance transactions.
On average, people who use this program to buy or sell a home save $3,000. Plus, you might be able to receive reduced mortgage fees or title company discounts. You can connect with the Homes for Heroes community by visiting its website.
The HELPER Act of 2023
The Homes for Every Local Protector, Educator and Responder (HELPER) Act of 2023 was recently introduced to Congress. If passed into law, this act will create a new FHA mortgage program for teachers and first responders who are also first-time homebuyers.
While the HELPER Act hasn’t yet been passed into law, Dan Green, a licensed mortgage loan officer and the managing director of Homebuyer, said: “The HELPER Act is the best mortgage program for teachers going. It's got momentum and could pass into law later this year.”
If this program is passed as proposed, eligible teachers and first responders will be able to buy a home with no down payment. Plus, the borrower won’t need to pay any mortgage insurance premiums, unlike other FHA loans.
Mortgage insurance premiums often cost 0.5% to 1% of the total loan amount each year, so not needing to pay this could represent significant cost savings.
State and local mortgage programs for teachers
Some states, cities, municipalities and nonprofit organizations may offer assistance programs to help teachers buy a home. Assistance could include such things as discounts on closing costs or even down payment assistance.
For example, Suzanne Downs, the founder and co-owner of Palm Beach Mortgage Group, explained, “One program that has been great for teachers is the Florida Hometown Heroes program, as it offers a 0% deferred payment on a second mortgage that can be used for the down payment and closing costs.”
Available programs vary by area and may change. So, even if you don’t find a suitable option the first time you search, you may find it helpful to search again. A mortgage lender with expertise in your area may be able to provide you with information about available programs.
Teachers’ union mortgages
Some teaching unions partner with mortgage companies to provide discounted lending options to their members. For instance, you might be able to get discounts on origination fees or better interest rates by using partner mortgage programs.
mortgage, check with your teacher’s union to see what’s offered. Plus, you may get discounts on related things like moving trucks or vans, and you might even be able to get help finding a licensed real estate agent.
Teachers’ credit union mortgages
There are some credit unions whose primary purpose is to help teachers and people who work at schools in specific geographic regions. Your school’s human resources department may be able to tell you if there are credit unions serving teachers in your area.
Credit unions are nonprofit entities and are controlled by the members who use their services. A credit union's ultimate purpose is to foster its members' well-being. One of the ways it does this is by offering lower fees and interest rates on loan products, like mortgages.
FAQ
Can friends and family use a mortgage program for teachers?
Mortgage programs explicitly designed for teachers typically can’t be shared with friends or family unless the person is going to be a co-borrower with the teacher on a loan, such as if you’re getting a mortgage jointly with your spouse.
However, each program has different rules, so this could vary. For example, some credit unions allow family and household members of people who belong to the credit union also to become members and use the credit union’s services.
Do mortgages for teachers have better rates?
You’ll sometimes get a better interest rate on a mortgage specifically designed for teachers, but this varies by program. For example, some programs may offer lower down payments or reduced closing costs instead of reduced interest rates.
What credit score do I need to qualify for a mortgage program for teachers?
The credit score you need to qualify will vary by program and lender. For instance, you may be able to get an FHA loan with a credit score as low as 500 to 580. If you opt instead for a conventional loan, you may need a credit score of at least 620 to 640 to qualify.
Bottom line
If you’re a teacher and plan to buy a home, many programs are designed to help you do this. While evaluating the available programs in your area may take a bit of time, the cost savings can be significant. For instance, if you’re able to find a home in your area through the Good Neighbor Next Door program, you may receive a 50% discount off the purchase price.
By taking time to research the available options in your area, you might be able to make the homeownership dream a reality.
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Congress.gov, "S.1514 - HELPER Act of 2023." Accessed June 28, 2023.
- Fannie Mae, "Selling Guide: B3-5.1-01, General Requirements for Credit Scores (10/05/2022)." Accessed June 28, 2023.
- Florida Housing Finance Corporation, "Hometown Heroes Program." Accessed June 28, 2023.
- Homes for Heroes, "Our Story." Accessed June 28, 2023.
- Homes for Heroes, "We Help Teachers Save on a Home." Accessed June 28, 2023.
- National Credit Union Administration, "What Is a Credit Union?" Accessed June 28, 2023.
- Teacher Next Door, "Financing for the Teacher Next Door Program Is Provided by Our Preferred Direct Lenders and Select U.S. National Banks." Accessed June 28, 2023.
- Teacher Next Door, “Looking to Purchase a Home? Teacher Next Door Can Help!” Accessed June 28, 2023.
- Teacher Next Door, "Teacher Next Door's Fresh Start Credit Repair Program." Accessed June 28, 2023.
- U.S. Department of Housing and Urban Development, "About Good Neighbor Next Door." Accessed June 28, 2023.
- U.S. Department of Housing and Urban Development, "FHA Revitalization Area Sales Programs." Accessed June 28, 2023.
- U.S. Department of Housing and Urban Development, "HUD 4155.1 - Section A. Borrower Eligibility Requirements." Accessed June 28, 2023.
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