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Home Loan Options for Teachers: Where to Find Help

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Teachers are among the most admired professionals in the country, but their pay lags other professions — and that can make it difficult to buy a home. Luckily, many communities offer home loans for teachers to attract educators to live in the neighborhoods they serve.

Here’s a closer look at the numerous local, state and federal homeownership programs that offer home loans for teachers.

What are home loans for teachers?

Home loans for teachers are special programs that help educators buy a home near where they work. They provide down payment assistance, low-interest loans, homebuyer education, and help navigate the variety of mortgage options and access to affordable housing.

Depending on the program, home loans for teachers are available to a wide range of individuals in the education system from pre-K to high school teachers, teachers at colleges and universities, adjunct professors, school nurses, coaches and custodians. Some programs require you to work in a public school system for a certain amount of time prior to applying.

Home loan programs for teachers to consider

1. HUD Good Neighbor Next Door program

The HUD Good Neighbor Next Door program gives teachers and other eligible public employees an opportunity to buy a home in a neighborhood in need of revitalization. HUD homes for teachers are available at a 50% discount off the listing price. Teachers who buy a HUD Good Neighbor Next Door house must sign a second mortgage equal to the amount of the discount. As long as the buyers stay in the home for at least 36 months, no interest and no payments are required on that second loan.

Who is eligible? Teachers who want to apply for the HUD Good Neighbor Next Door Program must be full-time teachers in a public or private school accredited by the state. You must look for HUD homes for teachers in the neighborhood where your school is located. In addition, you must commit to working for at least one year at the same location after the closing.

Buyers can’t have owned another residential property in the year before the HUD home’s purchase. Loan options for financing the purchase include a conventional loan or loans insured by the Federal Housing Administration or U.S. Department of Veterans Affairs (if you’re eligible). A down payment of just $100 is required if you use an FHA loan to buy a HUD home. If the home needs repairs, an FHA 203(k) loan is an option that lets you wrap your home improvement costs into the loan. VA loans require no money down.

How to apply: To apply for the Good Neighbor Next Door program, look for homes available in your area online. You can also search for a HUD-approved lender who can help you through the process. You must work with a HUD selling broker and make a bid at the sales price for this program. However, you don’t need to negotiate since the sales price is set. If there’s more than one bid on a property, a lottery will be held and two back-up bids will be kept in case the other buyers back out. If you have the winning bid, your broker can help you complete the HUD paperwork and get to closing.

2. Teacher Next Door program

The Teacher Next Door program, which provides down payment assistance, is also a resource for teachers to help them identify a variety of federal, state and local homebuyer assistance programs. Qualifying teachers can get up to $10,681 in down payment assistance. Grants don’t have to be repaid and are available for up to $4,170 in most locations and up to $6,000 in some areas. In addition to the down payment assistance and grant programs, a designated agent works closely with each teacher to match them with the right loan program and to help them find a house. The Teacher Next Door program is run by a private organization with licensed real estate agents who work with preferred lenders to help people find teacher homebuying programs.

Who is eligible? All classroom teachers for pre-K through 12th grade are eligible to participate. They don’t have to be first-time homebuyers unless a specific program requires it. The Teacher Next Door program has expanded to include other public service employees and professors. Eligibility for specific HUD mortgage assistance or other loan programs depends on the rules for those local, state and federal programs.

How to apply: You can apply online or search by your location on the Teacher Next Door site map.

3. Homes for Heroes program

The Homes for Heroes program is a national program for teachers and other public servants. It provides closing cost assistance to increase affordability for teachers who want to buy a home. Homes for Heroes connects teachers with real estate experts in their area to help them navigate the homebuying process and lower their costs. Buyers who work with a real estate specialist through this program could save $700 per $100,000 they spend on the home. They receive the savings as a rebate check after closing. Buyers may save an average of $700 when they use Homes for Heroes mortgage, title and inspection services.

Who is eligible? Pre-K through 12th grade and postsecondary teachers are eligible to participate in the program.

How to apply: To get started, apply online and get connected with real estate experts in your area.

4. Local home loan programs for teachers

Cities, states and investors offer programs for teachers that include down payment and closing cost assistance and low-interest loans. Some examples of programs include:

Landed

Landed provides down payment assistance for teachers in high-cost housing markets such as San Francisco, Seattle, Los Angeles, Hawaii and Washington, D.C. The program provides a down payment to qualified teachers to help them accumulate funds to make a 20% down payment. When you sell or refinance, the down payment is returned, along with 25% of the profit or loss on the property.

Who is eligible? To be eligible, you must be a teacher or employee of a public educational institution, including public schools, charter schools, colleges and universities for at least two years. You also have to commit to staying with that employer for two more years. In addition, you must make a down payment of 10% and stay in the house as your primary residence for at least one year. Finally, you must qualify for a mortgage with a participating lender.

How to apply: Apply online for Landed’s teacher homebuying programs.

Educator Mortgage Program

The Educator Mortgage Program, offered by Supreme Lending, is available throughout the U.S. Teachers and other employees of independent schools and private higher education schools can apply for home loans for teachers. They can receive up to $800 in closing cost assistance and up to an $800 discount on real estate fees. Additionally, their school gets a donation of up to $200. Loan specialists match teachers with loan programs geared towards teachers.

Who is eligible? Teachers and other employees in independent and private schools with a credit score of 620 or higher. You must make a down payment of 3.5%.

How to apply:  You can start the application process by filling out a brief online inquiry form.

Other homebuying assistance teachers should consider

First-time homebuyer programs

In addition to programs specifically for teachers, teachers who are first-time homebuyers may want to consider first-time buyer programs open to people from any profession. These programs offer down payment assistance, help with closing costs and low-interest loans. Some may have specific income or home price limits.

Down payment assistance

Down payment assistance programs are not limited to first-time buyers. Some are open to repeat buyers, so long as they meet the loan qualifications and, sometimes, income or home price limits.

Affordable housing for teachers

Not every teacher wants to buy a home or is ready to commit to homeownership. Many school districts offer apartment discounts for teachers. For example, Teacher Space New York helps teachers and staff at public, private and charter schools to find an affordable apartment in that expensive housing market.

 

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