Teacher first time home buyer programs deliver a variety of benefits to educators who are beginning their journey into finding a home. Some deliver financial benefits, some provide rewards, some provide help at different stages and some deliver resources. When you are looking at your first home, the blizzard of details can be daunting, partly because so much of it is new. Don’t let that stop you, because there are professionals and friends who can help you.
Teacher First Time Home Buyer Programs
When you begin to sort through the programs out there they fall into three categories:
- Programs that provide support
- Programs that provide discounts
- Programs that provide mortgage loan help
Let’s take a look at all three.
1) Support for a First Time Home Buyer Teacher
Homes for Heroes has been helping first time home buyer teachers find their first home, and save them significant money in the process for more than 20 years.
If you are a teacher, you are a hero. You play a crucial role in serving your local community. Homes for Heroes recognizes the importance of your role in the community and is dedicated to providing support, valuable services, industry expertise, and local market knowledge through their network of more than 4,400 real estate agents and loan officers. They specifically joined Homes for Heroes to serve teachers and other local heroes, and to help teachers like you save money on your first home. That’s the best part, teachers like you save an average of $3,000 when you use Homes for Heroes local real estate and mortgage specialists to buy, sell or refinance a home.
“Our real estate agent was fantastic to work with! She made every step of the home buying process simple and helped keep our minds at ease. Her dedication to helping others was very evident – we highly recommend Homes for Heroes.” – Eric and Taylor are teachers who purchased a house in Wisconsin.
Simply sign up online. There’s no obligation. A company team member will follow up with you to answer your questions, and when you’re ready to proceed, they will connect you with their local real estate and mortgage specialists.
If you choose to work with Homes for Heroes local specialists, after you close on your home, Homes for Heroes will send you a Hero Rewards® check. The average amount is $3,000 if you buy or sell a home, however if you do both, the average savings doubles to $6,000! After closing on your house, you can use the money to purchase new furniture or appliances, replace the carpet or re-paint the exterior of your new house. It’s yours to do what you want.
BONUS: the Hero Rewards savings offered by Homes for Heroes can often times be received IN ADDITION to the other savings outlined in this post. That’s why you’re able to save more with Homes for Heroes than other teacher first time home buyer programs who do not go above and beyond the benefits offered by federal and state programs.
2) Discount Teacher First Time Home Buyer Programs
It’s a little hard to believe, but there is a program that is a wonderful option for a first time home buyer teacher from the U.S. Department of Housing and Urban Development that will sell you a house for 50% off.
The Good Neighbor Next Door is a national program. One of its goals is to make the home purchase more affordable for community heroes such as:
- Teachers, educators and school employees
- Law Enforcement officers and employees
- Firefighters and first responders
- Emergency medical technicians and other workers in the emergency medical services field
The eligible homes in the Good Neighbor Next Door program are in locations identified by HUD as revitalization areas. That means they are in locations where:
- Household incomes are low.
- Homeownership is low.
- Foreclosure activity is high.
These neighborhoods need both economic and community development, and a good way to encourage that is to make foreclosed properties available to heroes at a half-off. If you get one of these deeply-discounted homes, you must agree to live there for at least three years.
With the Good Neighbor Next Door program, the properties that are available are offered first to the Good Neighbor eligible applicants seven days before they go on the general market.
Teacher First Time Home Buyer Programs for Mortgages
Most of the programs for first time home buyers that involve financial help come from the federal government, and most of them center around down payments. Although these programs are all called “loans,” they are really loan guarantees. That means these federal agencies will stand behind your loan. The actual money, however, comes from private mortgage brokers and banks. Getting approval from the federal government is one half of a two-part process. The other half is being approved for the mortgage with your lender.
In most cases, these federal programs are loan guarantees that insure your mortgage if you should default on payments. That, in turn, gives the private lender confidence in your mortgage application.
The VA Loan Guarantee
The Veteran Administration loan guarantee, if you are eligible, is probably the best of the federal mortgage programs in terms of benefits. Of course, you need to be a veteran, an active duty military member, a Reservist or a member of the National Guard. If you are a veteran who is now a teacher, it’s a great opportunity. The benefits of a VA loan guarantee eclipse the other programs quite a bit. The three advantages that provide the most financial benefit are:
- No down payment
- No private mortgage insurance
- Lower interest rates
These three benefits alone can potentially save you tens of thousands of dollars. Other benefits include:
- The VA loan guarantee will limit your closing costs.
- Does not require a minimum credit score (but your private lender may have a minimum).
- You can use the benefit throughout your lifetime and can even have two VA loans at the same time if you are careful.
- VA home loans are assumable.
- There is no maximum loan amount, but the VA does limit its guarantee
- The VA does not have a maximum debt-to-income (DTI) ratio requirement (but it does have guidelines for your mortgage lender)
- You aren’t automatically disqualified from a VA loan if you have had a bankruptcy in the past. If bankruptcy was more than a year ago, you could be eligible.
- The VA home loan guarantee can be used for single-family homes (up to four units), condos, manufactured homes, new builds and home improvements like solar panels.
- VA Loans may also be used by the surviving spouses of military service members killed in the line of duty.
There are some costs, and one of them is the VA Funding fee. For the first time home buyer, the federal agency lowers its funding fee (2.15% of the total loan). The VA funding fee is a one-time fee you pay to get the VA loan, but it can be folded into your monthly mortgage payments. The funding fee is waived for veterans with service-related injuries, disabilities or recipients of the Purple Heart.
If you want to know whether you qualify for eligibility requirements of the VA loan, based on your service history, they have a very useful chart that explains it.
The USDA Loan Program
USDA loans are part of a national program for folks who want to buy a home in a rural area. The agency defines rural areas as towns with less than 35,000 people, and it includes most of the United States.
The USDA Loan program has benefits that include:
- No down payment.
- USDA home loans typically have lower interest rates.
- USDA loans do not technically have a minimum credit score. However, most private lenders will ask for a score around 640.
- You can use a USDA loan guarantee to build a new home or buy an existing home. You can also use the money to renovate or move an existing home.
- USDA loans are assumable.
The USDA loan guarantee also has some fees at closing. It has an upfront guarantee fee that costs 1% of the loan. Then it has an annual fee that costs 0.35% of the loan amount. You can roll these fees into the mortgage so you don’t need to pay the money at closing. There are also upper income limits on these loans and the home must be your primary residence.
Since about one third of the teachers in the U.S. (32%) work in rural schools, this program should be a great resource for educators, teachers and school administrators.
The FHA Loan Program
The FHA loan guarantees are for low-to-moderate-income earners who have low credit scores. The low down payment rules and relaxed credit requirements make this loan guarantee a good option for educators who are searching for affordable housing.
Here are some of the advantages of the FHA loan guarantee:
- Low Down Payments – The FHA has a minimum down payment of 3.5%. Typical mortgages require up to 20%. Your down payment percentage may be higher if you have a credit score below 580.
- Low Credit Scores – This program was designed for those who have a low credit score and cannot get a loan from conventional lenders.
- Assumable – FHA loans are assumable. An assumable loan lets you sign your current mortgage over to a potential buyer without a lot of the paperwork. In addition, they assume your loan at the interest rate you got when you bought your house. That becomes a significant advantage for a seller in a real estate market where interest rates have gone up dramatically (for example, this year)
The FHA system does require two insurance-type fees at closing:
- The Upfront Funding Fee is 1.75% of the total financed amount. It’s paid at closing, but it can be rolled into the mortgage and paid over time. This is a one-time fee.
- The Mortgage Insurance Premiums is a fee you will be paying annually for the life of the loan. The current rate for MIP is 0.55%. You can roll this into your monthly mortgage payments.
The HELPER Act
One teacher home loan program that’s not in place yet has a great deal of potential for educators: the HELPER Act. It’s not a law yet, but Congress is currently considering it. The name stands for: Homes for Every Local Protector, Educator and Responder. It is being compared to VA loans…but for teachers. It would be an amazing teacher first time home buyer program if it passes. The benefits include:
- No down payments
- No private mortgage insurance (PMI)
Those two benefits on their own would potentially save you thousands of dollars, both up front and over the life of your mortgage. As with the other loan programs, there would be one upfront funding fee (3.6%) that would help in insure your loan.
The bill has bi-partisan support, and the President also supports it. If you are a public school teacher or educator, this is a bright spot in a tough housing market. The bill is waiting for action in the House Committee on Financial Services.
Receive an Average $3,000 Savings with Homes for Heroes
In addition to helping and supporting first time home buyer teachers, Homes for Heroes finishes up with a thank you check. It’s what we call Hero Rewards® savings and it’s a check we send you after closing on your new home. Teachers receive an average of $3,000 when they work with our real estate and mortgage specialists to close on their new home. And, if they buy and sell, the average savings doubles to $6,000.
At Homes for Heroes, we want to thank every hero in the nation, and that includes teachers and educators. We have the largest nationwide network of real estate and mortgage specialists ready to help you achieve homeownership.
Sign up now to get more information from our Homes for Heroes team. There is no obligation, cost, or extra paperwork for you. This is simply our way to say thank you for your service in the community.
Fill out this form to get started or learn more about Homes for Heroes, and we’ll reach out.