Teacher Home Buying Program | Designed to Save You Money

Last Updated on September 19, 2024 by Luke Feldbrugge

A teacher home buying program can provide teachers help in finding, financing and purchasing a home in a variety of ways. These last few years, the real estate market has been crazy, but it appears are starting to level out. As a teacher and educator, we want to help you find your next home. Here are some programs both private and sponsored by the federal government that can give you a leg up on the search for a new home.

Homes for Heroes: Teacher Home Buying Program

Homes or Heroes offers their teacher home buying program in all 50 states, and has the largest network of real estate agents and loan officers who have joined Homes for Heroes specifically to serve their local heroes; and yes, that means teachers and educators! You are heroes to Homes for Heroes team members; along with other heroes who serve their community including firefighters, EMS, law enforcement, military, and healthcare workers.

When teachers work with Homes for Heroes local real estate and mortgage specialists to purchase a home, they receive an average of $3,000 after closing to use toward new home expenses, furniture, appliances or maybe a much needed vacation after the move. If teachers buy and sell a home with Homes for Heroes local specialists they receive an average of $6,000 after closing! It’s how Homes for Heroes says thank you for your service in the community.

Simply sign up online and a member of the Homes for Heroes team will contact you to answer your questions. There’s no obligation. When you’re ready to speak with their local real estate and mortgage specialists in your area, they will connect you to begin your home buying process. You will be given a committed and capable team of local experts who specialize in serving teachers and educators like you.

“Great people, very helpful and caring. I have never met a lady who is so dedicated and determined to help a family. My real estate agent is amazing with a heart of gold and definitely made a huge impact on the future of my family. My family is very grateful.”- Kiara is a teacher who bought a home in New Jersey.

“This is such a great program; my real estate agent made it so easy to use. I didn’t realize all the little extra expenses that add up in getting a house and getting financial help from Homes for Heroes took a lot of the pressure off. Getting the house cleaned, buying a washer/dryer, lawn equipment – it all adds up. Thank you!” – Darcy is a teacher who found a new home in Oregon.

Homes for Heroes has been thanking community heroes for over 20 years, including teachers and educators, and has given them more than $100 million in Hero Rewards® savings throughout the U.S.

Good Neighbor Next Door HUD Program

The Good Neighbor Next Door program is a national teacher home buying program from the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration. One of its goals is to make the home purchase more affordable for:

• Teachers
• Firefighters
• Law enforcement personnel
• EMS professionals

The houses available to Good Neighbor candidates have the purchase price reduced by 50%. That’s right–half off for these homes.

So what’s the catch? The eligible homes in the Good Neighbor Next Door program are in revitalization areas as identified by HUD. That means they are in a targeted area where:

• The household income is lower than average.
• Homeownership is lower than the nearby areas.
• FHA mortgage foreclosure activity is higher than the surrounding community.

These neighborhoods need both economic and community development, and one way to do that is to make foreclosed properties available to heroes at a deep discount. If you get one of these homes, you will agree to live there for at least three years.

With the Good Neighbor program the properties that are going up for sale are offered first to the Good Neighbor eligible applicants –for 7 days, before they go on the general market.

Special Loans: Another Teacher Home Buying Program

Before we examine the big three federal mortgage programs, it must be with the understanding that although they are all called “loans,” they are actually loan guarantees. What does that mean? It means these federal agencies will stand behind your loan and insure it, but the agencies don’t give you the money. The money comes from private lenders, mortgage brokers and banks. Getting approval from the federal government is only half the battle. The other half is qualifying for the mortgage with your lender. That said, when the federal government backs your application for a loan, it can add a lot of credibility to your request in the eyes of private mortgage lenders.

The FHA Loan Program

The FHA loan guarantees are designed for low to moderate-income earners who also have low credit scores. The combination of a low down payment and relaxed credit requirements make the FHA loan guarantee an ideal teacher home buying program.

Here are some of the advantages of the FHA home loan guarantee:

• Smaller Down payments – FHA has a minimum down payment of 3.5% of the total home loan. Typical mortgages require up to 20%. Your down payment percentage may vary if you have a credit score below 580.
• Flexible Approval Requirements – The qualification criteria are not as strict as you find on conventional loans, and most teachers, principals, professors, and others in education can qualify.
• Lower Credit Scores – If you have a low credit score and cannot get a loan from conventional lenders, the FHA loan was designed with you in mind.
• Assumable – FHA loans are assumable. That makes them almost unique in the world of mortgages. An assumable loan lets you sign your current mortgage over to a potential buyer without all the paperwork and application process. Moreover, they can assume your loan at the interest rate you locked in when you bought it. That becomes a huge advantage for a seller in a real estate market where interest rates have gone up dramatically (like this year). Imagine telling your qualified buyers that they can assume your mortgage and get an annual interest rate of 3.3% while the rest of the world is paying 7%?
• Not just First Time Home Buyers – The FHA program is for everyone, not just first time homebuyers.

The FHA system does require some fees at closing, but generally this program can help home buyers who are feeling financially pinched but still want to get into a home. To learn more check out our blog post on FHA loans for teachers.

The USDA Loan Program

USDA loans are part of a national program for anyone who wishes to buy a home in a rural area. What’s rural, exactly? The USDA defines “rural” as a town with less than 35,000 people and that includes 97% of the United States. That makes almost everywhere an eligible location for this program.

The USDA loan guarantees are part of the agency’s Single Family Housing Programs. There are actually two government programs overseen by the agency: one that is a loan guarantee for those with moderate incomes, and one that is a direct loan to low and very-low income families seeking affordable housing.

The USDA Loan program typically refers to their Single Family Housing Guaranteed Loan Program. It’s benefits include:

• No down payment. That’s the big one. Most mortgages require large down payments.
• USDA home loans have fixed interest rates, meaning your rate will always stay the same.
• Loan terms are generally 33 years, meaning you have that long to pay the loan back. This is longer than a typical conventional home loan, making payments even lower.
• USDA loans do not technically have a credit score minimum. However, most lenders will ask for a score around 640.
• You can use a USDA home loan to build a new home or buy an existing home. You can also use the money to rehab, renovate or move an existing home.
• It’s not only for first-time homebuyers. It’s for everyone looking for single-family homes in rural areas.
• USDA loans are assumable.

Since about a third of all teachers (32%) work in rural schools, this program may be a good resource for educators, teachers and school administrators. The USDA loans also have some up-front closing fees. There are also upper income limits on these loans.

The VA Loan Guarantee

If you can get a VA loan–if you are a veteran who is now a teacher–do it. The benefits of a VA loan guarantee eclipses the other programs quite a bit. The big three advantages are:

• No down payment requirement
• No private mortgage insurance
• Lower interest rates

There are a lot more benefits to those who served in the military, or those in active service, but the list is quite long:

• The VA loan benefit will limit your maximum closing costs, which can be paid by the seller.
• There is no minimum credit score required from the VA.
• There is no penalty for paying your mortgage off early.
• You do not have to be a first-time home buyer to use a VA home loan.
• You can reuse the benefit throughout your lifetime.
• Your VA home loan is assumable.
• There is no maximum loan amount, however the VA does limit its guarantee.
• The VA does not have a maximum debt-to-income (DTI) ratio requirement.
• If you have a bankruptcy or foreclosure in the past, you aren’t automatically disqualified from a VA loan. If your foreclosure or bankruptcy was more than a year ago, you could be eligible.
• The VA home loan benefit 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 available to the surviving spouse of a service member or veteran killed in the line of duty, passed as a result of a service-related injury, is a POW or is MIA.

In terms of closing fees, there is the VA Funding fee. For a first time home buyer, the 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. The funding fee is also waived for veterans with service-related injuries, disabilities or recipients of the Purple Heart.

The primary criteria to qualify for VA home loans is you must have served in the US military for 90 days of active duty during wartime, or 181 days of active duty during peacetime. For Reservists and National Guard, it’s six years of service or 90 days if you were mobilized for active duty. To learn more about the VA loan check out our in depth guide and whether it’s the right choice for you.

The HELPER Act: Potentially Provide Great Benefits

One program to keep an eye on is not yet in place. It’s called the HELPER Act, and it is currently a bill being considered by Congress. The title stands for: Homes for Every Local Protector, Educator and Responder and may become a great teacher home buying program. It is being compared to VA loans in that it provides zero-down-payment loan insurance for school employees and classroom teachers.

Under this act, in addition to no down payments, you would also be able to skip paying monthly mortgage insurance premiums (though there would be one up front 3.6% mortgage insurance premium).

The bill has bi-partisan support in both the House and Senate, and President Biden also supports it. If you are a teacher, educator or school employee, this is a bright spot in an otherwise tough housing market. The bill is still waiting for action in the House Committee on Financial Services.

Homes for Heroes and These Other Teacher Home Buying Programs Work Together to Save You More Money

If you qualify for a HUD home and take advantage of their program, you can still take advantage of the rewards provided by Homes for Heroes.

If you decide to leverage one of the loan guarantee programs, you can still take advantage of the rewards provided by Homes for Heroes.

That’s the best part of working with Homes for Heroes: you just need to have worked in education at some point in your career to qualify. Whether it’s your current occupation, or you’re retired from teaching, you still qualify for the Hero Rewards offered by Homes for Heroes, in addition to the benefits offered by these other teacher home buying programs.

Remember, when teachers work with Homes for Heroes they receive an average of $3,000 after closing to use toward new home expenses, furniture, appliances or maybe a much needed vacation after the move. If teachers buy and sell a home with Homes for Heroes they receive an average of $6,000 after closing! And, that doesn’t include any of the other benefits offered by the other teacher home buying programs mentioned.

If you’re a teacher thinking about moving and want a new home, consider speaking with our specialists in your area. Let them answer your questions and you will discover how they can help you with your next home purchase. Simply sign up today and a member of our team will follow up with you. And thank you for educating our citizens. It is an honor to serve you.