Home Loans for Teachers: 10 Teacher Mortgage Programs

How to find grants and home loans for teachers

Home loans for teachers offer deals for educators, usually in the form of reduced fees, lower interest rates, or down payment and closing cost assistance.

By financing a new home with special teacher home buying programs, such as government-backed loans and other teacher grants, these loan programs can make homeownership more affordable for educators.

Read on to learn about the best home loans for teachers. Then compare your options with other loan programs to get the best deal.

In this article (Skip to…)

• Home loans for teachers
• 10 teacher mortgage programs
• Program requirements
• How to apply
• Pros and cons
• FAQ

What are home loans for teachers?

Home loans for teachers are specialized mortgage loan programs designed to support educators in purchasing a home.

These “teacher mortgages” often come with benefits such as lower interest rates, reduced down payment requirements, and assistance with closing costs. In addition, educators can find valuable resources, such as housing counseling tailored to their specific needs.

Furthermore, home buying grants for teachers and teacher down payment assistance programs offer free money and no-interest loans to ease the upfront costs of buying a home.

With a variety of teacher mortgage programs programs available, securing a mortgage loan has become more accessible than ever, ensuring that those who educate our future generations can invest in their own futures as well.

10 types of home loans for teachers

Are you ready to turn the key to your new home? Browse our list of teacher housing programs, each with unique benefits to help educators become homeowners.

1. Good Neighbor Next Door Program

Perhaps the most valuable home loan for teachers is the Good Neighbor Next Door¹ program, which can help educators save up to 50% on certain home purchases and offers mortgage discounts for teachers.

Good Neighbor Next Door offers up to 50% off the list price on HUD foreclosure homes. However, that only applies if you want to purchase in a “revitalization area,” as HUD defines it.

To qualify as an educator for this program, you’ll need to be a full-time pre-K through 12th-grade public school teacher. And you must agree to live in the home for at least 36 months.

HUD creates this 50% discount by taking out a silent second mortgage to cover half of the home price. This leaves you responsible for paying only the other half. HUD’s silent lien is forgiven after you’ve occupied the home for three years as a primary residence.

The Good Neighbor Next Door program helps law enforcement officers, firefighters, and EMTs, as well as educators. The U.S. Department of Housing and Urban Development (HUD) runs the program. So you know you can trust it.

For educators looking to explore more teacher mortgage programs, or to find eligible properties in your area that qualify for this program, use HUD’s look-up tool.

2. Teacher Next Door Program

The Teacher Next Door² (TND) initiative is a popular teacher home buying program that also offers mortgage discounts for teachers.. In collaboration with the U.S. Department of Housing and Urban Development (HUD), the program allows eligible teachers to purchase homes at a reduced price in designated revitalization areas. Typically, HUD acquires these homes through foreclosure procedures.

However, the Teacher Next Door program does not limit teachers to only purchasing a home in a targeted area. It allows them to purchase any home on the market.

Educators eligible for TND:

• All classroom teachers, pre-K through 12th grade
• Public school teachers
• Private school teachers
• College and university professors

The Teacher Next Door Grant and Down Payment Assistance Program

Qualified applicants are also eligible for the Teacher Next Door Grant and additional teacher down payment assistance. You can also pair TND with HUD’s Good Neighbor Next Door (50%) program, as well as other select first-time home buyer programs.

• Up to $8,000 in grant money
• Up to $10,681 in additional down payment assistance
• Fees like application and broker fees are waived
• Competitive interest rates
• Discounted title fees

TND also streamlines the home buying process by assisting you with the loan application and closing paperwork.

To participate in the program and access these teacher housing grants, teachers must use a participating lender, as TND does not directly underwrite loans.

3. Fresh Start Program

The Fresh Start Program³, part of Teacher Next Door, could help you secure a mortgage if you have a troubled credit history. This teacher mortgage program provides free advice on fixing your credit, but does not offer grants or down payment assistance. This can simplify the approval process for a teacher home buying program.

As its website says:

"[Fresh Start] will discover exactly what credit challenges are preventing your mortgage loan from being approved and help you overcome these issues as quickly and efficiently as possible. This service has proven to be extremely effective in helping buyers raise their credit scores and make home ownership a reality. Consultations are free.”

For teachers, this means a direct path to meeting minimum credit score requirements for any home mortgage program and moving one step closer to a successful home loan application.

4. Homes for Heroes Program

Even if a teacher has saved enough for a down payment on a new home, closing costs and other fees can still be a big challenge. The Homes for Heroes Program⁴ can help teachers and healthcare workers get these fees upfront costs lowered, and, better yet, it can often be paired with other home buyer assistance.

The Homes for Heroes Program can lower:

• Application fees
• Origination fees
• Appraisal fees
• Inspection fees
• Processing fees
• Underwriting fees

If you’re an educator, signing up for teacher home buying programs like Homes for Heroes allows you to work with participating lenders and real estate agents who offer discounts on their services. The money you save from these discounts can really add up.

For instance, Homes for Heroes suggests you might keep an extra $2,800 in your pocket on the purchase of a $300,000 home. And if the home’s price is higher, you’ll save even more. If you’re an educator looking into home loans for teachers, it’s definitely worth checking out if there are Homes for Heroes affiliates near you.

5. Educator Mortgage Program

Mortgage lender Supreme Lending runs a special teacher home buying program called the Educator Mortgage Program⁵. This can help reduce your closing costs and real estate agent fees by up to $800 apiece, or $1,600 in total savings.

Keep in mind that the $1,600 figure is a maximum benefit; not all borrowers will qualify for that much. The amount you can receive for each expense — real estate agent commissions and closing costs — will be limited to 0.2% of your loan amount.

To max out the full $800 benefit for both Realtor commissions and closing costs, you’d need a home loan of at least $400,000.

It’s also important to note that you cannot use this offer in conjunction with another teacher down payment assistance program. But if you’re not using a DPA, it may be worth looking into the Educator Mortgage Program.

Make sure you compare Supreme’s overall rate and costs with those of other lenders. You may be able to save more than $1,600 with another lender if it has significantly lower rates and fees.

6. Your teachers union

Being a member of a teachers’ union may help you become a homeowner sooner than you expected. Many unions offer special teacher home buying programs that provide access to exclusive benefits.

American Federation of Teachers (AFT)

If you’re exploring home loans for teachers, your membership in the American Federation of Teachers can be a game-changer. The AFT offers:

• Exclusive AFT programs aimed at assisting with homeownership.
• Special lending programs with AFT-affiliated mortgage lenders.
• Housing counseling

United Federation of Teachers (UFT)

Belonging to the United Federation of Teachers (UFT) not only connects you with a community of educators but also unlocks access to:

• Mortgage discounts through UFT-specific mortgage initiatives.
• Reduced mortgage rates and lower mortgage insurance premiums from UFT-affiliated lenders.
• Closing cost grants up to $7,500 for eligible members.

Please note that these teacher home buying programs have varying eligibility requirements and benefits, so it’s important to review each one carefully to understand how they can best meet your individual needs.

7. Teacher down payment assistance programs

Plenty of organizations offer home buyer assistance for would-be homeowners, regardless of occupation. These are called down payment assistance programs.

Governments at the federal, state, and local levels, as well as nonprofits and charities, frequently run DPA programs.

The Teacher Next Door program should put you in touch with DPAs local to you. But, if you prefer, you can approach them directly. Some DPAs provide grants that you’ll never have to repay. Others offer low-interest loans or forgivable loans.

There are thousands of DPA programs across the country. Each has its own rules about who’s eligible for help. So ask your Realtor or loan officer what’s available in your state and which assistance programs you might qualify for.

8. State and programs providing home loans for teachers

Some states have problems recruiting or retaining teachers. A number of those states offer special home loans for teachers as an incentive to move into certain school districts.

These tend to fall under the category of down payment assistance but may be more generous than other DPA programs available to the general population. For instance, you might get additional tax credits or grants. Here are examples of these types of programs:

• California Housing Finance Association (CalHFA) provides a lineup of resources, including grant programs, home loans for teachers with flexible guidelines and credit score requirements, first mortgage loans, and homebuyer education courses.
• Texas State Affordable Housing Corporation (TSAHC) supports both first-time and repeat homebuyers in reaching their homeownership goals. The organization offers down payment assistance, which can be provided as either a grant or a deferred, forgivable loan, with repayment required if the home is sold or refinanced within three years.

Again, a service like Teacher Next Door should be able to put you in touch with your local program, assuming there is one near you.

9. Government-backed home loans for teachers

It’s true; not everyone will do better with specialized home loans for teachers. Certain government mortgage programs are already so generous that they could exceed the benefits provided by popular teacher home buying programs.

All of these government-backed loans have the same goal: to make homeownership more accessible and affordable, especially for those who may struggle to meet the demands of conventional loan eligibility requirements. Because teachers frequently face financial challenges as a result of low salaries and high education-related debts, these loans can provide much-needed assistance in achieving their homeownership goals.

FHA loans

The Federal Housing Administration backs FHA loans, which have lower credit scores and down payment requirements than conventional loans and are frequently chosen by first-time homebuyers. This type of loan makes homeownership more accessible to teachers, who may not have as high a salary as other professions. FHA loans also permit grants or gifts to be used as down payments, which is helpful for teachers who are eligible for a number of grant programs.

VA loans

A VA home loan is hard to beat if you are both a veteran and a teacher (or the spouse of either eligible group). With this type of loan, you won’t need a down payment, and you’ll likely receive a competitive mortgage rate. Additionally, VA loans have no ongoing mortgage insurance, even if you put little or nothing down. Over other affordable options like the FHA loan, that is a significant advantage.

USDA loans

Similar to VA loans, loans guaranteed by the United States Department of Agriculture also let you buy with no down payment. USDA loans also offer lower interest rates and mortgage insurance rates than most other loan types.

For a USDA mortgage, eligibility depends on income limits and where you’re buying — it needs to be somewhere sparsely populated, rural, or suburban. Your income can’t exceed 15% above the local median.

Many teachers who work in rural areas could potentially take advantage of this program. USDA loans can offer 100% financing (no down payment), making them an attractive option for those who may struggle to save a substantial down payment.

10. Conventional loans for teachers

Although not specifically among the top home loans for teachers, the mortgage programs offered by Fannie Mae and Freddie Mac are pivotal in providing affordable homeownership, especially for educators who contribute so much to our communities. These programs come with benefits that are especially advantageous to those in the teaching profession.

Fannie Mae’s HomeReady Program

HomeReady is intended to assist low- to moderate-income borrowers who have less than the average down payment savings. Teachers may benefit from this program because it has a low down payment requirement of as little as 3% and flexible funding, which means the down payment and closing costs can come from a variety of sources, such as gifts or grants.

HomeReady also provides lower mortgage insurance premiums than conventional mortgage insurance. To qualify, income limits based on the area’s median income apply, but these limits are waived if the property is located in a low-income neighborhood.

Freddie Mac’s Home Possible Program

Home Possible, like HomeReady, is intended to help low- to moderate-income homebuyers. It also allows for a 3% down payment, which can come from a variety of sources, including family, employer assistance programs, secondary financing, and sweat equity. It also allows non-resident co-borrowers to be on the loan, which could help teachers qualify with a higher income level. Income limits apply again, but they are waived if you buy in a designated low-income neighborhood.

Eligibility requirements for teacher home buying programs

Before you start browsing real estate listings, let’s break down what lenders are looking for when you apply for educator home loans. Understanding these teacher home loan requirements can help you position yourself as a strong applicant and bring you one step closer to unlocking the door to your new home.

Employment verification for educators

Lenders typically require proof of full-time employment as an educator in a public school or accredited institution. This may include:

• A current employment contract
• Recent pay stubs
• An employment verification letter from your school district
• W-2 forms or tax returns from the past two years

Some teacher homeownership assistance programs may have specific requirements regarding the length of your teaching career or your commitment to continue teaching for a certain period after receiving the loan. For example, some teacher homebuyer programs may require you to commit to teaching in the area where you’re purchasing a home for at least three to five years.

Credit score and income requirements

Having a good credit score drastically impacts your ability to qualify for teacher home loans. While the exact requirements can vary depending on the loan program and lender, here’s a general guideline:

• Excellent (740+): Qualify for the best interest rates and terms
• Good (670-739): Still eligible for most loans with favorable terms
• Fair (580-669): May qualify for FHA loans or other specialized programs
• Poor (below 580): May face challenges, but some options may still be available

For most conventional loans, a minimum credit score of 620 is typically required. However, some teacher mortgage programs may have more lenient credit requirements.

Your income is another important factor. Lenders will evaluate your income to ensure you can afford the sale price of your new home. They’ll look at:

• Your base salary as a teacher
• Any additional income from summer school, tutoring, or other sources
• Your overall financial stability and employment history

Remember, a higher credit score and stable income can help secure more favorable loan terms and better mortgage rates for teachers.

Debt-to-income ratio requirements

Lenders use a number of important factors, including your debt-to-income ratio (DTI), to determine whether you can afford the loan and make monthly payments. DTI ratio compares your monthly debt payments to your monthly gross income.

Most home loans for teachers require a DTI ratio of 43% or lower, although some programs may allow for higher ratios.

As an educator, you may have student loan debt that impacts your DTI. Some teacher mortgage assistance programs may offer more flexible DTI requirements or may calculate your student loan debt differently, especially if you’re on an income-driven repayment plan.

How to apply for teacher home buying programs

Just as preparing for a new school year can be demanding, buying a new home can be a challenge. However, with the right preparation and knowledge, you can ace the home buying process and secure the right teacher mortgage program. Let’s explore the steps of home financing for educators, with a few tips to help you succeed.

Step 1: Prepare your documentation

To make the process of securing mortgage loans for teachers smoother, gather all necessary documents in advance. You’ll generally need:

• Proof of identity: Driver’s license or passport
• Proof of employment: Recent pay stubs, employment verification letter
• Income verification: W-2 forms and tax returns for the past two years
• Financial statements: Bank statements, investment account statements
• Debt information: Student loan statements, credit card statements, car loan details
• Rent history: For those who are seeking first-time home buyer programs for teachers, compile proof of rent payments for the past 12 months (if you’re currently renting).
• Education credentials: Teaching license or certification

Step 2: Find teacher-friendly lenders

Research lenders specializing in home loans for teachers. Consider credit unions, banks, and online mortgage lenders that offer special mortgages for teachers or educator home loans.

Also, contact your teachers union (such as the American Federation of Teachers or United Federation of Teachers) for recommendations or partner programs.

Step 3: Get preapproved for a teacher mortgage

Getting mortgage preapproval involves a lender evaluating your finances and conditionally committing to a loan amount. It’s important because it clarifies your budget for the home purchase price and demonstrates to sellers that you’re a serious buyer.

For home loans for teachers, preapproval can highlight special considerations for educator income, potentially giving you an edge in competitive markets.

Once pre-approved, you’ll receive a preapproval letter stating the loan amount you qualify for. This pre-approval typically lasts for 60–90 days, giving you time to shop for your new home.

Step 4: Finalizing your teacher home loan

You’ve found your dream home and your offer has been accepted. Now it’s time to finalize your teacher mortgage:

1. Complete the full mortgage application with your chosen lender.
2. Provide any additional documentation requested by the lender.
3. Schedule a home appraisal to determine the property’s value.
4. Complete a home inspection to identify any potential issues.
5. Review and lock in your interest rate.
6. Obtain private mortgage insurance (PMI) if required (typically for down payments less than 20%).
7. Review and sign your closing documents.

Throughout this process, stay in close communication with your lender, real estate agent, and if applicable, your teacher home buying program representative. They can guide you through any educator-specific requirements or benefits.

Tips for teachers buying a home

Finding affordable housing for teachers is within reach with the right strategies and resources.

Explore down payment assistance for teachers

Saving for a down payment can be challenging, but many down payment assistance programs are available to help teachers achieve homeownership. These programs can significantly reduce the amount you need to save, making it easier to afford a home.

Explore national programs like Teacher Next Door and Good Neighbor Next Door, which offer grants and financial aid specifically for educators. Additionally, check with your state and local government for teacher home buying programs that provide grants, forgivable loans, or deferred payment loans to cover down payment and closing costs.

Taking advantage of down payment assistance for teachers can make securing a home loan for teachers more manageable and affordable.

Compare mortgage rates

Mortgage rates can vary significantly between lenders, so it’s essential to shop around and compare offers. Start by researching different types of loans and their current rates. Reach out to multiple lenders to request personalized quotes based on your financial situation.

Pay attention to the Annual Percentage Rate (APR), which includes interest rates and other fees, to get a comprehensive understanding of the cost of each home loan for teachers. Use online mortgage calculators to compare how different rates and terms will affect your monthly payments and overall loan cost.

Leverage teacher mortgage incentives and discounts

Many programs and incentives are available exclusively for teachers to help them afford homeownership. Look into national programs like Good Neighbor Next Door and Teacher Next Door, which offer significant benefits and mortgage discounts for teachers.

Check with your state and local government for additional teacher housing grants, including down payment assistance and reduced mortgage rates.

Don’t forget to explore benefits offered by teachers unions, such as the American Federation of Teachers (AFT) and the United Federation of Teachers (UFT), which may provide further financial support and resources for home buying. Taking advantage of these opportunities can make purchasing a home more affordable and accessible for teachers.

Seek financial counseling services for teachers

Many teachers’ unions and professional organizations offer free or low-cost financial counseling services. These services can provide personalized advice on budgeting, improving credit, and navigating the home buying process. Financial counselors can also help identify specific teacher mortgage programs and resources available to teachers, ensuring you make the most of your benefits.

Pros and cons of home loans for teachers

When it comes to securing home loans for teachers, there are several advantages and drawbacks worth considering.

Pros

• Accessibility to affordable housing: Home loans for teachers offer terms that make buying a single-family home more accessible for educators.
• Favorable terms in key states: In states such as California and Texas, where it’s crucial for teachers to reside in the communities they serve, home loans for educators may include extra perks like down payment assistance or lower interest rates, adapted to the area’s cost of living.
• Assistance with private mortgage insurance (PMI): Home loans for teachers often offer reduced private mortgage insurance premiums or entirely waive PMI costs all-together.
• Refinancing opportunities: For those who already own their homes, the opportunity to refinance through teacher home buying programs can provide a path to lower interest rates and better loan terms, potentially saving thousands over the life of the loan.
• Ongoing support: Many teacher home buying programs go beyond just offering loans; they provide comprehensive support throughout the home-buying process. This includes counseling, financial education, and sometimes even grants for closing costs.

Cons

• Geographical limitations: Teacher home buying programs can come with location-based restrictions. For instance, an educator in a rural area might not have as many options as someone in a metropolitan area.
• Full-time status requirement: Part-time educators may find it challenging to qualify for home buying assistance, as many of these programs are designed specifically for full-time teachers.
• Complexity: Teacher housing programs can be complicated. For instance, some programs are contingent on the educator’s continued service in the profession. This could be restrictive for those considering a career change or who may face unexpected life changes.

While home loans for teachers can present remarkable opportunities for affordable housing, it’s important for educators to weigh these pros and cons carefully before committing to a specific teacher home buying program.

Home loans for teachers FAQ

Check your eligibility for teacher home buying programs

Securing home loans for teachers may seem like a complex process, but in reality, many educators find it more straightforward than anticipated.

Even without the aid of specific teacher home buying programs, the journey toward homeownership is well within reach. You can easily begin your search by comparing mortgage rates from multiple lenders and then applying for loan preapproval.

It’s a quick, hassle-free procedure with no strings attached, and you can start that process by clicking the links below. You’re likely already eligible for a teacher home loan program.

Resources

¹Good Neighbor Next Door

²Teacher Next Door 

³Fresh Start program

⁴Homes for Heroes program

⁵Educator Mortgage program