Home Loans for Teachers: 10 Teacher Mortgage Programs

How to find grants and home loans for teachers

Home loans for teachers often offer special deals, typically in the form of reduced fees, lower interest rates, or assistance with down payments and closing costs.

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 make purchasing a home more affordable for educators. These “teacher mortgages” often come with lower interest rates, reduced down payment requirements, and help covering closing costs. Many also offer home-buying assistance, including housing counseling tailored to the specific needs of school employees.

Educators may also qualify for home-buying grants for teachers or down payment assistance programs that offer free money or no-interest loans to reduce upfront costs. With so many teacher mortgage programs out there, it’s a lot easier for educators to get a home loan that fits their budget and helps them become homeowners.

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

One of the most generous home loan programs for teachers, the Good Neighbor Next Door¹ program offers up to 50% off the list price of select HUD-foreclosed homes in revitalization areas. You must be a full-time pre-K through 12th-grade public school teacher and agree to live in the house for at least 36 months as your primary residence.This 50% discount comes from a silent second mortgage, which HUD forgives after three years of occupancy. The program also supports law enforcement officers, firefighters, and emergency medical technicians (EMTs). You can check for eligible properties using HUD’s lookup tool.

2. Teacher Next Door Program

You can pair this teacher home loan program with the Good Neighbor Next Door program or other first-time home-buyer assistance programs. It offers:

The Teacher Next Door² (TND) iprogram provides educators with access to homes across the market, not just in targeted revitalization areas. Eligible applicants include public school teachers, private school teachers, college faculty, and all classroom instructors from pre-K through 12th grade.

• Up to $8,000 in grants
• Up to $15,000 in down payment assistance
• Waived application fees and broker fees
• Competitive mortgage rates
• Discounted title fees

You’ll need to use a participating lender, as TND doesn’t underwrite mortgage loans directly.

3. Fresh Start Program

Part of Teacher Next Door, the Fresh Start Program³ helps educators with lower credit scores work toward mortgage loan approval. While it doesn’t offer grants or down payment assistance, it provides free credit consultations and advice on meeting minimum credit score requirements.

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 helps teachers and healthcare workers lower upfront closing costs, like appraisal, underwriting, and application fees.

You’ll work with affiliated lenders and real estate agents offering service discounts. Those savings can add up; for example, Homes for Heroes estimates that qualifying buyers can save about $2,800 on a $300,000 new home.

5. Educator Mortgage Program

Run by Supreme Lending, this teacher mortgage program can reduce closing costs and real estate agent or Realtor commissions by up to $800 each. You’ll need a loan amount of at least $400,000 to qualify for the full benefit, and you can’t combine it with other down payment assistance programs.

Compare the Educator Mortgage’s⁵ complete offer, including interest rates and fees, to make sure it’s your best deal.

6. Your teachers union

Your teacher union may offer exclusive home-buying programs. For example:

• American Federation of Teachers (AFT) members benefit from special housing counseling and mortgage deals for teachers from AFT-affiliated lenders
• United Federation of Teachers (UFT) members may qualify for up to $7,500 in closing cost grants and lower mortgage insurance premiums

Always check your union benefits to see what’s available.

7. Teacher down payment assistance programs

Thousands of down payment assistance programs exist across the U.S., many of which are run by state and local governments, nonprofits, or credit unions. Some offer grants you never repay; others offer low-interest or forgivable loans.

Ask your real estate agent, Realtor, or loan officer which programs you qualify for. You can also get matched with these types of programs through Teacher Next Door.

8. State-run teacher home loan programs

States like California and Texas offer custom home loan programs for teachers to attract educators to specific school districts. Examples include:

• California Housing Finance Association (CalHFA) offers grants, flexible credit score requirements, homebuyer education, and home loans for teachers in California.
• Texas State Affordable Housing Corporation (TSAHC) provides grants or forgivable loans, often with extra benefits for first-time home buyers.

Check with Teacher Next Door or your state housing agency to find local options.

9. Government-backed home loans for teachers

It’s true; not everyone will benefit from specialized home loans for teachers. These government-backed loan options may work better than teacher-specific programs:

• FHA loans: Backed by the Federal Housing Administration, these require just a 3.5% down payment. You can use gift funds or down payment assistance to help cover costs. These loans are easier to qualify for, especially if you have a lower credit score, but you will need to pay mortgage insurance.
• VA loans: For veterans, active-duty service members, and eligible spouses, these come with no down payment requirement, no monthly mortgage insurance, and typically offer lower interest rates than other loan types.
• USDA loans: Guaranteed by the U.S. Department of Agriculture, these loans are available in eligible rural areas. USDA loans let you buy with no down payment and benefit from lower interest rates and reduced mortgage insurance costs.

10. Conventional loans for teachers

Some educators might choose a conventional loan over a mortgage for teachers if they don’t qualify for down payment assistance, need a loan with fewer restrictions on income, location, or property type, or don’t qualify for educator-only benefits.

Backed by Fannie Mae and Freddie Mac, these loans help moderate-income teachers who may not have significant savings.

• HomeReady: This program requires just a 3% low down payment and allows a wide range of funding sources, including gifts and grants. It also offers reduced mortgage insurance and waives income limits if you’re buying in a designated low-income area.
• Home Possible: With a 3% down option, this program supports moderate-income borrowers and allows co-borrowers who don’t live in the home. It also accepts employer assistance and other creative sources for down payment funding.

Eligibility requirements for teacher home-buying programs

Before you browse real estate listings, it helps to know what lenders expect. Understanding the basic eligibility requirements for teacher mortgage programs can help you prepare and improve your odds of approval.

Employment verification

Most lenders ask for proof that you’re a full-time teacher in a public school or an accredited institution. You’ll likely need a contract, recent pay stubs, and W-2s. Some programs also require a commitment to keep teaching in the area for several years after you buy.

Credit score and income

The higher your credit score, the better your chances of qualifying for favorable mortgage rates. A score of 740 or above gets you the best rates, and 620 is often the minimum for conventional loans. Some teacher home loan programs accept lower credit scores or offer flexible terms.

Your income matters, too. Lenders look at your salary, any extra earnings from tutoring or summer work, and your financial history to decide what loan amount you can afford.

Debt-to-income ratio

Your debt-to-income ratio (DTI) measures how much of your income goes to monthly debt. Most programs prefer a DTI of 43% or less. Some home loan programs for teachers may allow a higher DTI or treat student loan debt more flexibly, 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 plan, you can select a teacher mortgage program and feel prepared to take the following steps.

Step 1: Gather your paperwork

To start the mortgage loan process, pull together basic documents that show your identity, employment, income, savings, and debt. If you’re applying as a first-time home buyer or through a teacher mortgage program, you may also need to share your rental history and proof of your teaching credentials.

Step 2: Find teacher-friendly lenders

Look for banks and credit unions that offer competitive mortgage rates for teachers. Your teacher union or real estate agent can recommend partners or connect you with the best mortgage lenders for teachers in your area.

Step 3: Get preapproved

Preapproval is when a lender reviews your finances and gives you a conditional offer for a mortgage loan. Preapproval shows how much you can borrow and helps you set a budget. It also signals to sellers that you’re ready to buy. A preapproval letter is usually valid for 60–90 days.

Step 4: Finalizing your home loan

Once your offer is accepted, it’s time to close the deal. Complete your mortgage loan application, respond to any requests for additional paperwork, and schedule a home appraisal and inspection. You’ll also need to lock in your interest rate, secure mortgage insurance if required, and review your final closing documents.

Stay in contact with your lender, real estate agent, and any home-buying assistance program rep. This is especially important if you’re using a teacher mortgage program with specific requirements.

Tips for teachers buying a home

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

Down payment help for teachers

If saving for a down payment is challenging, consider exploring down payment assistance programs to help you achieve your goal. National programs, such as Teacher Next Door and Good Neighbor Next Door, offer grants and financial aid. Your state or city may also provide teacher home-buying programs with forgivable or deferred loans to cover down payment and closing costs.

Compare mortgage rates and fees

Mortgage rates vary by lender, so get quotes from a few to see what’s best for you. Focus on the APR to understand the full cost, and use online tools to estimate your monthly payment.

Look for teacher incentives

Programs like Good Neighbor Next Door and Teacher Next Door offer mortgage discounts for teachers. Some states and teacher unions also offer home-buying assistance, lower interest rates, and grants to support educators.

Use free counseling services

Many teacher groups offer free advice on budgeting, credit scores, and the home-buying process. These services can help you choose the right teacher mortgage program and prepare your mortgage application.

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 teachers must reside in the communities they serve, home loans for educators may include additional perks, such as down payment assistance or lower interest rates, tailored 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 altogether.
• Refinancing opportunities: For homeowners, 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.

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 the 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