Home loans for teachers: 9 programs with big savings

Peter Warden
The Mortgage Reports editor

Are teacher home buying programs worth it?

Teacher home loans offer better deals for educators, usually in the form of lower fees or down payment and closing cost assistance.

But not all teacher mortgages are worth it. Some offer genuine help, while some may just be marketing gimmicks.

Even if you’re a teacher, a specialized home loan might not be the best option. You might save more with a ‘standard’ mortgage available to all. 

So read up on some of the best teacher home loans below. Then compare your options with other loan programs to be sure you’re getting the best deal.

Explore your mortgage loan options (Oct 27th, 2021)

In this article (Skip to…)

  1. Good Neighbor Next Door
  2. Teacher Next Door
  3. Fresh Start program
  4. Homes for Heroes
  5. Educator Mortgage program
  6. UFT mortgages
  7. Down payment assistance
  8. Local programs
  9. Standard mortgages

1. ‘Good Neighbor Next Door’ mortgage

Perhaps the most valuable teacher mortgage is the Good Neighbor Next Door program — which can help teachers save up to 50% on certain home purchases.  

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

To qualify as an educator for this program, you’ll need to be a 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 the home price. This leaves you responsible for paying only the other half. HUD’s silent lien goes away after you’ve occupied the home for three years, satisfying the program’s primary residence requirement.

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

Want to find homes that are currently available with this program in your area? Use HUD’s look-up tool.

2. Teacher Next Door mortgage

As the name implies, Teacher Next Door is tailored to educators — though some other public servants have recently gained access to it. 

This program resembles a concierge service for home buyers. It helps connect you to borrowing programs that best meet your specific needs.

The program can also match you with state and local home buyer assistance programs — a task that normally requires some legwork of your own.

For example, you may be in line for a grant (an outright “gift” rather than a loan) that could cover all or some of your closing costs. Teacher Next Door would help you find and gain access to the grant. 

And there are other benefits potentially available:

  • Down payment assistance — When your savings aren’t enough to cover the down payment requirement, you may qualify for a grant or loan (with an ultra low interest rate) to get you over the line
  • First-time homebuyer help — If you’re a first-time buyer (meaning you haven’t owned your own home within the last three years), you could be in line for even more assistance. Some can even buy with no money down at all
  • No fees — The program does not charge application fees or other upfront costs

Teacher Next Door will also assist you with your loan application, helping to streamline the process by working with you on your purchase, financing, and closing paperwork. 

Teacher Next Door reviews

Teacher Next Door offers a lot, especially for a fee-free service. So it’s natural to wonder: Can this program really deliver on its promises?

For the most part, online Teacher Next Door reviews say yes.

Some reviews are downright glowing, crediting a TND case manager with finding thousands of dollars in grant money that the home buyer never expected to receive.

When you do come across a negative review, it’ll likely cite long wait times or case managers who make recommendations the reviewer didn’t agree with.

If your busy teaching schedule leaves little time to shop for loans or compare home buyer assistance programs, Teacher Next Door may be worth a try.

3. Teacher Next Door Fresh Start program

If you have a troubled credit history, the Fresh Start program, which is part of Teacher Next Door, might help you get the mortgage you want.

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.” 

4. Homes for Heroes

Homes for Heroes is a nationwide network of real estate, mortgage, and local business professionals that offer home loan discounts to select buyers.

“On average,” says the program website, “heroes save $2,400 when they buy or sell a home with Homes for Heroes.”

Although this program started out in response to 9/11 as a way of honoring first responders, it soon added teachers to its list of heroes.

Essentially, affiliate lenders and real estate professionals offer discounted fees and costs to teacher members. So you have to enroll and then use a professional who’s within the network. But those savings can add up. 

Homes for Heroes estimates that you could save $1,050 when buying a home for $50,000 — and savings increase as the purchase price goes up. 

If you’re eligible, it’s worth looking for Homes for Heroes affiliates in your area who could help you save. 

5. Educator Mortgage Program

Mortgage lender Supreme Lending runs a special Educator Mortgage Program. 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 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 percent 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 you cannot use this offer in conjunction with a down payment assistance (DPA) program. But if you’re not using DPA, it may be worth looking into the Educator Mortgage Program.

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

6. UFT mortgage deals

If you’re a member of the United Federation of Teachers, you may be eligible for special treatment from certain private lenders. You can find these lenders and details of their offers on the union’s website.

Some lenders offer reduced mortgage rates and mortgage insurance premiums to UFT members. And others may provide closing cost grants of up to $7,500. 

It’s certainly worth seeing if any UFT-affiliated lenders meet your needs.

7. Down payment assistance programs

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

DPA programs are often run by federal, state and local governments, charities, and nonprofits.

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’d 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. Local programs providing home loans for teachers

Some states have problems recruiting or retaining teachers. A number of those states offer special mortgage programs as an incentive for teachers 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. 

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

9. Standard mortgage programs

Not all teachers will do better with a specialized educator mortgage.

Certain home loan programs are already so generous, they could exceed the benefits provided by a teacher home loan.

A few examples include VA and USDA mortgages (which offer zero down payment and low rates for qualified borrowers), and low-down options from FHA, Fannie Mae, and Freddie Mac. 

VA and USDA loans

If you’re both a veteran and teacher, a VA home loan is hard to beat. You won’t need a down payment. And you’re likely to get a great mortgage rate.

In addition, VA loans have no continuing mortgage insurance — even with low or no down payment. That’s a big perk over other affordable loans like FHA and USDA.

Similarly, a mortgage backed by the United States Department of Agriculture (a USDA loan) can be perfect. 

USDA-guaranteed loans also let you buy with no down payment. And they 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. 

FHA and conforming loans

Even if you don’t qualify for a USDA or VA loan, you may find you get the best overall deal with a standard mortgage. 

Explore loans backed by the Federal Housing Administration (FHA loans) or Freddie Mac and Fannie Mae (conventional loans).

Both options allow low down payments. FHA only requires 3.5 percent down with a credit score of 580 or higher, and conforming loans start at 3 percent down with a credit score of at least 620.

You need to compare the total costs of these with special mortgages marketed to educators.

The loan program with the right combination of rates, fees, closing costs, and discounts will be the right one for you.

Explore your mortgage loan options (Oct 27th, 2021)

Housing affordability for teachers in top metros 

No matter your profession, housing affordability is a local issue because home prices vary widely across the country.

For example, a $350,000 single-family home in Fort Wayne, Indiana, tends to be a lot more spacious and better maintained than a $350,000 home in Los Angeles, California.

In case you’re thinking about moving or starting your teaching career to a new city, research by RealtyHop lists the five most affordable and least affordable cities for housing.

The site compares the median price of a house to the median income in the same city to determine how much of your income you’d need to spend on your monthly mortgage payment.

Least affordable housing

CityMedian Home PriceMedian Household Income% of Monthly Income Needed to Pay Mortgage
Los Angeles$960,000$62,14285.6%
New York City$950,000$63,99881.46%
Newark, N.J.$347,450$35,19971.43%
San Francisco$1.34 million$112,44965.52%

Most affordable housing

CityMedian Home PriceMedian Household Income% of Monthly Income Needed to Pay Mortgage
Wichita, Kan.$139,250$52,62016.32%
Fort Wayne, Ind.$142,900$49,41116.75%
Virginia Beach, Va.$305,000$76,61022.67%
Louisville, Ky.$210,000$53,43622.67%

Source: RealtyHop

FAQ about home loans for teachers

Are home loans for teachers worth it?

If you qualify for the right one, teacher home loans are definitely worth it. Many save thousands — or even tens of thousands with the Good Neighbor Next Door program. And the hassle involved can be minimal. Indeed, the time you invest in maximizing your savings could turn out to be the highest hourly rate you ever earn.

Are teacher home loans a scam?

It’s always smart to look out for home loan offers that seem too good to be true. Where there’s money, there are con artists. But if you’re introduced to a teacher home loan program by Teacher Next Door or HUD, you can be fairly sure it’s legit. Government-run down payment assistance programs are also trustworthy, even though a grant to buy a house may seem suspiciously good. 

Are teacher home loans always best for teachers?

Teacher home loans often have the best perks for teachers. But some teachers may get better deals through other programs. For example, if you’re also a veteran and your service entitles you to a VA loan, you’ll find the deal you get with one of those hard to beat. Even ‘standard’ loans can be combined with down payment assistance. So make sure you explore your full range of options before settling on a home loan.

Do I have to use Teacher Next Door?

Teacher Next Door can help match teachers with local home buyer programs and discounts. Of course, you’re not required to use Teacher Next Door by any means. You’re free to research down payment assistance programs on your own and approach them directly. But why avoid Teacher Next Door? Most who use it find it exceptionally helpful as a way of discovering what’s on offer locally.

Is Teacher Next Door legit?

Some educators worry the Teacher Next Door program is too good to be true. They think it must be some sort of scam. But it isn’t. It’s licensed by the federal government. And it mostly introduces teachers to other programs that should benefit them. 

Do I need good credit to qualify for a teacher home loan?

Each lender and loan program sets its own eligibility requirements. So those with a troubled financial past may need to hunt down mortgages for which they qualify. Some approve borrowers with scores around the 600 mark. If your credit score is really poor, you may not find a willing lender at all. That’s where the Fresh Start program comes in. It can help you quickly rebuild your credit, allowing you to get the mortgage you want. If you’d like to know for sure where you stand before home shopping or starting a refinance, ask a lender about pre-approval.

Compare lenders to save more 

The only way to be sure you have the best mortgage deal is to get quotes from multiple lenders.

Compare these quotes — called ‘Loan Estimates’ — side by side to find the lowest interest rate and closing costs, as well as the best loan terms for your financial situation.

The goal is usually is to find a lender with the lowest total cost of home buying or refinancing — in other words, the biggest savings over the life of the loan.

But you might find other, more immediate needs take priority.

For instance, if your goal is to get on the homeownership ladder quickly, you might prefer to pay a bit more in the long run for lower upfront costs. Maybe you need a low down payment. Or to save on closing costs.

Perhaps you’ll find a “special” mortgage designed for educators is best for you. But don’t assume one of those will be. Just rely on the math.

Check your eligibility

Qualifying for a home loan isn’t as difficult as many teachers and other professionals think.

As mentioned, you may not even need a “special” program to buy a home.

You can start your mortgage eligibility check here. There’s no obligation, and getting started takes just a few minutes.

Verify your new rate (Oct 27th, 2021)