Beyond Teacher Next Door: What Help Is Available For Educators Who Want To Buy A Home?
Victoria Araj5-minute read
December 02, 2021
Being a teacher can involve many sacrifices, including financial ones. But educators may qualify for help with buying a home. From low down payment programs to low mortgage rates, teachers could save thousands of dollars when they’re ready to buy.
What Kinds Of Home Loans And Grants Are Available For Teachers?
There are many different types of mortgages and many more down payment assistance programs and grants. Some are targeted toward certain groups of buyers, designed to give back to teachers and other public service officials. Some of these programs can be combined with discounted mortgages to help make buying a home even more affordable for educators. Please note that you may not easily find a lender who accepts the following programs. Rocket Mortgage® might not accept or participate in certain programs depending on a number of factors and eligibility requirements so its important to talk to a Home Loan Expert.
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Option 1: Teacher Next Door Program: Helping Teachers Find The Grants And Loans Available To Them
This home financing program offers grants and down payment assistance to public service professionals and teachers. The Teacher Next Door (TND) program is an all-inclusive service provided by a private agency for financing your home while you receive a large selection of discounts and incentives.
The Teacher Next Door (TND) program is known for offering grants as high as $4,170 in most areas and up to $6,000 in qualifying locations. This program also offers up to $10,681 in down payment assistance, provides teachers with low-rate home loan options and waives many fees, such as application and broker fees.
In addition, the Teacher Next Door program offers free home appraisals, enrollment in its credit building program and discounted title fees. TND can be used with first-time home buyer or other programs – like Fannie Mae’s HomeReady or Freddie Mac’s Home Possible – that offer additional benefits.
To secure these benefits, home buyers must work with a TND agent and borrow within their lender network.
Teacher Next Door Program Requirements
You must be a pre-K – 12th-grade teacher to qualify for the TND program. However, the program – which was initially developed solely for teachers – has expanded into programs for a wide variety of public servants and health care professionals. Just hit the Programs tab at the top of TND’s homepage to see if you qualify for other TND programs as well.
Teacher Next Door Program Reviews
According to its publicly available client reviews, this program is a great way for you to maximize your savings when you buy a home. The grants and down payment assistance program can be combined with other financing options, so even if you've already found a lender, you can still be eligible for the same discounts. This program can also be combined with the Good Neighbor Next Door program.
Rocket Mortgage is not affiliated with or otherwise sponsored by Teacher Next Door.
Option 2: Good Neighbor Next Door Home Loans
The Good Neighbor Next Door home financing program is funded through the U.S. Department of Housing and Urban Development (HUD) to help teachers and other U.S. civil servants buy a home. This program aims to help build up communities in designated revitalization areas.
How Does Good Neighbor Next Door Work?
When you buy a HUD home in the designated revitalization area where you work, HUD places a silent second mortgage on the property to ensure that you fulfill the 3-year owner-occupancy requirement. After living in the home as your primary residence for 3 years, HUD lifts the second mortgage, and you own the property, subject to the primary mortgage. If you don’t fulfill the owner-occupancy requirement, you will be required to pay full price for the property.
Qualified teachers buying a home in the revitalization area where they work will receive a 50% discount off the listing price of a home.
There are a few requirements you must meet to be eligible for the Good Neighbor Next Door program:
- You must be a certified pre-K – 12 teacher (or other designated public servant) teaching in a revitalization area.
- You must purchase a home in the designated revitalization area where you work.
- You must commit to live in the home for a minimum of 3 years to receive the discount.
- The property you purchase must remain your primary residence for all 3 years.
Is The Good Neighbor Next Door Program Right For You?
Rocket Mortgage is not affiliated with or otherwise sponsored by Good Neighbor Next Door.
Option 3: Homes for Heroes® Financing
You may have a bundle of money saved to put a down payment on a home – but you’ll still have to cover closing costs and other fees that pop up during the process. Homes for Heroes, Inc. can help U.S. teachers reduce these fees to make buying a home more affordable.
Homes for Heroes, Inc. can help qualified teachers reduce the amount of money spent in fees throughout the buying process. This program can help you save on closing costs, inspection fees, title company costs and more. For example, you can save up to $2,450 in fees on a $250,000 home.
You’ll need to be a certified pre-K – 12th-grade or post-secondary teacher to qualify for the Homes for Heroes financing program.
Is Homes for Heroes Financing Right For You?
Homes for Heroes, Inc. can help you save money on buying fees and can typically be combined with other incentive programs. You can visit the official Homes for Heroes, Inc. website to review details at www.homesforheroes.com.
Rocket Mortgage is not affiliated with or otherwise sponsored by Homes for Heroes, Inc.
Option 4: Government-Backed Mortgages
There are many government programs designed to encourage first-time homeownership or provide assistance to low-income buyers looking for affordable housing.
Government home loans are mortgages that are funded through the federal government. These loans are ideal for first-time home buyers, borrowers who purchase in rural areas and current or former members of the military. These loans typically come with more flexible eligibility requirements and low money down options.
There are three main types of government home loans: FHA, USDA and VA. All three have different benefits and may be combined with many of the above grants.
You’ll pay as little as 3.5% down if you have a 580 credit score or higher with an FHA loan. Expect to put 10% down if your credit score is below 580. FHA loans are great options for low- to mid-income home buyers.
Rocket Mortgage has a 580 minimum credit score requirement for FHA loans.
USDA loans can help you avoid down payments altogether if you plan to purchase a home in a designated rural area. You’ll need to verify the home you’re purchasing meets the USDA location standards and area median income guidelines – use Fannie Mae’s area median income look-up tool to see if you meet the USDA’s income guidelines.
USDA mortgages technically have no minimum requirement, but most lenders expect a credit score of 640 or higher.
Rocket Mortgage does not offer USDA loans.
VA loans have low mortgage rates, no down payment requirements and no ongoing mortgage insurance requirements.
Borrowers do pay a one-time funding fee that can be rolled into the mortgage. VA mortgages don’t have minimum credit requirements, but you’ll have the most qualification flexibility with a 620 median credit score or higher.
Rocket Mortgage has a 580 minimum credit score requirement for VA loans with sufficiently low debt-to-income ratios.
Is A Government Mortgage Right For You?
If you have limited funds for a down payment, government-backed loans might be a good option. However, choosing the best loan for buying a house depends on a wide variety of factors specific to your situation.
There is a common misconception that conventional mortgages – those offered by private lenders – require a 20% down payment. We think it stems from confusion about the importance of the 20% threshold. That’s when homeowners have enough home equity to avoid or drop private mortgage insurance (PMI). In reality, many conforming loans require a down payment of only 3%.
Can You Use A Government Program With Any Lender?
Not all lenders offer all government-backed home loans, though most offer some. Not all lenders offer all three types of government loans, either, so do some research before you decide on a lender.
Rocket Mortgage, for example, offers FHA and VA loans, but currently does not offer USDA loans.
It’s also important to note that not all lenders can accept government-funded assistance programs. The Good Neighbor Next Door program, for instance, is typically provided through an FHA mortgage, which many (but not all) lenders offer. Talk to your lender about the programs you’re interested in to determine if it’s possible to use them.
Option 5: Your Teachers Union
If you belong to a teacher’s union, they may offer programs that offer special discounts for teachers. If you’re a member of the American Federation of Teachers (AFT), you may qualify for one of their two programs. If you’re a member of the United Federation of Teachers, you may qualify for one of UFT’s discount programs. Also check with your state or local union to see what types of assistance they offer.
Option 6: First-Time Home Buyer Assistance Programs Available To All
You might be pleasantly surprised to learn that there are many programs available to help first-time home buyers.
In addition to the nationwide programs we’ve mentioned here, there are many states, municipalities, nonprofits and private agencies like Teacher Next Door with programs designed to encourage new buyers to purchase within their areas. HUD maintains a list of these local home buying programs. Check it out to see whether you can take advantage of these programs.
Remember, you can combine any of these home buyer assistance programs with any of the benefits of working with Teacher Next Door.
The Bottom Line
If you're a teacher looking to buy a home, it’s important to review all of the programs available to assist you. Interested in learning more about buying a home? Consider joining a first-time home buyer class.
See What You Qualify For
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