Last Updated on February 26, 2023 by Eric Jeanette
Home Loans for Teachers
Are you a teacher looking to purchase a home or refinance your existing mortgage? Perhaps you have less than perfect credit, and need a mortgage with lenient qualification requirements? There are various home loans for teachers which may include down payment assistance, bad credit or recent bankruptcies.
Teachers comprise a significant amount of the American workforce, with nearly 3.3 million accounted for in 2017. Fortunately, there are more home loan products, and down payment assistance programs available for teachers, than there are probably any other profession.
Many teachers want to know which mortgage program will offer them the best loan terms. We encourage you to take the time to review each type of loan on this page, and see which may be best suited for you.
Teacher Mortgage Programs – Home Loans for Educators
Teachers have a wide range of home loan options available to them. This includes traditional mortgages, such as conventional and FHA loans, as well as some special loan products. The rest of the article will outline the loans for teachers to buy a house:
Conventional Loans for Teachers
Teachers with good credit (at least a 620 credit score) should first see if they qualify for a conventional mortgage. Conventional loans usually will offer the best loan terms, such as lower interest rates. They are also best for teachers who can put a down payment of 20% or more on their home purchase. If you put 20% down on your home purchase, you will not be required to pay PMI (private mortgage insurance).
While our website is heavily focused on non-prime loans, and government mortgage programs (such as FHA loans), we also work with some of the best conventional mortgage lenders. We recommend that you see if you qualify for a conventional loan. If you are unable to get approved for a conventional mortgage, your loan representative will help you determine what other types of mortgages you may qualify for.
FHA Loans for Teachers
FHA loans are a great option for teachers that do not have good or excellent credit. They are also an ideal option for teachers that are looking for a low down payment. With a 580 credit score, you may qualify for a 3.5% down payment, and down payment assistance may also be used.
A common misconception is that FHA loans are only for first time home buyers. They are certainly a good option for many first time buyers, but they are not exclusively available to them.
In order to qualify for an FHA loan, you will need at least a 500 credit score, but most lenders want to see a 580 or higher FICO score. There are also other guidelines related to your credit, such as no recent bankruptcies or foreclosures. You must also be able to provide your last 2 years tax returns, and 2 most recent bank statements.
USDA Loans for Teachers
Teachers looking to purchase a home with no down payment should take a look at USDA loans. The USDA rural development loan offers a home buying program with no down payment, and you only need a 640 credit score to qualify. Keep in mind that these loans are only available in rural areas, as well as zones just outside of cities and towns.
There are also strict income limits in place, which for most teachers, their income should fall within these limits. However, if you have a spouse that makes a large income, this could disqualify you. The income limits are based on household income. You can look up the income limits for your county here.
Loans for Teachers with Bad Credit
With very low credit scores, your best option will be an FHA loan. If your credit scores are under 580, the down payment requirement will be 10%. This can absolutely be a reality for you and we have a few lenders who can work with those credit scores.
If you do not qualify for an FHA loan, there are other home loans that you may be eligible for. This includes non-prime programs that allow credit scores all the way down to 500! All of these loan programs will require a larger down payment of up to 25%
Another major advantage of some of the non-prime programs our lenders offer is that they do not have any waiting periods for major credit issues, such as bankruptcies, foreclosures, and short sales. With these loan programs, you may be able to get a mortgage even just 1 day after such events!
If your credit is below a 580, and you are interested in seeing if you qualify for a non-prime mortgage, we recommend contacting us. Based on your location, we will connect you with a non-prime lender that provides financing in your state.
Good Neighbor Next Door – Discount Homes for Teachers
The Good Neighbor Next Door program is a special home buying opportunity for teachers, firefighters, police officers, and emergency medical technicians. This program offers a 50% discount on select HUD homes.
How this program works is upon finding an eligible home (which we can assist you with), you will be placed in a lottery with other applicants interested in the same home. If there are no other applicants, you can purchase the home (if you qualify). If there are 3 total applicants, you will have a 33.3% (1/3) chance of winning.
In order to obtain the home, you must use an FHA loan. A huge benefit of this program, is the down payment is only $100! That means you could get a home for half the cost, and with only $100 out of pocket!
This program is a little complex, so we recommend having a loan representative answer your questions. If you want to learn more about this program, contact us.
Down Payment Assistance for Teachers
There are many down payment assistance programs available to teachers. This includes general programs offered to people of many occupations, as well as a few unique grants that are exclusively available to teachers (and other civil servants, such as police officers and firefighters).
In fact, there are so many different down payment assistance programs that we feel there are too many to list. This is especially the case since many offered locally at the state, county, or city level. If you want to find out what down payment assistance programs you may qualify for, fill out this form.
Teacher Refinance Mortgage
Teachers have the opportunity to refinance their mortgages to lower the rate, change the term, or cash out equity. There are no assistance programs when it comes to refinancing, but there are various mortgages available for teachers.
Refinancing to lower the rate or the payment is what most teachers ask us to do. The mortgage program you select will be highly dependent upon how much equity you have in the home and also your credit score. Once you hear all of your options, you can make the best decision for your scenario.
If you are looking to cash out equity, you can refinance with an FHA loan up to 80% of your appraised value. If you need more than 80%, we can provide you with a quote for a conventional loan with PMI.
Frequently Asked Questions
What mortgage lenders offer home loans to teachers?
You can apply for a mortgage with just about any mortgage lender. We work closely with a some mortgage lenders that specialize in providing home loans for teachers.
The benefit of working with one of these lenders is that they have a great deal of experience working with various programs available to teachers, such as the HUD Good Neighbor Next Door program, and down payment assistance programs for teachers.
If you would like to be connected with one of the mortgage lenders in our network, contact us today.
Are there any special home loans for teachers?
Mortgage lenders are not allowed to offer special home loans to borrowers based on their profession. The only exception is the HUD Good Neighbor Next Door program, which offers discounted homes to teachers.
There are also mortgage lenders that specialize in helping teachers, such as Supreme Lending who offers their highly popular Educator Mortgage Program.
What locations are these mortgage programs available in?
For any mortgage solution that you are looking for, we can help you in all 50 states. Just complete this short form and someone will contact you without pulling credit.