Home Loans for Teachers: 10 Best Teacher Grants & Mortgages

Where 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…)

• Good Neighbor Next Door
• Teacher Next Door
• Fresh Start
• Federal programs
• Fannie and Freddie
• Homes for Heroes
• Teacher union programs
• Down payment assistance
• Local programs
• Educator Mortgage Program
• FAQ

What types of grants and home loans for teachers are available?

It’s true that there are numerous grants and mortgage loans created especially for teachers. These programs are frequently designed to encourage teachers to live and work in rural or underserved communities and can help teachers afford housing, especially in expensive areas.

The eligibility requirements and benefits of home loans for teachers vary by location and institution. Therefore, it is important for teachers to research and compare their options to find the best home loan or grant that suits their needs and financial situation.

By exploring different teacher home buying programs, you can secure a mortgage that not only fits your budget but also helps you achieve your dream of homeownership.

1. Good Neighbor Next Door

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.

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, satisfying the program’s primary residence requirement.

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

Want to find eligible properties in your area that are currently available with this teacher home buying program? Use HUD’s look-up tool.

2. Teacher Next Door

The Teacher Next Door² (TND) program is a popular teacher home buying program. 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 all classroom teachers, pre-K through 12th grade, public and private school teachers, and college and university professors to purchase any home on the market.

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

The TND home loan for teachers will also assist you with the loan application, helping streamline the process by working with you on your purchase, financing, and closing paperwork.

Teachers who want to take part in the program must get financing from a mortgage lender of their choice since the program does not offer financing directly.

3. Fresh Start Program

If you have a troubled credit history, the Fresh Start Program³, which is part of Teacher Next Door, might help you get the mortgage you want. This program doesn’t give out grants or down payment assistance, but it does offer free advice on fixing your credit. This can make it easier for you to get approved 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 improving financial health and moving one step closer to a successful home loan application. With such targeted support, home loans for teachers become not just a possibility, but a practical next step towards homeownership.

4. Homes for Heroes

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. Homes for Heroes, Inc.⁴ can help teachers get these fees lowered, which will make it easier for them to buy a house. This program can save you money on closing costs, inspection fees, title fees, and more. Better yet, it can often be paired with other home buyer assistance.

Basically, if you’re an educator, signing up for teacher home buying programs like Homes for Heroes means you get to work with participating lenders and real estate agents who give you discounts on their services. You need to join first and then choose a professional from their approved network. The money you save from these discounts can really stack up.

For instance, programs like Homes for Heroes suggest 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 a teacher looking into home loans for teachers, it’s definitely worth checking out if there are Homes for Heroes affiliates near you to help you cut down costs.

5. 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 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 makes home ownership 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). 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.

6. Fannie Mae and Freddie Mac 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.

7. Your teachers union

If you’re exploring home loans for teachers, your membership in a teachers’ union can be an invaluable asset. Many unions, like the American Federation of Teachers (AFT), offer exclusive programs aimed at assisting with homeownership. Meanwhile, if you belong to the United Federation of Teachers (UFT), you could benefit from mortgage discounts through UFT-specific mortgage initiatives.

In addition to these union-specific offers, certain lenders provide UFT members with perks like reduced mortgage rates and lower mortgage insurance premiums. There are even opportunities to receive closing cost grants, which can be as substantial as $7,500.

Exploring AFT-associated lending programs is a smart move when considering your home buying plans. Simultaneously, it’s wise to investigate teacher home buying programs that might be available to you, including any state or local union-provided assistance. These opportunities can make the path to securing a home loan for teachers much more accessible.

8. 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.

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.

9. Local 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.

As an example, the 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.

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.

10. 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 a DPA 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.

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.

Benefits of home loans for teachers

Accessibility to affordable housing

Home loans for teachers acknowledge the essential role educators play in society by providing more accessible routes to affordable housing. They often come with loan terms that make the purchase of a single-family home more achievable for those in this noble profession.

Favorable terms in key states

Certain states — like California and Texas — recognize the need for teachers to live near where they work. Therefore, home loans for teachers in these areas may come with additional benefits, such as down payment assistance or more favorable interest rates, tailored to the local cost of living.

Assistance with private mortgage insurance (PMI)

Often, home loans for teachers offer the opportunity to either reduce or completely waive private mortgage insurance. This can result in significant savings over the lifetime of the loan, making monthly payments more manageable for full-time educators.

Opportunities to refinance

For teachers 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.

Disadvantages of home loans for teachers

Geographical limitations

While home loans for teachers offer many benefits, they can come with restrictions based on location. For instance, a teacher in a rural area might not have as many program options as someone in a metropolitan area.

Limited scope

The specialized nature of home loans for teachers means they’re not universally applicable. For instance, if a teacher wants to invest in property that is not a single-family home, they might find the terms are not as favorable.

Requirement for full-time status

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. Some home loans for teachers 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.

Complexity

Navigating teacher home buying programs can sometimes be complex. Teachers must ensure they fully understand the terms and conditions, as these programs can vary significantly in their offerings and requirements.

In essence, while home loans for teachers can present remarkable opportunities for affordable housing and homeownership, it’s important for educators to weigh these pros and cons carefully, considering their personal and professional circumstances, before committing to a specific teacher home buying program.

Compare lenders to save more

Exploring the best home loans for teachers involves a thorough comparison of quotes from various lenders.

It’s a good idea to carefully review these loan estimates and compare them to your situation in order to find the best interest rates, closing costs, and general loan terms.

When looking for home loans for teachers, the overall goal is to reduce the total cost of purchasing a home or refinancing. Basically, you want to find the route that will give you the most savings during the course of the loan.

However, you may have more pressing issues, such as locating a home loan program with reduced upfront payments to aid a quick transition into homeownership. This might mean you’re looking at options that offer minimal down payments or reduced expenses at closing.

In some cases, tapping into teacher home buying programs can prove advantageous, especially if they cater to your immediate financial needs without compromising your long-term fiscal health. Always let the numbers guide you to ensure the choice you make is as beneficial as possible.

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