Last Updated on September 29, 2022 by Luke Feldbrugge
The first responder home loans we are covering in this post have specific discounts or deals that are tailored to firefighters, EMS workers and police officers. You can spend a lot of time searching for them (and trying to guess the right search terms)…or you can let us do it. Homes for Heroes has been serving the first responder community for more than 20 years, so we can help you find savings that could make your new home more approachable.
We begin with the simple question: “are there any special first responder mortgage programs?” We get a lot of results, and then it’s time to comb through them. They fall into a few categories:
- Explaining how mortgages work
- How your credit report affects your mortgage search
- Help for down payments
- Help with closing costs
- Help for the overall affordability of a home
How Mortgages Work: First Responder Mortgage Loans
You may think you know everything there is to know about mortgages, but the money lending industry has its own unique language. You might get some curveballs. Mortgage loan companies will be asking for a lot of information from you once you start the application process. One of our blogs explains the process clearly, and it is worth a read. Pay particular attention to the section on pre-approval. Pre-approval can be instrumental to your home search, especially in today’s competitive real estate market.
Credit Reporting for First Responders
A bad credit report can be a non-starter if you are going through the mortgage process. If your credit score is below, say 620, it can stop the process cold. Certain kinds of mortgage insurance from Fannie Mae, for example, isn’t available if you have a score under 620. And that can cause trouble further down the line.
You can get help. There are non-profits out there, such as Money Fit, that offer a credit review and counseling to first responders with a 50 percent discount on enrollment. One thing to remember is: if you are looking to make a major purchase, like a house, don’t open new credit card accounts or new loan accounts, because that can negatively affect your score.
Is it worth it to pay for services that promise to help improve your credit scores? Be careful. It’s probably better to do it yourself. You can improve your credit score on your own with some work and some determination.
There’s also progress in the world of credit reporting. The Big Three, the companies that calculate your credit scores, have added the ability to include your rent into your score. That means if you pay your rent on time, it will count in your favor. How can that affect your score? A study back in 2017 reported that the average increase in credit score was 16 points when rent was factored in. While that was the average, the increase would be significantly more if you have a credit score below 620.
Down Payment for First Responder Home Loans
Down payments for first responder home loans can be intimidating. The default quote of 20 percent down to get a mortgage is too much for many home buyers, especially if you are a first time home buyer. Some financial experts are even questioning whether that’s realistic anymore with house prices being what they are.
Take a hard look at no money down mortgages. There aren’t any specific first responder no money down programs, but if you were in the military prior to this, VA loans are one of the most popular in the no money down category.
Many first responders live in rural areas or small towns. For example, 67 percent of firefighters in the U.S. are volunteers. If you are rural, you should look at USDA loans. These first responder home loans, backed by the USDA offer:
- no down payment
- reduced mortgage insurance
- below-market interest rates
Rural, in this case, is defined by the government to include about 97 percent of the U.S. map, so check this mortgage program out. It can save you thousands of dollars.
FHA loans are insured by the Federal Housing Agency and you only need 3.5 percent down, so first responders should check these out too–especially if you are buying your first home. Some of the requirements are:
- Credit score of 620* or higher
- Proof of income (1-2 months of paystubs)
- W2 forms for one year
- An appraisal from an FHA-approved appraiser
- Current debt information (auto loans, credit cards, etc.)
- Acceptable debt-to-income ratio (DTI)
*FHA loans for first responders are available to home buyers who have credit scores as low as 580, but they do require mortgage insurance.
When you get to the closing, closing costs can be a bit of a surprise. They might not seem like much compared to the size of the loan being processed, but we feel that the fewer surprises at closing the better.
These extra costs include insurance fees, appraisal costs, origination fees, taxes, insurance and more.
Many lending agencies will give first responders a break, or a discount, on some closing costs. It’s best to check with your mortgage lender to see if they have a program for folks like you.
Homes for Heroes works with partners who are inspectors and title professionals, so if you choose to work with us, you will be paired with our local mortgage specialist who will reduce their lending fees for any first responder home loan (in addition to your Hero Rewards®) at your closing.
FHA loans, as we mentioned, can also reduce your closing costs as part of the loan package.
Overall Affordability and First Responder Home Loans
The question of overall affordability is on everyone’s mind, especially with the bidding wars and escalating prices. If you simply can’t afford the homes you are looking at, you may feel stuck. The HUD Good Neighbor Next Door Program faces the affordability issue head on. This program from the U.S. Department of Housing and Urban Development Agency gives 50% off the price of a home for community heroes, including all first responders. HUD offers these deep discounts to encourage community revitalization by having police, firefighters and EMS workers live in the communities they serve.
What does revitalization mean? The homes in the Good Neighbor program are in revitalization areas as identified by HUD. That means they are in areas where:
- Household income is lower than average.
- Homeownership rate is lower than the surrounding areas.
- FHA-insured foreclosure activity is higher than surrounding areas.
These neighborhoods require economic and community development, so HUD makes these foreclosed properties available to first responders at half off.
There are some requirements for the buyers in the program. For example, you need to promise to live in the house for 36 months. Also you can only choose from the houses on HUD’s list.
They have a tool that lists eligible properties.
Homes for Heroes First Responder Home Loans
We have been working for 20 years to help first responders find new homes or sell their current homes. We can also help with refinancing
“I believe that the Homes for Heroes program is very important. I am a Detroit Fireman. My second line of work is construction, so you helped me sell the home I remodeled with my grandfather. The program meant so much to me–getting back some of my savings and then donating my proceeds to other heroes. Thank you to all the heroes for whom ‘above and beyond’ is part of every shift they work.”–Duane L. bought a home in Michigan.
Homes for Heroes can help first responders in at least three ways.
- We can help you find a real estate professional.
- We can help you find a mortgage lender.
- We pay you Hero Rewards® when you close on your house.
That middle step is probably the most help as you look for first responder home loans. We connect you with mortgage brokers who have committed to help first responders. They understand your unique challenges and they have worked with professionals just like you.
The personal relationship you develop with your realtor is important, but the relationship you develop with your lender will last a lot longer (15-30 years). It’s good to have your mortgage broker on your side. We can help you create that connection.
On your part, there are no fees, no extra paperwork, no red tape; the process is exactly the same as a typical real estate transaction. You just receive excellent care from our real estate specialists and receive a Hero Rewards® check at the end. And your hero status doesn’t end when you retire; we work with current and former first responders.
On average, our heroes save $2,400 when using both our real estate and lending specialists. Our specialists can work with your schedule, credit, and budget to find a perfect home for you and your family. Get more information and to talk to a specialist by signing up.
In addition to helping first responders on an individual basis, we also support organizations that help the community with other needs through our Homes for Heroes Foundation. This is a project we are particularly proud of.
Taking the plunge into the home market–buying or selling or refinancing–doesn’t have to be done alone. There are organizations out there to help you, specifically because of the service you give to your communities. It’s a simple way to thank you, but when you are in the market for a home, simple thank yous can add up fast.