Last Updated on December 16, 2021 by Maggie Sutton
Buying a home for the first time is exciting, but also expensive. While historically people saved 20% for their down payment, you can still get a great home and good mortgage with less, thanks to first time home buyer programs for teachers. Between grants, national funding, and different types of loans, there are home buying programs specifically for teachers to help with down payment costs.
Why Homes for Heroes is the First Time Home Buyer Program for Teachers
At Homes for Heroes, we want to thank every hero in the nation, and that includes teachers and educators. We have the largest nation-wide network of over 4,100 real estate and loan specialists ready to help you achieve your homeownership dreams. We connect you with an affiliate in your local area, ready to serve teacher heroes, and be with you every step of the way.
Homes for Heroes also has the experience to be your trusted homebuying program resource. In October 2021, we helped our 50,000th hero save money when buying their home.
We aren’t just dedicated to helping teachers with their housing transactions, however. We are committed to helping teachers and other heroes with their professions as well. Thanks to the Homes for Heroes Foundation, we are able to give back to teachers across the country.
What a Teacher First Time Home Buyer Needs to Know
Knowing where to even start when you’re buying your first home can be intimidating. It’s generally a good idea to know where you’re at financially before you start. Once you have a good idea of your budget, credit, and the kind of home you want to buy, you should have a big picture idea of how much home you can buy and when. Follow these steps to get prepared.
1. Decide How Much Home You Can Afford
You might be surprised at how big of a loan amount you are approved for, but that doesn’t mean you can necessarily afford that much. When talking about home affordability, you need to take into consideration all your outstanding debts, like car payments or student loans, your income, and expenses like groceries and electric bills.
The general rule of thumb is the 28-36 rule. This means that your monthly expenses should not take up more than 28% of your monthly income, and your total monthly debt should not make up more than 36% of your monthly income. We have a worksheet you can complete to calculate how much home you can afford here.
2. Understand Your Credit History
One of the biggest factors in obtaining a home loan is your credit score and credit history. Your credit score is a number that takes into consideration your ability and willingness to pay back any debts owed. A credit report contains all of your lines of credit and payment history since you began borrowing and spending. Your credit score takes into account your credit history to come up with your credit number.
Banks and lenders look at your credit score when you apply for a home loan to determine your interest rate. An interest rate is essentially the fee you pay to borrow the money for your mortgage. The better your credit score and credit history are, the lower your interest rate generally is. Having a lower interest rate can save you thousands of dollars over the life of your mortgage, which is why credit is so important when buying a house. We break down credit report and credit scores even further here.
3. Home Loans for Teachers
Another important aspect of buying a home is the type of mortgage you choose. Working with a Homes for Heroes lender, they can provide you with all the options that you qualify for. They can also help you determine which mortgage option makes the most sense for you.
Conventional loans are the most popular type of home mortgage loan in the U.S., with over half of all home loans being conventional. These home loans for teachers are available through mortgage companies, banks, and credit unions. Unlike government-backed loans, conventional teacher mortgages have lower down payment terms, no upfront funding fees, and have more favorable mortgage insurance terms.
FHA loans are a great option because they require as low as 3.5% for a down payment with good credit scores. Even if you have a lower credit score, FHA loans for teachers only require a maximum 10% for a down payment.
So, at a 3.5% down payment, if you’re looking at a $300,000 home, your down payment could be as low as $10,500. Sometimes, you can even finance some of your down payment components into your loan, meaning you’ll need less cash at closing.
USDA home loans are another excellent option for first time home buyer teachers, because they don’t even require a down payment for qualified applicants.
These home loans are designed for first time home buying teachers already living in, or moving to, rural areas. While you might think of rural as a small town, the USDA recognizes some towns up to 35,000 people as rural. USDA loans have the most requirements to meet for a government-backed loan. But, if you qualify, these loans are such a great option for homeownership.
The loan amount you request can be 100% of the home purchase price since there is no down payment requirement. There also is technically no minimum credit requirement, though a 640 credit score or better tend to have better success. You can also use a USDA loan to build a new home; it does not need to apply it to an existing home.
4. Estimate Your Mortgage
After looking at your credit score, credit report, and establishing how much house you can afford, you can start to estimate how much your mortgage could cost you. This exercise is to give you an estimate. To get the actual numbers you can expect to pay, work with your loan specialist.
They can also get you pre-approved, meaning the bank or loan company agrees to give you up to a certain amount of a loan at a certain interest rate before you even start looking at houses. This can make your offer more attractive when you find a home you’d like to buy, and can streamline the buying process as a whole.
5. Determine The Type of House You Want
There is no “right” house for everyone. People have different needs, tastes, and wants out of their home. Someone with small children may want to live near parks and good schools. Someone living alone probably doesn’t need a 5-bedroom home. Any not everyone wants to deal with yardwork, and a condo might be a better fit than a single-family home.
Take into consideration what you’re looking for in a home, but also in a neighborhood. Write your must-haves and nice-to-haves down and share them with your real estate agent. This will make sure you’re both on the same page and they can show you properties that will work for you. We have some tips for prioritizing your house search too.
6. Finding Down Payment Assistance for Teachers
For first time home buyer programs for teachers, there are several options at the national and local level including grants, tax credits, and even discounts from real estate agents and lenders. Sometimes it can be hard to figure out where to start.
But, a good place to start is with a first time home buyer class. These classes are meant for first time home buyers and are helpful in so many areas of the home buying process. One of the best resources from these classes is they generally discuss down payment programs available to you locally.
Department of Housing and Urban Development
The Federal Government also offers first time home buying programs for teachers at the state level. The United States Department of Housing and Urban Development, or HUD, has another program that is specific for teachers. The Good Neighbor Next Door Program is designed to revitalize neighborhoods in every state. The homes available in the Good Neighbor Next Door program can be purchased at 50% off their list price! The only catch is that it has to be a HUD-approved home, and the list is generally short. The GNND program is also only available in certain areas.
Down Payment Resource
Another place to find first time home buying programs for teachers is through Down Payment Resource.
This is an online, comprehensive database of down payment assistance programs. You can enter your information, including that you’re employed as a teacher, to see the programs available to you. Down Payment Resource has approximately 2,300 programs in their database to automatically match you with.
7. Other Ways to Save with Homes for Heroes
Another benefit of working with a Homes for Heroes mortgage, title and inspection specialists, you can save $500 on lender fees, $150 on title services, and $50 on a home inspection. This is in addition to the Hero Rewards savings you can receive after closing.
We also have deals with companies all over the United States for home and career related products and services, like moving companies, carpet cleaners, storage containers, and home security. That adds up to thousands of dollars in savings!
8. Make a Moving Checklist
Now that you are all ready to start looking at homes, it’s also time to start making a moving checklist. This way, as soon as your offer is accepted on a home, you know what to do right away. With the current housing market, it can easily be less than 30 days to close, which doesn’t give you much time to pack, transfer utilities, or hire a moving company. This list will help you figure out everything you need to know when it comes time to move.
Local Homes for Heroes Specialists are Committed to Teachers
Homes for Heroes is the largest, nation-wide program of its kind. We say thank you to heroes for their service to their communities by saving them money when buying, selling, or refinancing a home.
When you sign up, we’ll connect you with a Homes for Heroes real estate affiliate and mortgage specialist. These affiliates are in your local area, so they know what the housing market is like where you’re trying to buy. There is no obligation to use our service once you sign up, and there are never fees or extra paperwork when you use Homes for Heroes. We simply want to give back to our heroes across the country.
Homes for Heroes has helped over 51,000 teachers and other heroes save more than $90 million on their home transactions. We do this by giving you back Hero Rewards after your closing.
When you use one of our affiliate real estate agents to buy your home, you’ll get $700 back for every $100,000 in purchase price. So, if you buy a home for $300,000, you’d get $2,100 back. This money can be used for anything, like new furniture for your new home, make repairs, or put in savings. It’s yours to do whatever you’d like. It’s the least we can do to say thank you for educating in our communities.
Sign up now to get more information from a Homes for Heroes agent. There is no obligation, cost, or extra paperwork for you.