Last Updated on June 16, 2021 by Maggie Looker
Educators have have an immensely important job within our communities. So, when it comes to buying a house, getting a home loan as an educator should be easy. Thankfully, there are a number of great home loan options available specifically for educators, as well as down payment assistance. Let’s take a look at some of the most common types of home loans for educators to buy a home, and how Homes for Heroes can help.
Homes for Heroes Helps with Educator’s Mortgages
Homes for Heroes real estate specialists are experts at locating the perfect housing payment option that meet your needs. Whether you need to live in your district, you’re searching in a competitive market, or you just want to live close to certain amenities, our specialists can find the right home for you. Your real estate agent lives and works locally in your area. This means they know the market you’re looking in and have good knowledge of the inventory and fair pricing.
Along with sharing their industry knowledge, they’ll also save you substantial money. When you buy or sell a home with a Homes for Heroes real estate specialist, you will receive a check after closing for 0.7% of the home sale price, or $700 for every $100,000. So, if you buy a house for $250,000, you’ll get back $1750 after your closing.
Plus, if you work with our mortgage, title and inspection specialists, you can save an average of $500 on fees. These Hero Rewards are just our way of saying thank you for your commitment to education and your community. There is no extra paperwork at closing, no hidden or up front fees, and no restrictions on types of housing, like single family, duplex, or condo.
Our real estate agents and lenders can help navigate the different types of loans below. Our lenders can also work with you on getting the correct paper work or credit score help, if needed. You can combine our Hero Rewards with any of the loan or housing options you decide to go with. Take a moment to sign up with Homes for Heroes with no obligation to get more information.
Conventional Home Loans for Educators
Conventional loans are the most popular home loan for educators and the general public, with more than 60% of mortgages being conventional. The reason is, there are numerous advantages to conventional loans. For one, there are no up front funding fees, or fees you pay at closing, like when you use a government loan. The upfront funding fee is extra insurance that you’ll pay a loan back. There technically is no limit to the amount of money you can borrow with a conventional home loan, unlike with government-backed loans. However, you will still have a loan limit, determined by things like income and credit.
Your down payment can also be as low as 3% of the purchase price with conventional loans. But, if your down payment is less than 20%, you’ll need to have Private Mortgage insurance, or PMI. This is an additional fee to insure that you’ll pay your loan back, but you’ll only need to pay this until you’ve paid back 20% of your home’s value through your mortgage payments. Government-backed loans have a similar fee to PMI, but you must pay if for the life of the loan.
Finally, educators who use a conventional loan with good credit scores are rewarded with lower interest rates. Those with a lower credit scores can still qualify for a conventional home loan, but typically with a higher rate.
Also, conventional home loans for educators typically come with 30-year or 15-year duration term. This means by making the required payments each month, you will finish paying off your loan in the amount of years in your term.
FHA Home Loans
FHA loans are a great option for educators, and especially first-time homebuyers who are educators, because you don’t need a large down payment or excellent credit. These loans only require the buyer to put 3.5% as a down payment. Typically, educators with credit scores as low as 580 can qualify for FHA loans. Plus, closing costs can often be rolled into the loan itself too, meaning you need less money at closing.
These government-backed loans come with very competitive interest rates, although you will need to pay for Mortgage Insurance Premiums, similar to PMI, throughout the life of the loan. You do not need to be a first time home buyer to qualify for a FHA home loan either.
Of all the home loan types, VA loans are the only loans designed exclusively for military members. Backed by the U.S. Department of Veterans Affairs, these loans offer great advantages to those who have served in the United States military. If you or a spouse currently or have served in the military, you are eligible for a VA home loan if:
- You served in the U.S. military for 90 days of active duty during war time or 181 days of active duty during peace-time OR
- You are a surviving spouse of a military member who has also not remarried
To get a VA loan, you will need to show your lender a Certificate of Eligibility (COE). A COE shows your lender that the military has verified your service record, and you are eligible to receive a VA Loan.
The benefits of a VA loan are numerous. One of the biggest benefits is that there is no required down payment. Also, there is no Private Mortgage Insurance or equivalent if you do not pay a down payment. VA loans also offer extremely low interest rates, and you can pay your loan off early without penalty. There is also a limit on the amount to be charged in closing costs, generally less than with a conventional home loan. Closing costs are also allowed to be covered by the seller. You do not need to be a first-time home buyer to secure a VA loan.
USDA Home Loans for Educators
For educators looking to buy a home in a more rural area, getting a USDA home loan is a no-brainer. These loans do not actually have anything to do with agriculture, but rather with development of rural areas.
The USDA designates a rural area as somewhere with 35,000 residents or less. Because of this generous population definition, much of the United States actually falls into this category, including some suburbs. USDA loans have strict eligibility requirements, however, including household limits on income. You must meet all the requirements of USDA loans in order to secure one.
Like with several other government-backed loans, there are tons of advantages to USDA loans. For one, you might be eligible for no down payment with a USDA loan. But, depending on your credit score, you may need to pay up to 10% for a down payment. This is still considerably less than a 20% down payment typically paid on a conventional loan. You will have some mortgage insurances on USDA home loans for the life of the loan as well.
There technically is not a minimum credit requirement, but educators with a score of 640 or higher have a better chance of being approved. USDA loans have competitive interest rates and are usually fixed-rate in 15 or 30 year terms.
HUD Good Neighbor Next Door
As an educator, you have the opportunity to participate in the HUD Good Neighbor Next Door program too. This program helps public servants like teachers, first responders, and law enforcement officers purchase homes in neighborhoods in need of revitalization. Through this program, you can buy a HUD house for 50% of the appraised value. You must agree to live at the property for 36 months, and the home must be in an approved area to qualify for the Good Neighbor Next Door program. Programs like these are great home loan option for educators.
Homes for Heroes is here to help get you into your own home. Sign up for more information to see how Homes for Heroes can help you save money while you’re at it.