Teacher Home Buying Grants | Ways to Save on Buying a Home

 

Teacher home buying grants are certainly available, but many are not commonly known. Most have special criteria established to qualify, but when you can take advantage what is offered, teacher home buying grants can be helpful in purchasing a home. There are a lot of programs out there to help teachers and educators find a good home. Even in a stressed out real estate market. Grants are free money, that do not need to be paid back. Well, they aren’t totally free because they usually come with requirements about how the money is spent, but at the end of the day, a grant is a check made out to you to help you buy a house.

 

Most money saving initiatives to help teachers buy a home are not specific teacher home buying grants. Instead, many are government or private organization programs that offer financial assistance for teachers. As it pertains to the federal government, there are government agencies who guarantee specific loan types, so that a private lender has less risk in lending you the money if you qualify for a mortgage.

 

We will cover the most common places to find valuable savings when it comes to teacher home buying grants and money saving programs.

 

HUD’s teacher next door grant program saves you a ton of money right up front if you qualify. The U.S. Department of Housing and Urban Development will sell you a house for 50% off. It’s called the Good Neighbor Next Door program and one of its goals is to make a house more affordable for community heroes such as:

 

• Teachers, educators and school employees
• Law enforcement officers and employees
• Firefighters
• Emergency medical technicians

The homes in the Good Neighbor Next Door program are in locations identified as revitalization areas. That means neighborhoods where:

 

• Household incomes are low.
• Homeownership is low.
• Foreclosures are higher than usual.

These neighborhoods need urban development, and a good way to do that is to make the houses available to community heroes at a drastic discount. If you get a HUD home, you agree to live there for at least three years.

 

With the Good Neighbor Next Door program, the homes are offered first to Good Neighbor eligible applicants (seven days before they go on the general market).

 

If you’re willing to live in a pre-designated revitalization area for a minimum of three years and meet the other qualifications, this is a great option for teachers to save a lot of money on a home.

 

Local home down payment assistance programs and first time home buyer programs offer financial assistance to homebuyers looking to save some money on buying a home. These programs can take many different forms, including teacher home buying grants, loans, and forgivable loans. They are often available to first-time home buyers, low- to moderate-income borrowers, and those who are looking to purchase a home in certain geographic area.

 

Homes for Heroes actually gives you money after you close on a home when you work with their local real estate and mortgage specialists. The average amount if you buy or sell a home is $3,000. If you do both, the average savings is $6,000. It’s called Hero Rewards, and it’s given to teachers to show gratitude and appreciation for the community service offered by teachers.

 

It’s not a teacher home buying grant, but it’s great money saving option for all current and former teachers to consider, to help save money on the cost of a new home. It provides teachers with additional cash after they close on their new home purchase to use toward cosmetic updates like paint or carpet, repairs, or purchasing new furniture or appliances.

 

Simply sign up to speak with a member of the team. There’s no obligation. They will contact you, and when you’re ready, they will connect you with their local real estate and mortgage specialists in your area to assist you through the process.

 

USDA loans are for those who are looking to buy a home in a rural area. Since about one third of the teachers in the U.S. (32%) work in rural schools, this program should be a great resource for educators, teachers and school administrators. The USDA defines rural areas as towns with less than 35,000 people, and it includes more than 90% of the United States.

 

The USDA Loan guarantee can help you afford a home through:

 

• No down payments.
• Loans that usually have lower interest rates.
• Mortgages that do not have a minimum credit score (however, your private lender may have requirements).
• A loan you can use to build a new home or buy an existing home. The loan program also allows you to renovate or move an existing home.

The USDA loan guarantee has an upfront guarantee fee that costs 1% of the loan. Then there is an additional annual fee that costs 0.35% of the loan amount. These can be rolled into the mortgage so you don’t need to have the money readily available at the closing table when you purchase. There are also upper income limits on these loans so your family income can’t exceed 115% of your area median income. The home must be your primary residence.

 

If you are nearing retirement (age 62 or older) there are actual teacher home buying grants from the USDA loan program. If you live, or are moving into, a rural region, there is money available through Home Improvement Loans and Grants. This is for those with a very low household income and the improvements must be for safety reasons.

 

The FHA loan guarantees are for everyone else, as long as you are a low-to-moderate-income teacher with a lower credit score. Again, this is not a grant and it’s not a loan. It’s a loan guarantee that tells your lender that the Federal Housing Administration is standing behind the mortgage in case you default. There is a down payment for these loans, but it’s very low. This is a good option for educators who are searching for affordable housing but worried about their credit number.

 

Benefits of the FHA loan program include:

 

• It requires low down payments of only 3.5%. Typical mortgages ask for 20%. Your down payment percentage may be higher if your credit score is low (below 580).
• This program was specifically designed for those who have a low credit score (640 or higher) and cannot get a loan from conventional lenders.
• FHA loans are assumable. An assumable loan lets you sign over your current mortgage to a buyer without a lot of the paperwork. Most importantly, the buyer assumes your loan at the interest rate you got when you bought your house. That’s a significant advantage for a seller in a real estate market where interest rates have gone up dramatically (for example, this year).

The FHA process does include two fees at closing: the Upfront Funding Fee is a one-time fee that is 2.25% of the total financed amount. The Mortgage Insurance Premium (0.85%) is an annual fee you will be paying for the life of the loan. Both can be rolled into your monthly mortgage payments.

 

The Veterans Administration loan guarantee is probably the best of the federal mortgage programs in terms of benefits, and it will save you the most money. But like the others, it’s a loan guarantee and not a teacher home buying grant. First off, you need to be a veteran, an active duty service member, a Reservist or a member of the National Guard to be eligible. If you are a veteran who is now a teacher, check it out. The benefits of a VA loan guarantee eclipse the other programs. The three advantages that put the most money in your pocket are:

 

• The VA loan system has no down payments.
• You won’t need private mortgage insurance for your loan.
• You typically get your mortgage with a lower interest rats than a conventional mortgage.

Other benefits include:

 

• The VA limits the closing costs you will pay.
• There are no minimum credit score requirements (but your mortgage lender may have one).
• You can use the benefit for your lifetime.
• VA loans are assumable, so you can sign your mortgage over to your buyer, especially if its another service member or veteran.
• There are no maximum loan amounts, but the VA does have limits to their guarantee.
• The VA doesn’t have a maximum debt-to-income (DTI) requirement, but it does have guidelines for your mortgage lender.
• The VA home loan guarantee can be used for single-family homes, multi-family units (up to four), condos, manufactured homes, new builds and some home improvements such as solar panels.
• VA loan guarantees are often available to the surviving spouses of military service members killed in the line of duty.

There are some fees involved in the process, and one of them is the VA Funding fee. It helps fund the mortgage program. For a first-time home buyer, the VA lowers its funding fee to 2.15% of the total loan. The VA funding fee is a one-time fee you pay to get the VA loan, but it can be folded into your monthly mortgage payments. There is no funding fee for veterans with service-related injuries, disabilities or recipients of the Purple Heart.

 

The eligibility requirements for the VA loan guarantee is based on your service history, and the agency has a very useful chart that lays it all out.

 

A new program that is designed to provide down payment assistance programs to teachers is currently being debated in Congress. It’s called the HELPER Act, and the name stands for: Homes for Every Local Protector, Educator and Responder. It is often compared to the VA loan system, but it’s designed to help community heroes like teachers. While it’s not technically a grant, it could put a lot of money in your pocket in the form of savings. It’s benefits may include:

 

• No down payments
• No private mortgage insurance (PMI)

When you are talking about the VA loan guarantee, those are two very strong benefits of the program. Extending them to teachers through this legislation will save you thousands of dollars, both up front and over the life of your mortgage.

 

Keep in mind that federal loan guarantees often charge an upfront funding fee (in this case, 3.6%); this legislation includes such a fee.

 

The good news is the bill has support from both sides of the aisle, and President Biden also supports it. Keep your eye on this bill. It’s waiting for action in the House Committee on Financial Services, so you might want to contact them and tell them your views on it.

 

Homes or Heroes is another great way to save money when teachers buy a home. Homes for Heroes assists firefighters, EMS, law enforcement, active military and veterans, healthcare workers and teachers; buy, sell and refinance their home or mortgage. But if you work with their local real estate and mortgage specialists to buy, sell or refinance; they also provide significant savings after you close on a home or mortgage. They refer to these savings as Hero Rewards, and the average amount received after closing on a home is $3,000, or $6,000 if you buy and sell!

 

Simply sign up to speak with a member of the team. There’s no obligation. After you sign up they will contact you to ask a few questions and help you determine the appropriate next steps for you. When you’re ready, they will connect you with their local real estate and mortgage specialists in your area to assist you through every step and save you money when it’s all done.

 

It is how Homes for Heroes and their local specialists thank community heroes, like you, for your dedicated and valuable service.