FHA Loans for Teachers
Teachers often ask of there are special programs for them to help qualify for a mortgage. FHA loans for teachers are likely the best option when purchasing a home as an educator with a small down payment and sometimes lower credit scores.
FHA Loan Benefits for Teachers
Teachers are not much different than anyone else who is looking to purchase a home. They are looking for a way to finance their new home purchase with an affordable mortgage and with reduced out of pocket costs. Some of the FHA loan benefits that teachers enjoy are as follows:
- Low down payment
- Low interest rates
- More buying power
- Lower credit scores allowed
These are just some of the benefits of an FHA loan for teachers.
FHA Loan Requirements for Teachers
FHA loans can be a great benefit for teachers due to the low down payment, higher debt to income ratios, and competitive interest rates. If you are a teacher, here is what will be required to qualify for an FHA loan.
- Minimum FICO score requirement of 500
- Minimum down payment requirement of 3.5% (10% for scores under 580)
- Mortgage Insurance Premium (MIP) is required for every FHA loan
- Maximum debt to income ratio of 56%
- The home must be the primary residence
- The borrower must have a 2-year work history with steady income
- You must be able to fully document your income
- Home must pass FHA inspection
Read more about the FHA loan Requirements here.
Special FHA Exceptions or Assistance for Teachers
The FHA loan guidelines are going to be the same regardless of whether you are a teacher or work in any other profession. However, there are lenders who have special offers for teachers applying for an FHA loan. Some of these offers are as follows:
- Down payment assistance
- Appraisal credit
- Closing cost assistance
Please note, these special offers are not always completely free. You may be offered a slightly higher interest rate to offset the costs the lender is covering for you. There may also be a loan amount minimum imposed by the lender.
If you are looking for a lender who is offering special programs for teachers, then complete this form and we will help you.
Teacher Home Buying Grants
In every state, there are teacher home buying grants or down payment assistance programs that teachers can take advantage of. They are not only for teachers and you would have to apply and qualify for them on your own.
Some of the down payment assistance programs have credit score and education requirements. If you would like to learn more about the assistance programs in your area, then read our article on FHA down payment assistance.
Other Home Loans for Teachers
In addition to FHA loans, there are a few more popular programs which can help teachers to purchase a home.
Conventional Loans for Teachers – Conventional loans are the most popular mortgage program require a minimum credit score of 620 and with a down payment as small as 5%. The maximum debt to income ratio will be 43% which means you will not qualify for as much of a home as you would with an FHA loan. In most instances, the maximum conventional loan amount is higher than an FHA loan
Read our article which compares FHA to conventional loans.
VA Loans for Teachers – If the teacher is a veteran or has a spouse who is a veteran or active military, then a VA loan may be the way to go. There is no down payment requirement and the rates are competitive. However, there is a funding fee that needs to be considered when weighing your options.
Read our article which compares FHA to VA loans.
USDA Loans for Teachers – USDA loans are perfect for teachers who wish to move to a rural area. There is no down payment requirement but the home must be a primary residence and cannot be used for agriculture. Check this USDA lookup tool to see whether the home you are interested in falls within a USDA approved area.
Mortgages for Teachers with Bankruptcies – If you are a teacher who has unfortunately filed for bankruptcy, then you still may qualify for a mortgage. Read our article on getting an FHA loan with a bankruptcy to learn more about how this may apply to you.
Teacher Next Door Program
The teacher next door program is essentially a down payment assistance program for teachers and others who work within the school system. It is a grant of up to $6,000 plus the potential to have other discounted third party fees such as title insurance, appraisals, etc
Keep in mind, this is not a government agency who offers this. It is a private company that would require you to work with their lender. Therefore, you are tied to the rates and other fees that their lender offers only.
Our advice is to seek out assistance from a local agency where you can use those down payment funds with any lender you choose.
People also ask..
Are there special loans for teachers?
There aren’t any special or specific loan programs for teachers. Teachers can apply for and take advantage of the existing mortgage programs out there while potentially accepting some type of discount from the lender.
Do teachers get a discount when buying a house?
Some lenders will offer special discounts or offers and will bundle them with FHA loans for teachers. These discounts may include appraisal credits, closing cost assistance, or even down payment assistance. In some cases, these benefits may be accompanied with a slightly higher rate.
Do teachers get better mortgage rates?
When teachers apply for a mortgage, the rates offered will be the same as whether they were in any other line of work. It may be possible to join some type of credit union that is specific to teachers which potentially could offer competitive rates.