Whether you’re thinking of buying a home in Miami or something along the Gulf coast, there are some excellent financing options for teachers that require little to nothing down with competitive mortgage rates.
As long as you’re a teacher teaching K-12, you don’t have to wait to save up a 20 percent down payment but depending upon where the property is located you might even have to put zero down. Or, you can select an FHA loan that requires only a 3.5 percent down payment. Let’s take a look at three mortgage programs that teachers should seriously consider.
FHA. One program available today is the FHA home loan program. The FHA loan asks for just a 3.5 percent down payment and the down payment can come from the borrower’s own funds or gifted by a family member or a non-profit. FHA loans can be used to finance a home in a rural or semi-rural area as well as in densely populated urban areas.
FHA loans can be used to finance a single-family home, a townhome or an approved condo as long as the borrower occupies as a primary residence. FHA loans can also be used to finance a condominium as long as FHA has approved the condominium project.
Note: FHA loan limits are $420,680 (1-unit property) in most counties throughout Florida
FHA loans also come with a government guarantee to the lender. As long as the loan application was approved using standard FHA guidelines if the loan goes into foreclosure the lender is compensated for the loss. This guarantee is financed by two mortgage insurance policies, an initial premium called the upfront mortgage insurance premium of 1.75% of the loan amount which is rolled into the loan and an annual premium of 0.85% of the loan amount paid monthly assuming the buyer is putting down the min 3.5% down payment. FHA is great for teachers living in more populated cities like Miami, Jacksonville, Orlando, Tampa, St. Petersburg, West Palm Beach, etc.
USDA. The United States Department of Agriculture oversees the USDA Rural Housing loan. The most popular 502 Guaranteed program is offered only by approved lenders. The loan is used to finance properties in areas declared as rural by the USDA. The USDA loan saves money for teachers because unlike the FHA loan, there is no down payment requirement. Even though the FHA loan has a low down payment requirement of just 3.5 percent of the sales price, the USDA loan goes one better and still permits 100% financing.
The USDA does restrict where the property can be located because the program is designed to assist those who wish to finance in more rural areas. Every ten years after the U.S. Census is released, the USDA identifies eligible areas. USDA home financing is great for teachers looking to purchase in more semi-rural communities just outside of Orlando, Tampa, Jax, Ocala, Gainsville, Daytona, Tallahassee, Naples, Sarasota, etc.
Buyers interested in learning more about the USDA loan program can read all the latest USDA frequently asked questions here. The USDA loan also comes with a guarantee which is similar to the FHA program. The annual fee, rolled into the loan amount, is 1.00% of the loan amount and the annual fee is 0.35% which is paid in monthly installments.
VA. The final of the three is the VA loan. Just like the USDA mortgage, the VA loan does not require a down payment. If a teacher is a veteran of the armed forces or armed forces reserves with six years of service, the teacher may be eligible for this zero down loan program. There are no income or location limitations with the VA mortgage.
The VA guarantee to the lender is similar to the FHA and USDA programs but is limited to 25% of the loss should the loan go into default. However, of the three programs, the VA loan program boasts the lowest default rate of them all. One of the biggest advantages of the VA program is NO monthly mortgage insurance. This alone can save home buyers thousands over the course of a year.
Teacher’s across the U.S. can learn more about any of these options by calling Ph: 800-743-7556 or just submit the Info Request Form on this page for quick service.