Teachers and Public Service Workers Get A Mortgage Break

By: Bill Wehr


Teachers and public service workers can qualify to purchase a home with as little as $500 or 1% of the sales price of their own money, whichever is less. In addition, they will have less restrictive guidelines than is normally required from borrowers for a mortgage.

This program is 100% financing of the purchase price under the FNMA’s MYCommunityMortgage Program. You can even borrow another 5% with a community loan through a bank. This could pay for your closing costs and property tax and insurance reserves. That’s a total of 105%. That means if you qualified, you could buy a home with only $500 into the deal. The program restricts income limitations to 100% of the area’s median income. However, there are a number of areas in the country where 120% is allowed. There are even other areas that do not have these income restrictions. You can check these areas out for yourself on the web.

The eligible professions are teachers or administrators at the elementary or secondary levels in public or private schools. Public safety employees that are employees of a police department, sheriff’s office, university, hospital, airport or port authority that are responsible to the prevention and detection of crime are entitled. Fire department personnel on the local, state or federal level that are involved in fire suppression, emergency medical response, hazardous waste and response to terrorism fall into the classification.

These professions will have more flexible underwriting guidelines. As an example, the debt to income ratio can be as high as 45%. Another great feature is that for teachers and public service workers who do not have enough established credit to make up an acceptable credit report there is an alternative. If the borrower has a 12 month rental history with no delinquency, and no delinquencies on anything else that comes up for the past 12 months, that will do for the credit part of it.

The home will have to be for primary residence and not for rental. It will have to be a single-family residence and not a duplex. Condos are eligible. Manufactured housing is not eligible. The maximum loan is $417,000 in 38 states and $650,500 in Hawaii and Alaska.

All borrowers who are first time homebuyers will have to complete an approved homebuyer education program. The lending institution will give you information as to how to go about this. The education part should easily be completed by the time the loan is to close.

With all of this great news is the only thing holding you back is the lack of $500? This program solves that problem by being flexible. It will allow gifts from relatives, fiancés, or domestic partners. It even expanded the allowable gift to come from employers, churches or nonprofits.

The home will have to be for primary residence and not for rental. It will have to be a single-family residence and not a duplex or above. Condos are eligible. Manufactured housing is not eligible. The maximum loan is $417,000 in 48 states and $650,500 in Hawaii and Alaska.

If this sounds terrific for teachers and public safety workers, it is also open to private sector workers as well. The difference is more general restrictive underwriting criteria, but the program is the same at 100% financing and only $500 into the deal.

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Bill Wehr publishes mortgage articles at www.mortgagejourney.com. Bill has an MBA and is the owner of Great Pacific Northwest Mortgage www.billwehr.com serving Oregon and Washington. For loans please complete a secure on-line application at www.portlandoregonmortgages.com.

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