New legislation would extend a benefit similar to Veterans Affairs (VA) loans to first responders and teachers who buy homes.
U.S. Representatives John Rutherford (R-Fla.), Al Lawson (D-Fla.), John Katko (R-N.Y.), and Bonnie Watson Coleman (D-N.J.) introduced the bill, dubbed the Homes for Every Local Protector Educator and Responder Act, on May 13.
The bill would allow borrowers to finance up to 100% of the acquisition price. Mortgages would be subject to FHA loan limits. Homebuyers would pay an up-front mortgage insurance premium of 3.6 percent of the principal, which could be financed, and would not pay a monthly insurance premium.
If passed, the new program would be administered by the Federal Housing Administration. The benefit is modeled on the widely used home loan program for veterans, which is administered by the Department of Veterans Affairs.
Police officers, prison guards, firefighters, paramedics, emergency medical technicians and public or private school teachers would all be eligible.
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But before borrowers rush to take a job as a summer school teacher to get a break on a mortgage, the bill has a caveat. Eligible borrowers must have worked in one of those professions for at least four years.
They also must be in good standing at their job, and not subject to disciplinary action. They must also show that they intend to keep working in the same job for another year.
Like VA loans, which are popular with investors but not homesellers, the benefit would allow the borrower to skip the down payment altogether.
Samuel Royer, the national director for Heroes First Home Loans at Churchill Mortgage and a veteran, came up with the idea for the program, to acknowledge first responders’ sacrifices, he said. “I believe that American first responders deserve the same access to affordable housing benefits that I have as a veteran,” Royer said.
The bill looks to ease access to homeownership by lowering the upfront cost to borrowers. The anemic housing inventory, however, still poses a problem for any potential homebuyers who aren’t prepared to pay well over the asking price.
Homesellers, who now have many offers to choose from, are not likely to look favorably on anything that entails more complicated financing. Loan officers, too, sometimes have reservations about government-financed loans.