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Mortgages for teachers and first responders

A new bipartisan bill in the House of Representatives, called the HELPER Act (or Homes for Every Local Protector, Educator and Responder) aims to help teachers and other first responders who kept things going during the height of the COVID-19 pandemic by providing them with a one-time, down payment-free mortgage.

The bill still has a way to go before possibly being enacted, but if it is passed, here’s what it could mean for those covered by the legislation. We also have information on existing programs for people in these professions.

What is the HELPER Act?

The bill would create a one-time home loan program under the Federal Housing Administration, which would allow eligible borrowers to get a mortgage without needing to fund a down payment or pay for private mortgage insurance (PMI).

The program is modeled after similar VA loans, which allow veterans, active service members and their families to secure a mortgage with little or no money upfront and (usually) at favorable interest rates.

What would the HELPER Act mean for teachers and first responders?

First responders and teachers, especially, often collect lower salaries compared with private sector jobs in their area. This bill would make it easier for them to become homeowners by reducing the amount of money they would need upfront to purchase property.

However, the bill, though well-intentioned, may not give as big a boost to its beneficiaries as it might appear to.

“Rolling out zero down payment programs after home prices have soared is questionable timing,” said Greg McBride, Bankrate’s chief financial analyst. “Last time we saw that movie it didn’t end so well.”

Mark Hamrick, Bankrate’s Washington bureau chief, agreed.

“While on the face of it, this has a feel-good aura to it, the reality is that educators and first responders would be better and more broadly assisted by providing them with adequate pay and benefits,” he said. “This ends up being a gift as well to the housing market at a time when it is soaring, not in need of assistance.”

President Biden promised during his campaign that promoting affordable housing would be a key goal, so it remains possible that other proposals will be introduced down the road.

What other homebuyer assistance is available for teachers and first responders?

Many states and cities offer down payment assistance to public-sector employees, so if you’re shopping around, it’s worth seeing what programs are available in your area.

The U.S. Department of Housing and Urban Development (HUD) also administers the Good Neighbor Next Door Program, which allows teachers and first responders to purchase property in designated “revitalization areas” at a 50 percent discount off the list price, so long as they commit to living there for at least 36 months.

Bottom line

The HELPER Act is meant to give a boost to teachers and first responders, many of whom had to put in extra hours and effort in response to the COVID-19 pandemic.

The proposed legislation is still making its way through Congress, and you can keep tabs on its progress here.

If enacted, the HELPER Act would give its beneficiaries more flexibility when shopping for real estate.

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