The new legislation would grant a benefit similar to Veterans affairs (VA) to first responders and teachers who buy homes.
United States Representatives John Rutherford (R-Fla.), Al Lawson (D-Fla.), John Katko (RN.Y.), and Bonnie Watson Coleman (DN.J.) presented the bill, called the Law of Homes for All Local Protectors, Educator and Respondent, 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 approved, the new program would be administered by the Federal Housing Administration. The benefit is based on the widely used Veterans Home Loan Program, 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 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 one caveat. Eligible borrowers must have worked in one of these professions to at least four years.
They must also be up to date on their work and not be subject to disciplinary action. They must also show that they intend to continue working at the same job for one more year.
Like VA loans, which are popular with investors but not with home sellers, the benefit would allow the borrower to skip the down payment entirely.
Samuel Royer, National Director of Heroes First Home Loans to Churchill Mortgage and a veteran came up with the idea for the program, to recognize the sacrifices of first responders, he said. “I believe that American first responders deserve the same access to affordable housing benefits that I have as a veteran,” said Royer.
The bill seeks to facilitate access to home ownership by reducing the initial cost for borrowers. However, anemic home inventory still poses a problem for prospective home buyers who are not prepared to pay more than the sale price.
Home sellers, who now have many offers to choose from, are unlikely to look favorably on anything that involves more complicated financing. Loan officers also sometimes have reservations on government-financed loans.