Are There Home Loans For Federal Government Employees?

6 Min Read
Published May 23, 2024
FACT-CHECKED
Written By
Erik J. Martin
Reviewed By
Tom McLean
A loan officer reviews mortgage options with an older couple.

Working for the United States government has many benefits, including job security, good benefits, and the ability to serve your country and help people. But do those benefits include any federal employee home loans or mortgage programs that can make buying a home easier or more affordable? While there are no direct home loans for federal employees, there are programs that can help federal employees afford a home.

Key Takeaways:

  • There are no mortgage loans expressly for federal government employees. However, only military service members or veterans can get a VA loan.
  • Nothing prevents federal employees from qualifying for any type of loan, including conventional, FHA, VA or USDA loans.
  • Federal employees also may qualify for home buying assistance programs, including Good Neighbor Next Door and state and local programs.

Do Home Loans For Government Employees Exist?

The United States government offers several well-known mortgage programs that help qualified buyers afford a home if they can’t get a conventional loan. These include Federal Housing Administration, Veterans Affairs, and U.S. Department of Agriculture loans.

However, there are no home loan programs exclusive to federal employees. VA loans come the closest. To get a VA loan, you must be in military service, a veteran, or the spouse of a veteran. Beyond that, federal employees have the same mortgage options as anyone else.

“It’s a common misconception that multiple special mortgage options are available exclusively to federal government employees,” says Dennis Shishikov, an adjunct professor of economics at City University of New York. “But there are no mortgage products specifically designed for them.”

What’s Your Goal?

Home Buying Assistance Programs For Federal Employees

A more direct way for government employees to get help to afford a home is through home buyers and down payment assistance programs.

Here are some programs government employees may be eligible for.

Public Servant Next Door Program

This program helps government employees who qualify as first-time buyers by offering grants and down payment assistance. Eligibility extends to all government employees at city, county, state and federal agencies.

Benefits include no upfront or application fees, low down payments, the ability to buy any home on the market, a streamlined application process, preferred interest rates, a free or discounted home appraisal, and discounted title fees.

This program also offers government employees a housing grant of up to $8,000 for home purchases and down payment assistance of up to $10,681, which are nonrepayable grants.

Good Neighbor Next Door Program

The Good Neighbor Next Door program, administered by the U.S. Department of Housing and Urban Development, offers eligible law enforcement officers, teachers, firefighters, and emergency medical technicians the chance to buy a home in a revitalization zone at a 50% discount.

To qualify, participants must commit to staying employed in their field for at least one year after the home purchase. Additionally, they must live in the purchased property as their primary residence for at least three years. They also agree to take out a second mortgage to cover the gap between the property’s list price and the discounted purchase price.

“This opportunity provides significant discounts on homes to public servants. And it’s excellent for first-time buyers. But it may have limited availability depending on location,” says Tony Mariotti, a Realtor and CEO of RubyHome Luxury Real Estate in Los Angeles.

Military And Veteran Housing Programs

If you are in the military or a veteran, the VA home loan comes in handy, as do several other programs you may qualify for, including:

  • Specially adapted housing grant. “These grants help veterans with service-connected disabilities live more independently,” says Colten Claus, associate broker with 8z Real Estate in Colorado Springs, Colorado. If you are eligible, you can receive up to $117,014. Qualifying disabilities include the loss or loss of use of more than one limb, blindness in both eyes, certain severe burns, and more.
  • Homes For Our Troops. This program donates and constructs specially adapted custom homes across the nation for severely injured post-9/11 veterans, helping them rebuild their lives at no cost to the eligible veteran.

Union And Professional Association Benefits

Many unions and professional groups offer benefits like down payment assistance, grants, and financial counseling.

“These programs can greatly reduce the upfront costs of buying a home, although they may not be available in all areas or for all government employees,” Mariotti says. “Your eligibility may be contingent on union membership or specific employment terms.”

Here are three examples of real estate-related benefits available to members of unions and professional associations:

  • The American Federation of Government Employees offers members a 20% cash-back rebate on the seller’s agent commission when you sell your home.
  • On average, members of Union Privilege can earn over $1,800 cash back when buying or selling a home with an approved real estate agent.
  • AFL-CIO members have access to its Union Plus Mortgage program, which includes a program that assists members afford their mortgage payments in times of need.

State And Local Home Buyer Assistance Programs

States also may offer grant programs specifically designed for individuals looking to buy a home, especially those relocating for work reasons.

“Assistance programs offered locally and in your state can vary widely but may provide down payment assistance and favorable loan terms,” Mariotti says. “Their main drawback is that they can vary by location. Some programs may also provide tax incentives or reduced interest rates, but eligibility requirements can be strict, sometimes based on income or first-time buyer status.”

You can contact your state’s housing finance authority and HUD’s state resources and seek advice from a local real estate agent to learn more.

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FAQ

Here are answers to common questions about government employees’ home buying options.

One easy way to save is to set up a separate savings account and automatically transfer a fixed portion of your paycheck into it. This can systematically build your savings over time. Just remember that in addition to the down payment, you need to pay closing costs of 2% to 5% of the purchase price.
Maintain a strong credit score, have a stable employment history, and avoid too much debt. For federal employees, evidence of job stability can be persuasive to lenders.
Federal government employees are evaluated on the same criteria as other mortgage applicants, such as credit score, debt-to-income ratio, and loan-to-value ratio. People with government jobs generally have a stable, reliable income, which can help when applying for a mortgage.

The Bottom Line

Even though there is no mortgage program exclusive to federal employees, they have the same loan options as anyone else – and may qualify for programs providing down payment assistance. Invest time searching and applying for these worthwhile opportunities, and consult closely with a trusted real estate agent or lender who can guide you through this process.

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