Buyer guide · Texas

How a Texas teacher's paycheck looks to a mortgage underwriter

How lenders read a Texas teacher's paycheck: 10- vs. 12-month pay, contract renewals, summer school and stipends, new hires starting in August, and student loans.

Bottom line:

A teacher's pay is easier to document than most people fear. Freddie Mac divides annual pay by 12, so a 10-month schedule doesn't shrink your income. An annually renewed teaching contract supports continued income. Summer school and stipends need some history. New hires can close on a signed contract under Fannie Mae and Freddie Mac rules if the start date is close.

Who counts as a teacher for Heroes

TSAHC's Homes for Texas Heroes program covers full-time public school "professional educators" in K-12: classroom teachers, teacher aides, school librarians, certified school counselors and school nurses. Your certification is checked through the State Board for Educator Certification lookup, and your lender confirms full-time employment. Private-school staff aren't on TSAHC's list; they can look at Home Sweet Texas or TDHCA's programs, which are open to any job.

Heroes pays up to 5% of the loan amount as a grant or a loan forgiven after three years. The income limit is up to 170% of area median family income, and for the non-bond option without the tax credit, only your own qualifying income counts. A teacher married to a higher earner who stays off the loan can still fit.

The 10-month paycheck problem that isn't

If your district pays you over 10 or 11 months instead of 12, your checks stop or shrink in summer. To an underwriter, what matters is annual salary.

Freddie Mac's guide spells it out: when annual pay is received in fewer than 12 months, the lender divides the annual gross by 12. Its own example is monthly pay times 10, divided by 12. So a teacher paid $5,400 a month for 10 months earns $54,000 a year, and qualifies on $4,500 a month.

FHA, Fannie Mae, VA and USDA don't publish the same formula in the sections we reviewed, so have your lender show you the calculation it uses.

What proves your pay

Your current contract or a district salary letter.
Recent pay stubs and two years of W-2s.
A written verification of employment from the district's HR office.

Freddie Mac says an annually renewable or term education contract supports continuance unless the lender knows otherwise. In plain terms, a one-year teaching contract isn't treated as a job that ends in May.

Stipends, coaching and extra duty

Texas teachers often stack extra pay: coaching, band, department head, bilingual or special education stipends, tutoring. How it counts depends on how it's paid.

Type of extra pay	How lenders usually look at it
Stipend written into the base contract	Ask whether the lender can count it with salary when the contract lists it.
Coaching or extra-duty pay paid separately	Likely handled as variable income, which needs a history.
Summer school	Freddie Mac treats it as seasonal or secondary work; under 2 years of history may be justified.
Tutoring or a side business	Self-employment rules apply, usually 2 years of tax returns.

For variable pay, Fannie Mae recommends a 2-year history and accepts 12 months or more with offsetting strengths. FHA uses the lesser of the 2-year average or the prior year, which builds in a cut if extra pay fell.

New hires: closing before the first paycheck

Summer is prime buying season for teachers, and many first-year teachers want to close before August. The rules allow it in some cases:

Fannie Mae: the offer must be signed and non-contingent, naming the position, pay and start date. Under one option, on a one-unit main home qualified on fixed base pay, the start date can be up to 90 days after closing. You need reserves of six months of housing payments, or enough to cover your bills until the start date plus one month.
Freddie Mac: the income must be salary or guaranteed hourly pay. One option allows a start date up to 90 days after the note date if you have funds to cover housing and debts until then, plus one month.
FHA: no offer-letter rule in the handbook. A new graduate's time in school can count toward the 2-year history.

If you're switching districts, the same contract rules help. A move to a new district in the same line of work isn't a gap.

Student loans: the PSLF angle

Public school teachers work for qualifying employers under Public Service Loan Forgiveness, which forgives the remaining Direct Loan balance after 120 qualifying payments while working full time. The PSLF regulation counts teachers who work at least 30 hours a week over a contract of at least 8 of 12 months as full time.

For a mortgage, what matters is the payment the lender counts:

FHA: if your credit report shows $0, the lender uses 0.5% of the balance.
Fannie Mae: a documented $0 income-driven payment can count as $0.
Freddie Mac: can leave the loan out if you're approved for forgiveness and have 10 or fewer payments left, or the loan is deferred through forgiveness.

On a $60,000 balance, the difference between $0 and 0.5% is $300 a month in your debt ratio. Ask lenders which loan type treats your student loans best.

Other teacher programs to know

HUD Good Neighbor Next Door offers 50% off the list price of certain HUD homes in revitalization areas to full-time pre-K-12 teachers at state-accredited public or private schools, if you serve the area. You must live there 36 months. Supply is limited.
Dallas Targeted Occupations has covered educators and librarians; its current funding is spent.
City and county programs in Austin, San Antonio, Fort Worth and El Paso may be layered depending on each program's rules.

A teacher's prep list

Get a salary verification letter from HR showing your annual contract amount.
Gather two years of W-2s, plus stipend or summer school records.
Print your SBEC certification page.
Pull your student loan servicer's payment and PSLF status.
Finish an approved homebuyer education course before closing; TSAHC requires one borrower to take it.
Time your closing around the contract year if you're changing districts.

Then check your eligibility and ask for a lender who closes Heroes loans for educators regularly.

Readers also ask

Do Texas teachers qualify for Homes for Texas Heroes?

Full-time public K-12 classroom teachers, teacher aides, school librarians, certified school counselors and school nurses qualify. Certification is checked through the State Board for Educator Certification. Private school staff aren't listed.

Does 10-month pay hurt my mortgage application?

No. Freddie Mac divides annual pay by 12, so a teacher paid over 10 months qualifies on the full annual salary. Ask your lender to show the calculation for your loan type.

Can I buy a house before I start teaching?

Possibly. Fannie Mae and Freddie Mac allow closing on a signed, non-contingent contract with a start date up to 90 days after closing, if you have reserves to cover payments until then.

Does summer school income count?

It can. Freddie Mac treats summer school as seasonal or secondary employment and says a history under two years may be justified for teachers.

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