You’re a nurse looking for a mortgage to buy a home. What are the best home loans for nurses? This can be tricky, since lenders prefer applicants with a steady copy-and-paste paycheck. As a nurse, however, you have a base salary but you also work overtime, are paid differently for night shifts, have work gaps or may even be a traveling nurse. Thankfully, there are lenders out there sympathetic to your situation. This article will be a guide to home loans for nurses so you can decide what is best for your own personal circumstances.
Nurses have access to all the same mortgage products and programs that other homebuyers do. But, before we dive into those options, let’s look at two programs designed specifically for nurses that help you with the homebuying process.
Nurse Next Door
Nurse Next Door’s National Home Buying Program is not a mortgage lender for nurses, but they will assist in matching you with the right aid program, mortgage, and property based on your situation. Nurse Next Door’s First Time Home Buyers Program is designed for nurses and other medical professionals who have not owned a home within the past three years. You can receive a grant of $1,000 to as much as $8,000 (where available) and down payment assistance of up to $10,681. Not only does the program provide better interest rates, but there's no application fee and you'll receive an appraisal credit of up to $545 at closing. Nurse Next Door can be used for the purchase of any home, including foreclosed properties nationwide.
IMPORTANT: Before choosing this option, check your state for available down payment assistance programs available for nurses. We compiled this list for you to see which down payment assistance programs are available in your state.
Homes for Heroes
Homes for Heroes is a nationwide homeowner assistance program determined to make home buying easier for medical professionals, as well as firefighters, law enforcement personnel, teachers, and members of the military. On average, buying or selling a home with this program can save you $2,400. That can include savings of $1,700 by using one of the program’s real estate specialists, as well as $500 in savings on lender fees, $150 savings on title services, and $50 on inspection fees. Much like Nurses Next Door, you should check first with your state for grants and assistant programs designed for nurses.
Physician mortgages are special mortgage programs created for medical professionals, which primarily means doctors, dentists, and the many variations of each. Physician mortgages are considered “portfolio loans,” which means they’re customized for specific borrowers with unique financial situations. For example, most medical students have high levels of student debt by the time they graduate, and even well into their careers. A physician mortgage accommodates this type of borrower by forgoing traditional DTI (debt-to-income) requirements for taking out a mortgage. Here are other benefits to a physician mortgage:
No Private Mortgage Insurance (PMI)
Conventional mortgages require the borrower to purchase private mortgage insurance (PMI) if they put down less than 20%. However, medical professionals who qualify for a physician mortgage will not be charged PMI!
Down payment is $0 or low
Since doctors have spent so much time in school and in training, they haven't built up the savings necessary to make a down payment. For that reason, it is common for physician mortgages to offer 100% financing or a very small down payment.
No work history needed
Again, since doctors have been in school for so long, the mortgage lender will not require the same work history as they would to a borrower via a traditional mortgage.
Do Nurses Qualify?
Unfortunately, most banks with a doctor home loan program do not extend it to nurses. There are nurse practitioner mortgage loans and nurse anesthetists (CRNA) home loans, however. Here are the lenders who consider CRNAs and NPs eligible for physician mortgages:
- Consumers Credit Union
- Frandsen Bank & Trust
- Evolve Bank & Trust
In addition to the usual obstacles most homebuyers face in getting mortgage financing, nurses do have a few specific challenges.
As stated in the beginning of this article, most lenders prefer giving loans to those with proof of consistent work and pay. However, this isn't always the norm for nurses. Between shift differentials, overtime, and extra shifts, lenders may need to perform special calculations to determine your stable income.
If your employer can confirm consistent overtime pay, then that may be added to your qualification. Depending on how long you’ve been making that income, you may be allowed to use all of it to qualify. Most lenders will require two years of consistent overtime income. Sometimes, writing a letter with your application explaining your income to your lender may help.
Work gaps can play a negative role for a traveling nurse. They can appear to be unstable employment and income. But just as is the case with overtime and other special income situations, the lender will typically average, your income over 12 to 24 months. Because traveling nurses are being relocated regularly, an employment offer letter of “future income” may be accepted to verify income.
Student Loan Debt
Debt in the medical world is common, even well into your career. If you’re a recently graduated nursing major, buying a home isn’t impossible. Because loans for medical professionals are fairly lenient, a high debt-to-income ratio doesn’t have the same effect as it would for a typical borrower. Your best option may be to buy a home based on your base income only, regardless of extra pay. That can balance out owning a home as well as paying off your student loan debt. And because nursing is considered a stable field, an employment offer letter may be sufficient to verify both your employment and your income.
If you are looking for a sure way to take out a mortgage to buy your next home, then below are the options available to all Americans, regardless of their occupation.
These loans are available with a down payment of 3% to 5%, with loans up to $647,200 as of 2022. The rules of this loan are based on Fannie Mae and Freddie Mac guidelines, two-government sponsored enterprises that fund the loans. These loans require a credit score of 620 or higher. A major advantage of conventional loans is that they can be used to purchase second homes and even investment properties. And even if you need a loan amount greater than $647,200, you may be able to apply for a conventional jumbo loan. Those offer loan amounts in excess of $1 million.
Backed by the Federal Housing Administration, these loans require a down payment of 3.5%, and a credit score ranging between 580 and 620. But with a 10% down payment, your score can be as low as 500. Though these loans are more accommodating if you have fair or poor credit, they do have mortgage insurance premiums, both upfront and monthly. That can make them more expensive than other loan types.
VA loans are only available to those who have already served or are currently serving in the US military. Credit score requirements will vary based on the lender. VA loans are backed by the Department of Veterans Affairs, and do not require a down payment. Also beneficial, monthly private mortgage insurance is not required (though there is a funding fee to be paid up front and added to the loan). The loans also generally have lower closing costs than other loan types.
No down payment is required however, you'll need a credit score of 640 or higher. These loans are backed by the US Department of Agriculture and may also require certain household income limits, as well as a property location in certain areas, such as rural or suburban.
Your home loan should be based on of your personal situation. Consider the following:
- For military personnel, obtaining a VA loan may be your best option.
- A conventional loan may be the best choice for you if you have good credit and enough savings for a nice down payment. It will also be the best choice of you are looking to buy a second home or an investment property.
- FHA will generally work best for lower credit scores. These loans also work very well with down payment assistance programs.
- If you have little savings and lower income, a USDA loan may be the way to go, as they allow you to buy a home at a low rate with no money down.
- Take advantage of either Nurse Next Door or Homes for Heroes if you need down payment assistance and there are no better alternatives available.
Choose the right mortgage loan option, and you’ll easily qualify for the home of your choice.
Since 2009, Kevin Mercadante has been writing about his journey as a mortgage loan officer during the 2008 financial crisis on his website Out of Your Rut.com. The experience gave Kevin perspective and he frequently discusses the big-picture trends that are impacting the American economy today. He’s a regular contributor/staff writer for as many as a dozen financial blogs and websites, including Money Under 30, Good Financial Cents and The Dough Roller.