If you’re a nurse looking to buy a home you should find yourself in the good books with lenders. This is because you perform an essential service and nurses have a reputation as low-risk borrowers. You can expect to get Lenders Mortgage Insurance (LMI) waivers on your home loan, attractive interest rates and other benefits.
Lenders tend to offer similar favourable terms to doctors, dentists, veterinarians, optometrists, pharmacists, chiropractors, physiotherapists, and to medical residents and intern doctors on home loan and investment loan applications.
Here’s what you need to know as a nurse when you apply for a home loan.
LMI waivers, discounts and benefits for nurses
Typically people applying for home loans have to get LMI if their deposit is less than 20% the property value. However, LMI is usually waived for nurses, meaning you can get a home loan with a smaller deposit without being slugged with LMI costs.
As a nurse, you can borrow up to:
- 80% of the property value (LVR) without LMI if you have a 20% deposit.
- 85% of the property value with significantly cheaper LMI or a full waiver.
- 90% of the property value by meeting lender conditions such as a 10% deposit, a good credit history, a record of timely repayments on your debts and a strong income while in stable employment.
- 95% of the property value requires meeting stricter lending criteria including all of the above, and have minimal debts. You need to also avoid unusual property types or remote locations to borrow up to 95% LVR.
- To borrow over 95% LVR. You may be able to borrow up to 105% LVR with a guarantor home loan. This means avoiding LMI premiums as well as a deposit.
- It may be possible to borrow up to 100% LVR without a guarantor or LMI if you can show high income levels and have been in nursing for more than 3 years. However, this may not be the best choice for many nurses, the lending criteria is very strict on this type of home loan and they come with very high interest rates.
Whether you are eligible for special terms, concessions and discounts that generally apply to nursing and healthcare professionals depends on meeting the following criteria.
Categories of qualifying nurses include:
- Enrolled Nurse
- Nurse Educator and Researcher
- Nurse Manager
- Nursing Support and Personal Care Worker
- Registered Nurse
- Student nurses may also qualify because they require on-the-job training
Some lenders may ask you to present proof of the following.
- Membership of the Nursing and Midwifery Board of Australia (NMBA) which has Working, Student and Associate membership categories.
- Registration with AHPRA, the Australian Health Practitioner Regulation Agency.
For most home loan applicants, lenders look at normal base salary (PAYG) in calculating borrowing capacity, and typically shade or ignore overtime, allowances and second job income. But some lenders recognise that, for nurses, overtime, fringe benefits and second incomes are common and part of the nature of the profession.
Here’s how these lenders may calculate nurses’ incomes for loan eligibility and borrowing capacity.
- Overtime. Typically, lenders only take 50-80% of overtime income from regular borrowers, which significantly reduces their borrowing power. However, as a nurse and essential worker some lenders accept your overtime income in full (100%). Make sure you work with a lender who understands that nurses work in shifts and are eligible for shift penalties.
- Fringe benefits. Many nurses get part of their income from fringe benefits—meal allowances, paid vacation, employee’s allowances among others—as non-taxable income. Some nurses have their fringe benefits credited directly into their bank accounts. The funds may also be automatically deducted from your salary to pay off debts like car loans or mortgages. Often lenders consider your fringe benefits to be taxable income, effectively reducing how much you can borrow. You need to find a lender who would consider this as tax-free income.
- Income from a second job. Some lenders do consider a nurse’s income from a second job when deciding on borrowing power. This is not the case for most borrowers. However, your second job needs to be in the same line of work.
So if your second job is in aged care or as a first aid trainer or assessor, that income would count with most of these lenders.
In general, what you might need depends on each lender.
You may qualify for a home loan even while on probation, but you may need to show proof of stable income when you apply for a home loan.
Professional packages for nurses
Lenders offer tailored professional packages for those who plan to borrow more than $250,000. They usually include interest rate discounts and other banking services including rewards credit cards, home loan offset accounts, and transaction accounts.
As a nurse, most lenders would give you larger interest discounts in your professional package.
Professional packages have a single annual fee that may range between $300 to $750. Before you opt for a professional package, compare its annual fee against the total fees you would end up paying if you were to use the different products separately, on their own.
Nurses with overseas qualifications
If you earned your nursing qualification overseas you may not get the full extent of LMI waivers and other special benefits typically given to other nurses. An experienced mortgage broker can help you make the best of the situation.
Buying an investment property
If you are planning on buying more than your first home, such as considering an investment property, you may get similar favourable terms from some lenders.
Consider working with a mortgage broker
Mortgage brokers can save your time and help you find the best deals on your home loan. Book a call with a mortgage broker to get started.