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Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings.
Being a nurse offers a lot of benefits. In addition to a fulfilling role in which you help others, nursing is a flexible profession with a great deal of job security. Whatsmore, nurses’ salaries are very attractive, averaging at about $70,000 annually according to U.S. News & World Report.
But being a healthcare professional can have its drawbacks, too–especially when it comes to mortgages.
Banks and other lenders can see “flexible” schedules as an “unstable” when performing a risk assessment on a mortgage. Furthermore, it can be difficult to account for a full-time schedule when many of your hours are extra shifts. Simply put: Nurses’ financial situations are complex and are often hard to present as stable to mortgage lenders.
For travel nurses, who often have gaps in employment and with employers, and in spite of making large salaries, proving stability to lenders is an even bigger hurdle.
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Of the types of nurses discussed here, staff nurses will have an easier time securing a mortgage. For one thing, staff nurses will have a base income to present to lenders, which is a positive when it comes to risk assessment. But that doesn’t mean that mortgage approval is guaranteed.
As mentioned above, a staff nurse can bring their lender proof of their base income (such as an offer letter) when applying for a mortgage. But in almost all cases, base income does not account for the actual income a nurse brings home.
Nursing wages can be subdivided into several kinds of pay, including shift hours, overtime, and shift differential. According to a study from researchers at New York University (NYU) Rory Meyers College of Nursing, one-third of all surveyed nurses said that they work overtime beyond their typical 12-hour shift. So, how does a mortgage lender account for a staff nurse’s actual income during risk assessment?
“[A] lender’s ability to use all of their income will depend on how long they have been on the job,” says Tammi Lindley, a senior loan officer at Mortgage Express. “For a full-time nurse, all of the base pay is considered, but the various other types of pay can only be included if the nurse has a two-year history of receiving this type of pay.”
Essentially, it comes down to how the individual lender weighs non-base salary income when determining the loan amount you qualify for. More than likely, they will weigh overtime and night shift differential pay differently than your base pay.
For instance, night shift differential refers to the increased rate of pay for regularly scheduled, non-overtime work hours between 3 p.m. and 8 a.m. And it will be up to the lender how to consider those hours when determining whether to approve you for a loan and for what amount. Some may see it as high income, some may see it as less consistent income. Typically, non-standard pay, such as night shift differential, overtime, and bonuses, will be factored in similarly to standard pay of a consistent history (12-24 months) of these kinds of income can be shown.
So, how do you figure out your total income? Assuming you have 12-24 months worth of paystubs showing consistent night shift differential, overtime, and bonuses, these are the steps you would take to show your total income:
Step 1 – Calculate Your Current Base Pay – Do determine your base pay, multiply your hourly rate by the number of guaranteed hours you work every week. So, for example, if your base pay is $35 an hour and you work a full 40 hours per week:
$35 x 40 (hours) = $,1400
$1400 x 52 (weeks) = $72,800
$72,800 / 12 (months) = $6,067/month
Step 2 – Calculate Your Differential Pay (for Two Years) – As mentioned above, night shift differential is the higher hourly rate for shifts between 3 p.m. and 8 a.m. So, for example, if you work 500 night shift hours in 24 months and the differential rate is $7, then multiply these numbers to get your two-year differential pay:
$7 x 500 (hours) = $3,500
Step 3 – Calculate Your Overtime Pay (for Two Years) – As with differential pay, to determine your overtime pay for two years, you would multiply your overtime rate by the number of hours worked. If your overtime pay rate is 1.5 x ($52.50/hour) and you worked 250 hours of overtime, your calculation would look like this:
$52.50 x 250 (hours) = $13,125
Unlike staff nurses, travel nurses may have a more difficult time securing a home loan due to the nature of their work. That said, approvals and loan amounts are highly dependent on where you work and your work history and it is possible for travel nurses to get mortgages.
If you’re a travel nurse, there are likely gaps in your employment that result from a number of factors. Perhaps you’ve had a number of short contracts in your employment history. Perhaps you work per diem or have changed agencies in the past.
All of these scenarios do not mean that you are a bad employee with trouble maintaining work, but without a bit of context, a lender may misconstrue your career history as a negative.
These are a few ways to help give your lender some important context for understanding your career history:
“Providing as many pay stubs to your lender as possible will be helpful in calculating qualifying income,” Lindley says.
According to Lindley, providing as much documentation, especially paystubs, will help your lender determine your income and to provide the best mortgage for your situation. “In many cases, providing the last pay stubs of the year for the previous two years will give a true breakdown of all payment types, giving the nurse a better chance of including all the ‘extra’ pay.”
If you find that your mortgage applications are being denied, don’t give up. We recommend maintaining your employment with a single agency for two years to increase your chances for loan approval.
Even though as a travel nurse, you’ll likely spend less time in your home than other nurses, buying a home is still a good investment for a number of financial reasons and can be helpful later in life. When a travel nurse invests in a home, they will:
As a nurse, you will have a lot of opportunities to earn and increase your earnings over time, but it’s important to understand how you are paid when buying a home. Do you know the different kinds of pay that show on your pay stubs? Do you understand the differences between overtime and differential pay? The average length of a mortgage is 30 years, so understanding how you are paid now will help you plan and forecast for your future and for your ability to maintain payments over that period.
Even if you want to own a home, is it your biggest financial priority? It might not be. And if it is, what are your other big financial priorities? Retirement? Starting a family? Do you want to go to graduate school for nursing? Before you start down the road of homeownership, it’s important to know where your priorities lie so that you can plan your financial future accordingly.
According to Minority Nurse, even well-paid nurses struggle to make and maintain payments on large purchases. “Even if a purchase is appropriate for your life stage, try to minimize your total household overhead. Even well-paid nurses risk fatigue from worry or overwork to manage bills and payments for one-time splurges or ongoing financial commitments.”
If you decide that owning a home is the next step for you, understand the other major financial decisions that are in your future and recognize how buying a home will affect those purchases.
So, you’ve read up on the best practices for buying a home as a nurse or travel nurse and you’ve decided that buying a home is the right choice for you. Next, you’ll want to explore look for ways to reduce the cost of your mortgage. One way Nurses can reduce the costs of their mortgages is by using nursing home loan assistance programs. Below, we’ve listed 6 options you can explore.
Home loan assistance up to $6,000 is available for qualifying medical professionals, though, depending on availability, grants as low as $1,000 may be available. Depending on your situation, down payment grants up to $10,681 may be available.
The exact qualification criteria to qualify for this program will depend on which state you live in. In general, all professional medical staff will qualify. Grants are awarded for primary residences only and to medical professionals who do not already own a home. For more information, click here.
The EveryDay Heroes Housing Assistance Fund (EHHAF) offers housing grants to police officers, firefighters, teachers, doctors, nurses, and social workers. With this program, you can get up to 97% Loan to Value (LTV) Ratio. If you are a veteran in one of these professions, you could even qualify for 100% financing.
The EHHAF does not publish any specific eligibility requirements in order to qualify for one of their grants. For more specific requirements info, click here.
Registered nurses in California, Massachusetts, Hawaii, Oregon, or Alaska can make use of the Homes for Heroes program in order to buy their own house. This program discounts 25% of your realtor fee when buying a house. This applies as long as you use a realtor or broker who is affiliated with the Homes for Heroes program. You will also receive reduced inspection fees and closing costs.
After you purchased your house, Homes for Heroes will refund you 0.7% of the home purchase price. If you use a Homes for Heroes lender, you will also have additional savings on lending fees.
To be eligible for the Homes for Heroes program, you must be a registered nurse in California, Massachusetts, Hawaii, Oregon, or Alaska and use one of the Homes for Heroes affiliate agents. For more information about Homes for Heroes, click here.
Mortgages for Champions offers special home loans to various medical professionals, including home loans for registered nurses. One of the biggest perks to this program is the costs it eliminates, including loan application fees, loan processing fees, and mortgage underwriting fees.
Mortgages for Champions’ loans does not publicly share their loan eligibility criteria. If you want to get more information, you can contact them here, or you can apply and get a quote here.
While FHA loans are not designed specifically for nurses, they do come with a number of advantages, including:
Additionally, FHA loans are good for nurses with low credit scores, who are having a hard time producing a down payment, or who have lower incomes. For more information about FHA loans, click here.
USDA loans are backed by the U.S. Department of Agriculture and are designed for borrowers who want to buy homes in rural areas. Like with other loans, there are some requirements:
For more information about USDA loans, click here.
Even with a great salary and some help from an assistance program, buying a home can be expensive. One way to reduce the long-term cost of a mortgage and improve your buying power in the present is with a sizable down payment.
According to The Balance, the general rule for making a down payment is to provide 20% upfront. The best option is to pay this in cash, of course. But not everyone has tens of thousands of dollars in their savings.
If you don’t have cash for a down payment, the next options will be credit unions and private loans. Credit unions and private lenders have different criteria for borrowing. Furthermore, those criteria will differ from credit union to credit union and private lender to private lender.
Generally, though, if you’re prepared to apply for a mortgage, you probably meet the criteria for a personal loan. Generally, lenders look at the following to determine whether you are eligible for a loan:
If your a nurse and you’ve decided to buy a home, you’ve already take the first step. Now that you’re equipped with the knowledge above, you can determine your total income, find the lender that meets your needs, and apply to assistance programs!
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