Medical professionals like doctors, surgeons and dentists are typically considered low-risk borrowers due to the stable nature of their job. As providers of an essential service, they play an important role in society and generally earn incremental income over their years of practice. Being low-risk, medical professionals are offered various discounts on home loans, including lower interest rates and waived Lenders Mortgage Insurance (LMI) when borrowing more than 80% of the property’s value.
Unfortunately, nurses don’t always qualify for the same professional discounts available to doctors. Still, you may be able to get some other benefits when you apply for a home loan as a nurse because lenders acknowledge that you provide an essential service, which automatically puts you in the category of low-risk borrowers. However, not all lenders offer the same benefits or discounts to nurses, and applying with the right lender is the key to landing a competitive deal. Here’s what you need to look out for when applying for a home loan as a nurse
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1. Borrowing capacity
The amount you can borrow for a home depends on various factors, including your loan serviceability, which is determined by your income and expenses. However, various lenders will assess your income differently, especially if you earn overtime income, work two jobs or receive fringe benefits as part of your package.
Lenders typically consider only about 50% to 80% of a borrower’s overtime income while calculating their borrowing capacity. But some lenders make an exception for nurses by accepting their entire overtime income as part of their salary, which could help improve eligibility.
It’s worth checking with a lender regarding how they treat overtime income or seek help from a broker to apply with lenders who treat nurses favourably. You’ll also need some documentation to prove regular overtime income. This generally includes your last two months’ payslips, your most recent group certificate and a letter from your employer confirming regular overtime income.
Some lenders may also consider your full income from a second job while assessing your home loan application, provided your second job is in the same line of work.
2. LMI waiver
Being a nurse doesn’t make you eligible for an LMI waiver automatically. However, working in a low-risk profession may allow you to borrow more than 80% of the property’s value from some lenders without incurring the cost of LMI.
While regular borrowers must provide a 20% deposit to qualify for a home loan without paying LMI, some lenders allow nurses to apply for a mortgage with a 15% deposit and pay no LMI. However, there might be additional criteria to meet, such as having a high credit score and stable employment history.
If you don’t have an adequate deposit saved up, the other option to avoid paying for LMI is asking a family member to go guarantor on your home loan. However, both the guarantor and you need to be aware of the risks and responsibilities involved before getting into such an arrangement.
3. First home buyer discounts
If you are a first home buyer, you may be eligible for the First Home Owner Grant (FHOG) in your state. It’s worth checking with your local government or broker whether any such grant is available and how you can apply for it. If you are a nurse and a first home buyer, some lenders may offer you discounted LMI premiums, but there may be conditions to enjoy this discount, such as paying the deposit from your savings or borrowing up to a specified maximum limit.
What are the eligibility criteria to qualify for nurse home loan discounts?
Nurse home loan discounts are only available to qualified nurses who are currently employed and actively working. To confirm your eligibility for a nurse home loan discount, some lenders may ask you to provide a copy of your registration with the Australian Health Practitioner Regulation Agency (AHPRA) and membership of the Nursing and Midwifery Board of Australia (NMBA).
It’s also helpful if you have been working as a nurse for at least two years before applying for a home loan.
Is it necessary to work with a mortgage broker to qualify for a nurse home loan discount?
The short answer to that question is no. But the long answer is that while it’s not necessary to work with a mortgage broker to apply for a nurse home loan, there are several benefits of working with one.
Even though doctors and nurses are both healthcare professionals, nurses don’t receive the same preferential treatment from lenders that doctors do. Therefore, you don’t automatically qualify for an LMI waiver or discount on your home loan as a nurse. Besides, only a few lenders offer nurse home loan discounts and consider 100% of a nurse’s income from overtime or a second job while calculating eligibility for a home loan.
Calling each lender individually to check what’s on offer is a time-consuming exercise, especially when you are time poor with most of your day dedicated to caring for your patients. A broker can help match you with the right lender offering competitive deals for your profession and select a loan with features that match your requirement. You can also expect help in filing your paperwork, which will eliminate any delays or rejection due to incomplete or incorrect documentation.
