Do banks offer nurse home loan discounts?
Unfortunately, nurses don’t automatically get access to special doctor home loan discounts but, with some creativity, you can still get a great deal:
- Waived Lenders Mortgage Insurance (LMI) when borrowing up to 85% of the property value: You need to prove that you have stable employment with a strong and consistent income.
- Discounted interest rates: You generally need to be borrowing over $250,000, or applying for a professional package.
How much can I borrow?
You may be able to borrow up to:
- 80% of the property value: This is an ideal amount as you won’t need to pay LMI. However, you’ll need a 20% deposit. This means you’ll need a $100,000 deposit to borrow $500,000 at 80% Loan to Value Ratio (LVR).
- 85% of the property value: Unlike for higher LVR loans, the lending criteria for borrowing 85% is less strict and LMI is significantly cheaper or you can avoid it completely.
- 90% of the property value: You can borrow 90% LVR as long as you can meet certain lender requirements. This usually includes clean credit history, timely repayment of debts, 10% deposit and stable employment with a strong income.
- 95% of the property value: You’ll need to meet stricter bank criteria for a 95% home loan. To improve your chances, you must have a clean credit history, stable employment, good income, minimal debts and must not be buying an unusual property type or in a remote location.
- More than 95% LVR: With a guarantor home loan, you can borrow up to 105% of the property value. This way, you don’t need a deposit and can avoid paying an LMI premium as well.
For mortgages over 80% LVR, most lenders will need you to have at least 5% in genuine savings.
Will lenders consider 100% of my overtime income?
For regular borrowers, lenders will only consider 50-80% of your overtime income, which can significantly reduce your borrowing power.
Nurses, on the other hand, are essential services workers so some lenders will accept 100% of your overtime income.
Not all banks understand that nurses do shift work and earn shift penalties so lender choice is essential!
Most lenders will need you to provide:
- An employment letter confirming that you have been receiving overtime income regularly for the past one or two years, depending on the lender.
- Two of your most recent payslips.
- Your most recent group certificate.
What about fringe benefits?
Apart from assessing overtime income, many lenders make mistake when assessing fringe benefits.
In many cases, nurses receive a portion of their income in the form of fringe benefits, which is non-taxable income.
This income is typically credited directly into your bank account or the funds are automatically deducted from your pay to pay off a debt, such as a mortgage or a car loan.
The common mistake that lenders make is including fringe benefits as taxable income, which can greatly reduce the amount you’re eligible to borrow.
Luckily, there are some lenders that consider this income as tax-free income.
Will banks consider second job income?
Yes! Some banks recognise that most essential services workers do shift work and have a second job to supplement their income.
- The second job needs to be in the same line of work, so working as an aged care worker or a first aid trainer/assessor on the side will typically be acceptable.
- Your income may be shaded by between 50-80%.
- Some lenders will accept 100% of your income if you can show that you have a 6-12 month work history with your second employer and have been earning a regular income.
- Some lenders will consider less than 3 months work history if you’re in a strong financial position with a clear credit history.
Can I avoid the cost of LMI because I’m a nurse?
Lenders won’t automatically offer you waived LMI because you’re a nurse.
However, because you work in a low risk profession, you’re more likely to qualify for 85% no LMI, which is waived LMI when borrowing up to 85% of the property value.
You’ll need to meet additional lenders requirements:
- You must not be borrowing more than 85% LVR.
- The maximum loan size is $1,500,000.
- Your credit file is free of any bad credit records.
- You have a strong income. Lenders prefer borrowers with an annual income of over $150,000.
- You have stable employment.
- You’re buying a property. However, some lenders may accept refinances to purchase a property.
What if I don’t meet the above criteria?
If you currently have a 15% deposit, saving a little more to get to 20% is another option for you to avoid LMI completely.
The only exception is if you’re borrowing at 80% with a low doc loan.
Our mortgage brokers are specialists in nurse home loans. They know which lenders offer these discounts to nurses and which lenders are more conservative with their requirements.
You can call us on 1300 889 743 or fill in our free online assessment form to find out what offers are available for your situation.
Are first home buyer discounts available?
If you’re a first home buyer, you can get a discount of up to 15% on your LMI premium with select mortgage insurance companies.
You won’t get the discount if your lender doesn’t deal with these specific LMI providers.
Please note that in most cases, you must not be borrowing more than $600,000. Also, if your deposit is from a borrowed source then you won’t qualify.
Luckily, you can use the First Home Owners Grant (FHOG) as your deposit. However, it may not be enough on its own.
If you’re unsure about whether or not you qualify for the grant, you can find out in the FHOG website.
How can I reduce my LMI premium?
If you don’t qualify for waived LMI, you can still reduce your premium to a more reasonable amount.
To avoid a high LMI premium, you’ll need to consider:
- The loan size: For a larger loan size, you’ll have to pay higher mortgage insurance costs. Generally, for a loan size of up to $300,000, LMI will be much cheaper. Larger loan sizes of up to $500,000 will have moderate LMI. If you’re borrowing over $500,000 then LMI will be very expensive. So if you’re borrowing $300,001, you can immediately save as much as $800 by borrowing just $1 less.
- The LVR of the mortgage: Like the loan size, you’ll have to pay more LMI on a higher LVR mortgage. It should be noted that when you borrow even $1 over 90% or 95%, there will be a significant increase in the amount of LMI you’ll have to pay. By reducing your loan amount just a little bit, you can easily save over a thousand dollars or so.
- The lender and mortgage insurer: Policies related to LMI premium differ from lender to lender. Even mortgage insurers don’t all have the same mortgage insurance rates. This is because they price their premiums according to their personal view of different loan types, loan amounts and types of borrowers.
We know which lenders and mortgage insurers offer the cheapest LMI premiums. Please complete our free online assessment form or call us on 1300 889 743 to speak with one of our specialist mortgage brokers.
How can my deposit source change my LMI premium?
The source of your deposit can change your LMI premium. Here’s how:
- If you have at least 5% in genuine savings, you’re eligible for standard LMI rates.
- If you can’t show that you have genuine savings then you may need to pay a higher mortgage insurance premium.
- You’ll likely have to pay an even higher LMI if you don’t have genuine savings and you have a borrowed deposit such as a personal loan or loan from parents.
Please note that different lenders have different policies regarding this. Some may have a set of premiums that apply to all borrowers while others may consider it depending on various factors.
Nurse home loans FAQs
Why don’t nurses qualify for doctor home loan discounts?
The main reason why nurse home loans don’t offer doctor home loan discounts is because of the way lenders view doctors.
Although they’re both technically in the same industry and are considered low risk professions, doctors are considered highly profitable clients by lenders.
This is mainly because, statistically, they have one of the lowest default rates of any profession.
Lenders are fighting to get these clients so they offer incredible discounts. However, this doesn’t mean that nurses aren’t considered good clients.
As long as you can present a strong, nurses too can get waived LMI (usually when borrowing no more than 85% of the property value) and discounted interest rates.
Can I get a home loan if I’m on probation?
Although it may be a bit difficult, you can get a home loan even if you’re on probation.
You may be able to borrow up to 95% of the property value as long as you meet all other standard bank lending criteria. This includes having a clean credit history.
Since lenders prefer clients with stable employment, some may be more conservative in their lending criteria.
It’s recommended that you apply for a home loan only if you’re certain that your employment is stable.
How much deposit do I need?
If you’re buying a home, you’ll need to have at least 5% of the purchase price of the house as a deposit.
This means that for a $400,000 purchase, you’ll need a deposit of at least $20,000.
Aside from that, you may need an additional 5% of the purchase price to cover your purchasing costs. These mainly include government fees such as stamp duty and other costs like conveyancing fees and LMI.
The purchasing costs calculator can give you a reliable estimate of the costs of buying a property.
Applying with the right lender is key!
Even if you’ve received overtime income for just three months, we may be able to help you find a lender that can consider 100% of this income.
Please call us on 1300 889 743 or complete our free online assessment form and we can help you apply with the right lender.