Just because doctors get attractive home loan discounts doesn’t mean nurses are entitled to the same perks. While both applicants are from the medical industry, banks and lenders aren’t as flexible with nurses as they are with doctors.
Fortunately, there are lenders that offer special deals on nurse home loans.
Nurse home loans vs. doctor home loans
Nurses don’t get doctor home loan discounts. This is mainly because they aren’t considered as low risk and high pay customers as certain types of doctors.
However, if you can prove that you have stable employment with a strong and consistent income, you may be able to qualify for waived Lenders Mortgage Insurance (LMI). Banks generally charge LMI when you borrow more than 80% of the property value.
Aside from a higher loan amount and more flexibility offered to doctors who meet lender requirements, nurse home loans aren’t really that far apart.
How much can I borrow?
With nurse home loans, 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% are less strict and LMI is significantly cheaper. In some cases, some lenders may even waive the LMI premium. Lenders prefer those with a 15% deposit.
- 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. Typically, banks consider genuine savings as money held in a bank account for three months.
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.
How to qualify for waived LMI on nurse home loans
Most lenders consider nurse practitioners to be one of the lowest risk professionals. This is why you’re more likely to qualify for waived LMI.
If you have a 20% deposit, you can simply borrow 80% without having to pay LMI at all as long as it isn’t a low doc loan.
However, if you want to borrow over 80% then you’ll need to meet additional lenders requirements such as:
- 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.
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 various discounts. However, this doesn’t mean that nurses aren’t considered good clients.
As long as you can meet lender requirements, nurses too can get waived LMI 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.
Will lenders consider 100% of my overtime income?
Nurses may have unusual income structures that aren’t accepted by all banks. This is especially when considering overtime income.
Lenders don’t often consider overtime income when assessing a home loan application because the payments are generally irregular. Even if they do, they may only consider half of that income.
However, there are lenders that can consider 100% of the overtime income of nurses.
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.
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.