Are there home loans for nurses?
You bet! There are quite a few special home loans for nurses.
On top of that, there are many local and national programs that can provide financial help with your down payment and closing costs – especially if you’re a first–time home buyer.
However, just because you’re a nurse, doesn’t mean a specialized ‘nurse home loan’ is best. You might find you can buy a home more easily with a standard mortgage program. So do your research and choose carefully.
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The 6 best home loans for nurses
We recommend six mortgage programs for nurses to explore. Two are specialized home loans for nurses, and four are ‘standard’ loan programs that just about anyone can apply for.
You might find that, even though special perks are available to nurses, one of these mainstream programs will end up being your best option.
To give a quick overview, the 6 best home loans for nurses are:
- Nurse Next Door program
- Homes for Heroes
- Conventional mortgages
- FHA mortgages
- VA mortgages
- USDA mortgages
Let’s dig into each program in a little more detail.
Specialized home loans for nurses
Here are the two most famous home loans for nurses that operate nationwide.
Nurse Next Door
The Nurse Next Door program is not a ‘true’ mortgage loan program. It does not lend money or originate loans. Rather, it’s a home buyer assistance program that will help match you with the right property, mortgage, and aid program for your needs (if required).
Via Nurse Next Door, you can get grants of up to $6,000 (where available) and down payment assistance of up to $10,681. You may also get reduced closing costs through the elimination of a home appraisal and other fees.
Before you use this program, though, check that you can’t get more generous grants or loans from your state or local down payment assistance program.
Homes for Heroes: Healthcare Professionals
Homes for Heroes is another nationwide homeowner assistance program that aims to make home buying more affordable for firefighters, law enforcement, teachers, military, and – yes – medical professionals.
The website says, “On average heroes save $2,400 when they buy or sell a home with Homes for Heroes. When a hero works with our real estate specialist, on average they will save $1,700. When a hero works with our mortgage, title and inspection specialists, on average that hero will save $500 on lender fees, $150 on title service, and $50 on a home inspection.”
Note that you have to use professionals recommended by Homes for Heroes in order to benefit. Again, check other local programs to make sure this is the best option for you before you buy.
Standard home loans for nurses
If you’re looking for home buying assistance – or simply an affordable loan option – you don’t have to use a mortgage program tailored to nurses.
In fact, some of the most affordable types of home loans are widely available across the market. These include:
- Conventional conforming loans – Conventional mortgages aren’t backed by the government. But most conform to the rules laid down by Fannie Mae and Freddie Mac, which are two government–sponsored enterprises. You’ll need a down payment of at least 3% of the purchase price and a credit score of 620 or better
- FHA loans – If your credit score is between 580 and 620, you could opt for a mortgage backed by the Federal Housing Administration (an FHA loan). You’ll need a 3.5% down payment. But go with a conforming loan if you can. Because with those you can escape mortgage insurance costs more easily and cheaply
- VA loans – Backed by the Department of Veterans Affairs, these loans are open only to those who have served or are still serving in the military. If you’re eligible, this is highly likely to be your best bet. Lenders set their own credit score thresholds, usually between 580 and 660. But you need no down payment. And you’ll be in line for an ultra–low rate, no private mortgage insurance, and low closing costs
- USDA loans – Mortgages backed by the US Department of Agriculture (USDA). These, too, require no down payment. But you’ll likely need a score of 640 or better. You must also meet household income limits and buy a home in a designated rural area. Some suburbs are included. Use the USDA’s maps to find whether the place where you want to buy is eligible
These loan types can typically be used with down payment assistance (DPA) programs, which could help cover your down payment and potentially your closing costs, too.
All states, as well as many cities and counties, offer DPA programs for first–time buyers. With these, you typically have to choose from a shortlist of approved lenders. And some of them offer special privileges to nurses and other essential workers.
Sometimes, mortgage lenders brand their offerings as especially for nurses. And these can deliver real benefits. But it’s likely their loan products are based on one or more of the four programs above.
Loan options from private lenders
Some private mortgage lenders offer reduced closing costs or other perks for nurses.
For example, Homes for Champions (RealFi Home Funding Corp.) says that its offering for nurses and doctors can save you “up to 2.00% to 3.00%” by eliminating many fees normally due on closing. But this company is a licensed direct lender in only 13 states, plus Washington DC: CT, DC, DE, FL, GA, MD, NC, NJ, NY, PA, SC, TX, and VA.
Other companies or organizations also offer help to homebuyers who are nurses.
One such program is the Everyday Hero Housing Housing Assistance Fund. It seems that it refunds to you seller concessions negotiated by specialist real estate agents. You wouldn’t be alone in assuming that’s a scam, it has an A+ rating with the Better Business Bureau. So it may be worth checking out. Just remember that seller concessions are hard to obtain in sellers’ markets, which most are at the time of writing.
Meanwhile, Nurse Home Loan Programs says its goal is “to educate and connect our Nurses with the best home loan solutions for them all over the country.”
It might be worth talking to one of the company’s specialists if your applications are getting rejected. Because that does sometimes happen with lenders that don’t understand nurses’ special working conditions, such as overtime and differential income – or that struggle to grasp the challenges of high student debt and travel nurses’ seemingly chaotic employment records. (More on those and similar challenges below.)
Home loan grants for nurses
We’ve already mentioned grants and loans that can help you top up your savings for a down payment and closing costs. Lenders are generally cool with these. And, in some places, you can get assistance running into the tens of thousands of dollars.
There are thousands of these down payment assistance programs (DPAs) across the country. Each state has at least one. And many cities and counties have their own.
To find one that covers the area where you want to buy, read this article or check out your state’s page on the Department of Housing and Urban Development (HUD) website.
Note that each DPA sets its own eligibility requirements, as well as caps on the amount of money it will grant or lend you. So you’ll have to do a bit of research to find what you could be in line for and whether you qualify.
But the rewards of doing so can be exceptionally valuable. And some DPAs provide preferential treatment for nurses.
How to overcome home buying challenges as a nurse
Qualifying for a mortgage as a nurse can sometimes present challenges.
Lenders need to verify your income, but not all of them understand how nursing works. And you may have to explain to them why the way your job is structured makes nurses a special case.
Nursing income for mortgages
Of course, your basic pay should count toward your qualifying income when you’re applying for a mortgage. But it can become more complicated when it comes to overtime, shift differentials, and “extra” pay.
With those, lenders are likely to look back over the last couple of years to see your average gross pay. If you recently had a schedule change or took on more hours, that might not count toward your income right away.
For example, if you’ve only just started earning the higher hourly rate for night shifts, lenders are unlikely to take that into account when deciding how much you can borrow. It might help if you can get your employer to write the lender verifying this will be a long–term arrangement.
You can also write an explanatory letter with your application telling the lender why you think it should take into account more of your income. And that sometimes works. But not always.
Travel nurses sometimes have to seek out lenders that understand their work.
You know that you can hop from contract to contract and agency to agency and never skip a beat, except when you choose to take a vacation. But, to a lender, your employment record looks patchy and might suggest you can’t hold down a job.
Again, you can explain to lenders how your employment works. And, if one won’t listen, move on to others that will.
As higher nursing qualifications become more valuable, many nurses take on high levels of student debt. And that can affect your home buying budget because of something called your debt–to income ratio (DTI).
Lenders worry about borrowers being able to comfortably afford their mortgage payments and other homeownership costs if they have too many other debts. And student loans can compound that debt burden.
There are ways to drive down your DTI, including paying off big monthly debts with small balances. For example, if your auto loan payments are high, but you’ve nearly paid it off, get rid of it before applying for your mortgage.
Nurse.org has an excellent article that goes into more detail about applying for a mortgage as a nurse. And it covers most of what we’ve said and more. You can learn more here.
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How to choose the right home loan program
Of course, there’s no single best home purchase loan for nurses. That will depend on your personal circumstances.
If you are serving – or have previously served – in the military (as a nurse or not), a VA loan is highly likely to suit you best.
If you’ve never served, but have good credit and a decent down payment, a conventional loan is often the next best. But, if your credit score is in the 580–619 range, you might need to go for an FHA loan.
Finally, USDA loans can perfectly suit someone with small savings and buying in a rural area, providing their household income isn’t too high.
Just from that brief summary, you probably already have an idea of the type of loan that might suit you best. There are links to full descriptions of each in the bullet points where they’re listed, above.
What are today’s mortgage rates?
Nurses can often find especially good deals when they take advantage of healthcare–oriented mortgage and assistance programs.
But don’t stop at finding the right loan program. You should also shop around for the best mortgage lender.
You’re likely to be offered different mortgage rates and closing costs by each lender to which you apply. So get quotes from several and pick the one with the best deal for you.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.