Tips for Nurses Buying Their First Home

Buying your first home is a huge milestone that comes with all sorts of emotions—nervousness, excitement, stress, or even all those things at once. Luckily for nurses, there are a number of loan options, grants, and different types of assistance programs that can help streamline the homebuying process and alleviate some of the common financial challenges nurses face when buying their first home. Let’s take a look at some of your options, so you can go through the homebuying process with confidence.

Are there homebuyer assistance programs for nurses?

Nurses can use certain homebuyer assistance programs to qualify for their first mortgage. While there are many resources marketed as “homebuyer programs for nurses,” some marketed programs may not actually offer special benefits specific to nurses. But as a first-time homebuyer there may also be homebuyer grants available through municipal entities, city or state agencies, and some nonprofit organizations.

Let’s take a look at some of the specific homebuying assistance programs available to nurses, including homebuyer grants for service workers and employer-assisted housing.

Homebuyer grants for service workers

Nurses can take advantage of homebuyer grants for service workers and government employees, such as Nurse Next Door and Homes for Heroes. These first-time homebuyer programs can help cover application and appraisal fees, as well as provide down payment options and interest rates.

Employer-assisted housing

Your employer may run employer-assisted housing (EAH) programs to help nurses live closer to work, cut down on travel time, and invest in their local communities through homeownership.

Through EAH programs, employers help with some of the cost of buying or renting. This can come in several forms, including grants for down payments, loans that are forgiven if you remain employed for a certain period of time, or education and counseling about the homebuying process.

Other first-time homebuyer assistance programs

Nurses can also tap into assistance programs that are available to all first-time homebuyers, regardless of their profession.

FHA, VA, and USDA mortgage loans

There are a few government loan programs for first-time homebuyers that nurses may qualify for, including:

• Federal Housing Administration (FHA) loans. FHA loans can help first-time homebuyers qualify for low down payments of up to 10%. Homebuyers with credit scores of 580 or above may qualify for a down payment as low as 3.5%.
• Veterans Affairs (VA) loans. VA loans are available to homebuyers who have served in the military. VA loan lenders typically require no down payment or mortgage insurance, and offer low interest rates and closing costs for veterans.
• S. Department of Agriculture (USDA) loans. USDA loans can help homebuyers of certain income limits in rural areas access loans with no down payment. They have no minimum credit score requirements, though a score of 640 or higher is preferred.

Down payment assistance programs

Down payment assistance programs can help first-time homebuyers cover their down payments and closing costs through grants or low-interest loans. These programs are commonly offered at the state, local, or regional level, but they’re only accepted by certain lenders. Be sure your mortgage lender accepts down payment assistance if you opt for one of these programs.

State first-time homebuyer programs

Most states run their own first-time homebuyer programs to help new borrowers fund their down payments and closing costs. Each state program is unique and may offer different rates, resources, and eligibility guidelines.

Let’s take a look at how your down payment can impact your mortgage. Use our down payment calculator below to estimate your monthly payment as you adjust your expected down payment amount.

Challenges for nurses when applying for a mortgage loan

Compared to other professionals, nurses may sometimes have a harder time explaining how their income is calculated and documented to a mortgage lender. Most nurses have to account for overtime, schedule changes, and variable shift pay. Travel nurses, in particular, might find it difficult to explain their employment history, especially if they work with several contracts and organizations within a year.

Working with a lender that understands that a nurse’s income can fluctuate, how to account for employment gaps, and how nurses can document their income can make this process much easier.

How nurses can prepare for a home mortgage application

New homebuyers can prepare for a mortgage application by having the appropriate documents and information ready.

If you’re hoping to use overtime to justify a larger mortgage, you may be asked to show a few years’ worth of income to demonstrate consistency. Most lenders will ask for a twelve to twenty-four months of pay history. This means having both pay stubs and W-2s ready.

However, even if you just started your first job out of nursing school, you can still use your base pay to qualify for a mortgage. Most lenders require you to be in a field for two years before you can qualify for a mortgage, but some lenders consider nursing school as part of your work history. This does mean a smaller mortgage than waiting two years and using your overtime pay to demonstrate actual income.

See how you can calculate your down payment options using our calculator here:

Existing debt, such as any remaining student loans can also impact a loan application. The easiest way to prepare is to calculate your debt-to-income ratio or DTI. This is the percentage of your gross (pre-tax) monthly income that goes toward debt.

For example, if you make $6,000 a month and your student loan payments are $1,200 a month, with no other debts, your DTI is 20%.

43% is usually the max for taking out a mortgage and most lenders prefer to keep DTI under 36%. To get an estimate of your DTI ratio, use our simple DTI calculator here.

Finally, knowing as much as you can about the area you want to live in can help. This can mean choosing a neighborhood within your budget, and a location that’s convenient to work and other nursing career opportunities. When it comes to buying your first home, there are many options as a nurse that can help your reach your homeowing goals.

To learn more about mortgage lending options with Laurel Road, click here.