Home loans for nurses

Typically people applying for home loans have to get LMI if their deposit is less than 20% the property value. Most of the big banks don't waive LMI for nurses, but some lenders, often health-sector mutual banks, waive or discount it, meaning you may be able to get a home loan with a smaller deposit without being slugged with the full LMI cost.

As a nurse, you can borrow up to:

• 80% of the property value (LVR) without LMI if you have a 20% deposit.
• 85% of the property value with significantly cheaper LMI, or a full waiver with some lenders.
• 90% of the property value by meeting lender conditions such as a 10% deposit, a good credit history, a record of timely repayments on your debts and a strong income while in stable employment.
• 95% of the property value requires meeting stricter lending criteria including all of the above, and have minimal debts. You need to also avoid unusual property types or remote locations to borrow up to 95% LVR.
• To borrow over 95% LVR. You may be able to borrow up to 105% LVR with a guarantor home loan. This means avoiding LMI premiums as well as a deposit.
• If you're a first home buyer, the government's 5% Deposit Scheme lets you buy with a 5% deposit and no LMI, which may suit you better than a lender's waiver.

LMI waivers are lender policies that change often, and the professions, deposit limits and conditions differ between lenders. Check the current policy with the lender or a mortgage broker before you rely on one.

Eligibility criteria

Whether you are eligible for special terms, concessions and discounts that generally apply to nursing and healthcare professionals depends on meeting the following criteria.

Qualifications

Categories of qualifying nurses include:

• Enrolled Nurse
• Midwife
• Nurse
• Nurse Educator and Researcher
• Nurse Manager
• Nurse practitioner
• Registered Nurse
• Student nurses may qualify with a few lenders

Professional affiliations

Some lenders may ask you to present proof of the following.

• Registration with the Nursing and Midwifery Board of Australia (NMBA) through AHPRA, the Australian Health Practitioner Regulation Agency.
• Membership of a nursing union or association, such as the Australian Nursing and Midwifery Federation, for some lenders.

Income eligibility

For most home loan applicants, lenders look at normal base salary (PAYG) in calculating borrowing capacity, and typically shade or ignore overtime, allowances and second job income. But some lenders recognise that, for nurses, overtime, fringe benefits and second incomes are common and part of the nature of the profession.

Here's how these lenders may calculate nurses' incomes for loan eligibility and borrowing capacity.

• Overtime. Typically, lenders only take 50-80% of overtime income from regular borrowers, which significantly reduces their borrowing power. However, as a nurse and essential worker some lenders accept your overtime income in full (100%). Make sure you work with a lender who understands that nurses work in shifts and are eligible for shift penalties.
• Fringe benefits. Many nurses, especially in public and not-for-profit hospitals, salary package part of their income, such as meal and entertainment benefits, as tax-free fringe benefits. Some nurses have their fringe benefits credited directly into their bank accounts. The funds may also be automatically deducted from your salary to pay off debts like car loans or mortgages. Often lenders consider your fringe benefits to be taxable income, effectively reducing how much you can borrow. You need to find a lender who would consider this as tax-free income.
• Income from a second job. Some lenders do consider a nurse's income from a second job when deciding on borrowing power. This is not the case for most borrowers. However, your second job needs to be in the same line of work.

So if your second job is in aged care or as a first aid trainer or assessor, that income would count with most of these lenders.

In general, what you might need depends on each lender.

You may qualify for a home loan even while on probation, but you may need to show proof of stable income when you apply for a home loan.