Do banks offer nurse home loan discounts?
Although special discounts for doctor home loans may not be readily available to nurses, there are still options for them to secure favorable deals.
- You could potentially steer clear of incurring Lenders Mortgage Insurance (LMI) fees if you possess a dependable and consistent source of income, thereby allowing you to borrow up to 85% of the property's value.
- Discounted interest rates: You generally need to borrow over $250,000 or apply for a professional package.
Waived LMI For Nurses
Lenders are offering waived LMI on a 90% home loan for nurses.
To qualify for no LMI on a 90% home loan:
- You must buy a residential property (Only Category 1 and 2 locations are accepted)
- You need a minimum of $5,000 in genuine savings over six months. Rent paid via lease agreement is accepted as real savings.
- One lender has a minimum income requirement of $90,000, while another lender does not have a minimum income requirement.
- You do not require a university degree.
- The maximum loan amount is $1.35 million for metro locations and $1 million for non-metro locations.
- Either applicant can be a nurse to qualify for waived LMI.
Here's how much you save on LMI fees:
|PropertyValue||Loan Amount||LVR||LMI Premium Saved*|
*The LMI calculator of our team of professionals for home loans displays the expenses for acquiring LMI for a new primary residence located in New South Wales.
Do I Qualify for An LMI Waiver?
You qualify for a nurse home loan deal if you are working in the following capacities:
- Registered Nurse
- Nurse Educator and Researcher
- Nurse Manager
- Enrolled Nurse
- Nursing Support and Personal Care Workers
Midwives Eligible For LMI Waivers Now
Midwives qualify for an LMI waiver if their annual income is over $90,000. Lenders do not differentiate between nurses and midwives while assessing a loan.
We know lenders that will accept 100% of your overtime.
Previously, midwives were considered relatively high-risk customers and were not eligible for benefits that other medical professionals would receive.
How much can I borrow?
You may be able to borrow up to:
80% of the property value:
This is an ideal Value Ratio (LVR) in some ways, as you won't need to pay LMI. You'll need a 20% deposit; for example, if you are buying a $500,000 home, you'll need a $100,000 deposit to borrow $400,000.
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 altogether.
90% of the property value:
You can borrow at 90% LVR as long as you meet certain strict lender requirements. This usually includes having a clean credit history, timely repayment of debts, and stable employment with a strong income.
95% of the property value:
You'll need to qualify based on even more strict lender criteria for a 95% home loan. To improve your chances, you must have a clean credit history, stable employment, good income, and minimal debts and must not be purchasing an unusual property type or one 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.
You can go through the bank lending criteria page for more information or get an estimate using our borrowing power calculator.
Lastly, if you're earning a high income and have been working in the same industry for over three years, you may be eligible for a 100% home loan with no LMI and no guarantor. The lending criteria are strict, and the interest rates are higher on these home loans, so they are not suitable for everyone.
Will lenders consider 100% of my overtime income?
For most borrowers, lenders will consider only 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 mistakes 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 earnings 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 tax-free.
Will banks consider second job income?
Certain banks recognize that individuals working in essential services frequently have varying work schedules and may have a supplementary job to increase their earnings:
- It's recommended that your second job be within the same field of work. For example, taking on a role as a caregiver for the elderly or a teacher of first aid courses would generally be considered appropriate.
- Your income may be shaded by between 50-80%.
- If you have been earning consistently with your second employer for 6-12 months, certain lenders may take your entire income into account.
- Some lenders will consider less than three months of 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 lender's 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?
Saving an additional 5% on top of a 15% deposit can prevent the need for LMI.
The only exception is if you're borrowing at 80% with a low-doc loan.
Our area of expertise is to offer home loans exclusively to nurses. They have knowledge of lenders that provide reduced rates for nurses and individuals with more stringent criteria.
Are first-home buyer discounts available?
As a newcomer to the real estate market, you might be able to receive a reduction of as much as 15% on your LMI premium by partnering with certain mortgage insurance providers.
You won't get the discount if your lender doesn't deal with these specific LMI providers.
It's important to keep in mind that the maximum borrowing amount is typically capped at $600,000, and if your deposit originates from a borrowed source, you may not meet the eligibility requirements.
Fortunately, relying solely on the First Home Owners Grant (FHOG) as a deposit may not suffice.
If you're unsure about whether or not you qualify for the grant, you can find it on 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 premiums 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.
How can my deposit source change my LMI premium?
The standard LMI product of almost all mortgage insurers typically targets people who can show that they have a saved deposit. However, some lenders may also offer no genuine savings solutions.
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 your 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.
Frequently Asked Questions (FAQs)
1. 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.
2. 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.
3. How much deposit do I need?
When purchasing a house, it is necessary to have a deposit of no less than 5% of the total cost. To illustrate, a home valued at $400,000 would mandate a deposit of no less than $20,000.
In addition to the price of the property, it's important to factor in additional costs that may amount to 5% of the purchase price. These expenses include government fees like stamp duty, as well as conveyancing fees and LMI. To get a precise estimate of the total expenses involved in buying a property, you can use a purchasing costs calculator.
However, if you don't have a sufficient deposit, there are low deposit as well as no deposit home loan solutions.
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 contact us, and we can help you apply with the right lender.
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