Nurses: How to get over the mortgage approval hurdle


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There are a lot of benefits to being a nurse: You get to do meaningful work, you’ll find ample job security and flexibility — plus, you’ll automatically get high salary opportunities. The mean hourly wage for a registered nurse is $35.36, according to U.S. News and World Report

But sometimes, that flexibility can cost you. In other words, traditional and travel nurses sometimes have a difficult time getting approved for a mortgage

Lenders often have a hard time lending to nurses because of their more complex financial situation. Nurses can’t always prove full-time income and job histories free of employer shifts. Many nurses look “unstable” on paper: Lenders may only be able to see employment gaps, overtime, night shift differentials and more instead of regular, steady income. 

Travel nurses frequently have even more trouble getting a loan. A list of red flags for lenders includes constantly changing employers, employment gaps, overtime and student loans. 

Getting a mortgage as a staff nurse

Staff nurses who have a consistent paycheck shouldn’t have as much trouble getting a mortgage, with one caveat: You can use your base pay to get a mortgage, but this base doesn’t show all the income you might make, since one-third of surveyed nurses work past their scheduled work shift — which is commonly 12 hours, according to a new study from researchers at New York University (NYU) Rory Meyers College of Nursing. 

Because a nurse’s pay can be broken out into many different types of pay, such as overtime, shift differential and more, a lender’s ability to use all of their income will depend on how long they have been on the job,” says Tammi Lindley, a senior loan officer at Mortgage Express. “For a full-time nurse, all of the base pay is considered, but the various other types of pay can only be included if the nurse has a two-year history of receiving this type of pay.”

Lenders may or may not take more than your base pay into consideration when they determine how large of a mortgage you can qualify for. In other words, they calculate overtime pay differently than they calculate base pay. 

Lenders also might not use night shift differential pay when they calculate how much you can get for a mortgage — but they might. A night shift differential refers to a nurse’s pay for work that’s performed as regularly scheduled non-overtime hours between 3 p.m. and 8 a.m. It is computed as a percentage of the employee’s rate of pay. In other words, a night shift differential means that a nurse will get paid more for working nights.

A mortgage lender will typically view night shift differential pay the same as it does overtime and bonuses in other occupations. The lender will want to see 12 to 24 months of history to consider the income for qualification purposes. Here are the steps you can take to calculate your total pay, including night and differential, if you’ve had 2 years under your belt:

Step 1: Calculate your current base pay and your guaranteed number of hours that you’ll work per week. Let’s say your current base pay is $35 per hour and you work a guaranteed 40 hours per week every year: 

$35 x 40 x 52 weeks / 12 months = $6,066 per month

Step 2: Calculate your night differential as a two-year total. Let’s say you work a total of 500 hours at $8 per hour: 

$8 x 500 / 24 months = $166 per month

Step 3: Calculate your overtime as a two-year total. Let’s say you work a total of 300 hours extra over the course of two years at $45 per hour.

$45 x 300 / 24 = $562.50 per month

Getting a mortgage as a travel nurse

Travel nurses may be seen as even less desirable by lenders because of unstable income. Of course, this depends on where you travel for work and any employment gaps that might pertain to your particular situation. However, there are ways that travel nurses can get around these hurdles and get a mortgage. 

Employment gaps

You might look like a job hopper if you’re a nurse — particularly if you’re a travel nurse. Your contracts may be short, you may jump from agency to agency or work per diem. Per diem refers to work that you do as a nurse on a day-to-day basis. 

Traveling for a period of time, changing employers or only work per diem? There are ways you can explain what looks like employment gaps in your work history. 

  • Simply request a letter from your employer which explains how your shift differentials and overtime are likely to continue or have an agency complete an employment verification for your past work.
  • You can also write a letter explaining the nature of your work to your lender.
  • Show a two-year history of employment. If you have been a travel nurse for less than two years but you have been a travel nurse for one year, your previous staff RN experience might help. 
  • Keep your pay stubs, W-2s and agency contact info, pay statements and year-end documentation from each agency you’ve worked for. 

“Providing as many pay stubs to your lender as possible will be helpful in calculating qualifying income,” Lindley says. “In many cases, providing the last pay stubs of the year for the previous two years will give a true breakdown of all pay types, giving the nurse a better chance of including all the ‘extra’ pay.”

Having trouble getting a mortgage? Consider sticking with one travel nursing agency and get two years of travel under your belt.

Investing for the long-term: Why home-buying is a good idea for travel nurses 

Many nurses struggle with their finances, according to Minority Nurse. It may be particularly important for travel nurses to consider the financial implications of investing in a home, even though you may not be there often. There are several reasons a home can be a worthwhile long-term investment. You’ll build equity over time, interest is deductible from taxes, you can gain control over your living space, stabilize your housing costs and more.

Understand your salary and benefits package

You can make a lot of money as a nurse, but it’s also important to consider the structure of your pay and what it means for your finances and home purchase. What does the differential for nights and weekends mean — and how will that affect your overall pay? Will you get a raise? How does the traveling factor in, and how do overtime and bonus shifts work into the picture? Understanding all of these factors can help you determine how much you can set aside for a home, how much of a loan you’ll qualify for and how much it’ll take to make mortgage payments for 30 years — the most common loan term in the United States.

Consider your financial priorities

Decide what your long-term financial plans are. Will you continue as a nurse for the duration of your career or take a hiatus from nursing when your kids are young, for example? Determine how you’ll be able to pay for a mortgage over the long term. 

Be choosy about when you buy a home

Even well-paid nurses worry or work overtime to manage bills and payments for large purchases or ongoing financial commitments, according to Minority Nurse. Determine when the best time will be to purchase your home. 

Logistically, it might not make sense to get a mortgage if you’re a travel nurse who can’t even spend a lot of time in your home due to work schedules. Primary residences require that you move into a home 60 days after closing, so be sure you’re able to move in on or before that date. You could also consider getting a roommate or setting your home up on a short-term rental site like VRBO or Airbnb. You could also get creative and collaborate with a community of travel nurses by taking turns staying in each other’s homes as you travel to each others’ cities for work.

New grads planning for a mortgage 

Have you just graduated from nursing school and are ready to get a jump on home ownership? When you buy a house out fresh out of school and you have no other assets, two options are a possibility:

  • You can use your base pay to purchase an older or smaller home that may be cheaper.
  • You could also wait until you qualify to use your additional pay to afford a larger home. 

Lenders can consider your base pay right away since your education counts as work history, even though lenders require two years of work history to consider you for a mortgage. School is included in this mix and it can include overtime and shift differential pay. 

Prep for retirement and save for a mortgage at the same time

One of the most important things you can do when you first start your career is to start saving for retirement and for a down payment as soon as you get your first paycheck. Start saving as soon as start your first job. A good rule of thumb is to save one hour of your paycheck every day into your employer-sponsored retirement account. 

Are you 20 years into your career and haven’t saved yet? That’s okay. Just get started saving as much as you can. Remember, you’ll likely have the salary to make that happen.

Assistance programs

Here are some assistance programs you can consider if you want to buy a home but are concerned that your pay or employment gaps will prevent you from getting a mortgage.

Nurse Next Door Grants: Housing Grants of up to $6,000 are available to medical professionals, including nurses, medical staff and doctors. Depending on availability, you can get a $1,000 minimum grant to be used toward a new home purchase. You could also be eligible for down payment assistance of up to $10,681.

Everyday Hero Housing Assistance Fund: The Everyday Hero Housing Assistance Fund (EHHAF) helps everyday community heroes like police, firefighters, teachers, social workers and medical professionals, including nurses, with gift funds to help cover closing costs when you purchase a home. 

Homes for Heroes: Homes for Heroes is the nation’s largest network of real estate, mortgage and local specialists that can help nurses with home buying, selling or refinancing and help you save you money in the process. Homes for Heroes helps firefighters, EMS, law enforcement, military, health care professionals and teachers.

Mortgages for Champions: Mortgages for Champions offers home loans to doctors and nurses. You can get a home loan that eliminates out-of-pocket costs, including the loan application fee, loan processing fee, mortgage underwriting fee, mortgage commitment fee and commitment points.

FHA loans: FHA loans aren’t specifically for nurses but an offer some specific advantages. An FHA loan is insured by the Federal Housing Administration. If you default on your loan, the FHA will cover your lender’s loss. Do you have a low credit score, the three-digit number that tells lenders how well you pay back debt? Will you have a hard time coming up with a down payment, have low-to-moderate income or a shaky past financial history? An FHA loan can be a great option if you’re not making a lot of money at the beginning of your career.

USDA loans: Do you plan to or already live in a rural area? A USDA loan could be a good fit for you. The U.S. Department of Agriculture backs these loans, which means it’s insured by the federal government, just like an FHA loan. You’ll have to meet income qualifications, live in a designated rural area and your adjusted gross income can’t be more than 115% of the median income in the area in which you plan to live. Your credit score must also be at least 640.