When it comes to approving a mortgage, lenders look for low-risk borrowers that provide a regular work schedule and regular source of income. Unfortunately, travel nurses, and nurses in general, don’t always fit into the simple box that lenders look for. When it comes to getting a mortgage as a traveling nurse, it can involve much more work and preparation, but it is possible to overcome these obstacles and receive the mortgage you are looking for.
Here we explore the challenges travel nurses face, how to overcome these obstacles, and how to secure your home mortgage. We explore potential challenges and steps to overcome them, offer tips to help you prepare for the lending process, and identify programs designed to help travel nurses purchase the home of their dreams.
As a travel nurse, you work to take care of patients around the country. When you decide that you are ready to purchase a home, these mortgage programs for nurses are a way to thank you for the work you do to keep communities safe and healthy.
Is it hard to get a house as a travel nurse?
In general, lenders look for borrowers with a regular stream of income and a traditional 9 to 5 job that they understand. Unfortunately, while travel nurses don’t usually have a shortage of income coming in, they do not always follow the traditional norms, and they definitely don’t work the traditional 9 to 5. Add on the fact that a good portion of their income is not taxable and does not reflect on a w-2, and they often have gaps between periods of employment contracts, and a traveling nurse doesn’t always look good to a lender on paper.
However, obtaining a mortgage as a travel nurse is not impossible. It will, however, likely take additional work on your part to help the lender better understand your non-traditional income.
What challenges do travel nurses face?
Whether a lender has told you that you lack a stable income or a consistent employment history, or you have heard from other traveling nurses that buying a home is impossible, the fact is, as a travel nurse looking to purchase a home, you will have obstacles that you need to overcome. Here we take a closer look at some of the obstacles you may face.
1. Variable income
As a travel nurse, your income varies based on your specific contracts and location. Time off between contracts creates gaps in the income coming in. Travel nursing can also be seasonal. For instance, a travel nurse may receive more income for working in the midwestern states during the winter months when no one else wants to travel through the snow and less for a position in Hawaii where everyone wants to come and enjoy the state while they work.
How to overcome
Variable income is something that lenders see with a variety of different professions, such as construction or agriculture. In order to overcome these differences, your employment history makes all the difference. Ideally, you want at least two years of stable income history that shows the lender that, while your work may be seasonal in nature, you have a steady stream of income. Keep thorough records of contracts, pay stubs, and W2s in order to provide these items to the lender.
2. Taxable and non-taxable income
Travel nurses typically receive taxable and non-taxable income as part of their employment. Non-taxable income, or per diem, is the pay you receive for things like housing, travel, meals, and incidentals while you are working at a location away from home. This income is not taxable and, in some cases, makes up a large portion of a nurse’s paycheck. However, when it comes to taxes, this income is not included. This means your tax records will report a lower income when you present them to a lender.
How to overcome
In most cases, lenders use tax returns to verify your income and stable income history. Because the income is not taxable, some underwriters may choose not to include it in your income total, meaning you may not show enough income to qualify for a mortgage. One way around this is to consider asking for housing stipends instead. If the per diem income is listed as a housing stipend, Fannie Mae states that it can be used as qualifying income as long as you can show a regular history of stipends with your contracts.
3. Employment gaps
Employment gaps are common for travel nurses. Whether you work six months straight and take a month off to relax before your new contract or if you have multiple weeks off in between contracts, the mortgage lender sees these times off from working as a gap in employment.
How to overcome
The best way to overcome employment gaps when applying for a mortgage is to provide a job history of at least 12 months. However, 24 months is recommended. A thorough job history shows that gaps are not uncommon. The lender will then also average your income to include these gaps and changes in pay rates. Providing your lender with a detailed letter of explanation also helps them understand the nature of how travel nursing works and why these gaps in employment are common.
4. Unstable employment
As a travel nurse, it is not uncommon to work a 13-week contract and then move on to another location or agency. While, in your eyes, you have stable and regular employment, on paper, it appears to a loan officer that your employment is unstable and you are constantly changing jobs. Unfortunately, this is often the last thing lenders want to see because it paints a negative picture of income stability.
How to overcome
The good news is there are things you can do to make you appear more stable to a lender. As we have mentioned, establishing a solid work history of at least two years is important. This allows the lender to create a yearly average of your income. In addition, be ready to provide copies of contracts, pay stubs, and W2s. You should also include a letter of explanation that explains that you are a travel nurse in an industry with high demand and how these travel contracts work.
Mortgage tips for travel nurses
Before you start looking for your new home, it is important to take some steps that will help make the mortgage application and home-buying process much easier.
Tip #1 Establish a travel nursing history
If you have just started out as a travel nurse, now is not the time to think about buying a home. Ideally, you need to have at least two years of experience as a travel nurse in order to show that, despite employment gaps and irregular income on paper, you still provide the stability that mortgage lenders are looking for.
Tip #2 Create a thorough explanation letter
Travel nursing is a non-conventional source of employment that mortgage lenders don’t always understand. Unfortunately, on paper, you may not look like an ideal mortgage candidate. Creating a detailed letter of explanation that explains what a travel nurse is and how contracts typically work will help explain employment gaps as well as changes in income and listed employers.
Tip #3 Highlight your financial responsibility
A mortgage lender’s ultimate goal is to find a borrower that presents with financial responsibility and the ability to make regular mortgage payments. When it comes to travel nursing, this will likely mean explaining both your taxed and non-taxed income, how travel stipends work, and the financial steps you take to make this work.
Tip #4 Take time to research loan requirements
Before you consider applying for a home mortgage it is important to understand all the necessary requirements. It is important to conduct thorough research that answers some of these questions.
- What types of mortgage loans are available?
- What type of home are you looking for?
- What are your current financial assets?
- How much current debt do you hold?
- What is your current debt-to-income ratio?
- Do you know your credit score?
Tip #5 Explore first-time buyer and nursing program benefits available
When looking for a home loan, it is important to see what special loan benefits and programs you may qualify for. For example, many lenders offer first-time homebuyers benefits such as lower interest rates or discounts on closing costs. As a nurse, you may also be eligible for specific programs and grants designed for nurses, such as the Nurses Next Door program. Knowing what programs may be available to you can help when it comes to choosing a mortgage lender.
Special housing programs for travel nurses
When you are thinking about purchasing a home, knowing what programs are available can save you hundreds to thousands of dollars when it comes to your loan and monthly payment. This is especially true for nurses as there are many different opportunities geared toward those in the medical profession. Here we take a closer look at your mortgage loan options.
1. Special Home Programs
Special home programs, such as Hero Home Programs, the Nurse Next Door program, and the Home for Heroes program, offer many different benefits to nurses looking to purchase a home. These benefits can include everything from waived fees and discounted rates to grants that cover closing costs and have no repayment requirements. Researching these programs and finding ones you qualify for can help you save thousands of dollars when you purchase your home. When you qualify for these programs, it is important to find a lender that works with them.
2. Conventional loans
Known as conforming loans, conventional mortgages follow the rules and requirements set forth by Fannie Mae and Freddie Mac. First-time homebuyers can purchase a home with as little as 3% down. However, homes with less than 20% down require private mortgage insurance (PMI). A conventional loan is best for borrowers with a good credit score.
3. Government-backed loans
Government-backed loans are mortgages that are backed by a federal agency. These include FHA loans (backed by the Federal Housing Administration), USDA loans (backed by the US Department of Agriculture), and VA loans (backed by the Department of Veterans Affairs). Each one of these loan types has specific requirements that can include income limits, home location requirements, or military service.
To learn more about home loan options for nurses, read Home Loans for Nurses: What You Need to Know?
Buying a home as a travel nurse is possible
Just because you have a non-traditional career and do not follow the standard 9 to 5 employment record, it doesn’t mean you can’t purchase a home. As a travel nurse with gaps in employment and non-traditional income, you will have to provide additional information to a mortgage lender and be prepared to provide more in-depth proof of your income and employment. However, with the help of specific nursing programs, you can qualify for a home mortgage, often with special discounts and benefits from programs designed to help those in the medical field.
Helping you qualify for the home of your dreams
At Hero Home Programs, we understand how overwhelming the home-buying process can be, especially when you don’t quite fit into the traditional box mortgage lenders look for. Our team of home-buying professionals helps walk you through the steps you need to take, as well as look for all the special programs you may qualify for as a nurse. Contact Hero Home Programs today to learn more about how we can help.