How to get a mortgage for travel nurses
When applying for mortgages for travel nurses, factors like overtime, night shift differentials, and employment gaps can present unique challenges to lenders accustomed to more traditional employment patterns.
However, while traditional lenders may prefer “inside-the-box applicants” with consistent 9-to-5 jobs and uniform monthly incomes, the dynamic and varied professional life of a travel nurse is increasingly recognized in the mortgage industry.
Despite these hurdles, there are specialized mortgages for travel nurses available, along with strategies to enhance your application and improve your chances of approval.Find the best mortgages for travel nurses. Start here
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This article was created in collaboration with former travel nurse recruitment manager and current content and social media director at Nurse.org, Angelina Gibson.
How to get a mortgage for travel nurses
As a travel nurse, you might be curious about how to successfully qualify for a mortgage tailored to your unique profession.
Perhaps you’ve encountered concerns about your variable income, or you’re aware of colleagues who have navigated similar situations. In the following section, we’ll explore mortgages for travel nurses and the key strategies and insights to help you get one.
1. Overcoming unstable employment history
Loan officers often don’t understand the nature of a travel nurse’s work, which can affect how they view applications for mortgages for travel nurses. On paper, it might appear to a lender that you are a contract employee or “job-hopper” because your contracts are typically only 13 weeks long and you move from agency to agency.
Your work history appears quite stable to you. You can pick up another contract as soon as the previous one is done. If all else fails, you’ll pick up per diem work or (gasp!) become a staff nurse. But that’s not how the lender sees it.
Keep in mind the kind of applicants lenders like to see: full-time, salaried employees with stable income and no employer changes. That’s just not a realistic standard for travel nurses, and that’s okay.
Here’s how you can get qualified for a mortgage loan despite your “unstable” situation. This guidance is particularly relevant for those seeking mortgages for travel nurses:
- Write a letter of explanation. Describe the nature of travel nursing. Add details, such as why your specialty is in high demand and that there is virtually no shortage of contracts you can take. Explain why travel nurses like yourself are extremely sought-after. “This is probably your strongest option, and you shouldn’t have any problems provided you have documentation,” says loan officer Jon Meyer.
- Get two years of travel nursing under your belt. History, history, history. This is what the lender wants to see. It’s tough to average three months of income. However, 12–24 months of travel nursing experience will give the lender more confidence in your ongoing earning potential
- Take a W2 assignment and stick with one agency if you're a new traveler. If you plan to start traveling, pick one agency to work for and make sure they pay you as a W-2 employee. A lender may still consider you non-self-employed if you are simply moving to another company
- Keep your paystubs, W-2s, and agency contact info. Your lender may need information from each of the agencies you’ve worked for. Keep all your pay statements and year-end documentation from each agency. Keep handy a contact name and number at the agency that is willing to complete a “verification of employment” for your past work, and even write you a letter regarding your previous history
- Use staff RN experience as part of your employment history. If you are a travel nurse, you will likely be considered self-employed. This is true even if you receive some W2 pay along with your 1099 (contract) pay. Lenders need a two-year history of self-employment to use the income to qualify. If you have been a travel nurse for less than two years, but at least one year, your previous staff nurse experience might help
Here’s what FHA guidelines say: “To be eligible for a mortgage loan, the individual must have at least two years of documented previous successful employment in the line of work in which he/she is self-employed, or in a related occupation.” (emphasis added). Conventional loans use a similar rule.
In essence, combining your staff RN experience with your more recent travel RN role could help establish a sufficient history of self-employment for mortgage qualification purposes. This approach is especially useful for those pursuing mortgages for travel nurses. However, if your travel nursing career is less than a year old, it’s generally advisable to accumulate at least 12 months of experience to enhance your eligibility for a mortgage.Find the best mortgages for travel nurses. Start here
2. Closing employment gaps
Travel nurses may take long periods off between assignments, which can affect the loan amount they qualify for. For example, you’ll work for six months, save money, then take 1-3 months off for leisure. That’s just part of the travel nurse lifestyle. Also, the time between one contract ending and your next contract could be 1-2 weeks.
Is this considered a “gap in employment” by a mortgage lender?
How long is a gap in employment?
The interpretation of what constitutes an employment gap varies depending on the type of loan you’re applying for, especially in the context of mortgages for travel nurses.
FHA defines an “employment gap” as at least one month. Conventional loan regulator Fannie Mae doesn’t set a specific time, but says that lenders must look at the history of any variable income and determine if any gaps are consistent over time or longer than usual.
If longer than usual (or more than one month for FHA), you’ll need a letter explaining the time you spent away from work.
How to qualify for a mortgage when you have employment gaps?
In a word, job history. You’ll need to build up at least 12 months, but preferably 24 months, of history as a travel nurse. There are a couple of reasons for this.
- First, you need to prove how long a “typical” employment gap is
- Second, the lender needs to average your income, including any gaps and various pay rates. That also takes time
As mentioned in the previous section, get as much history as a travel nurse as you can. If you plan to become a travel nurse next year but also want to buy a house, you might consider starting to travel now.
Write a great letter of explanation
Mortgage lenders don’t know the ins and outs of the nursing industry, let alone the travel nursing industry. So write a detailed letter of explanation about how travel nursing works. Put it in context for the lender.
That letter can go a long way toward your approval. You could also request a letter from your recruiter or agency HR department. A letter on letterhead from the company explaining the travel nursing process will help your case.
3. Managing variable income
When managing variable income, it’s important for travel nurses to maintain a favorable debt-to-income ratio, given that pay is seasonal and varies by contract and location.
For example, a travel nurse working in California will often make more than a nurse working in Florida. Additionally, hospitals will pay travel nurses more to work in Wisconsin during the winter. (No one wants to be stuck in a snowstorm.) There are also states where travel nurses like to work (Hawaii) just for the experience, and hospitals in these locations can pay lower because of the lifestyle.
Each individual contract is negotiated differently — agency by agency and hospital by hospital. But how do you explain all this to an underwriter when applying for a mortgage?
One thing lenders do understand is seasonable work and variable pay. Lots of industries — construction, agriculture, and others — are variable in nature. The key is getting enough history.
Get at least 12 months’ stable income history, but preferably 24 months, before applying for any mortgages for travel nurses. Keep everything: contracts, pay stubs, W2s, and offer letters. You can get approved if the lender can average out the variable and seasonable payments over a reasonable amount of time.
According to Fannie Mae, the nation’s lead mortgage rulemaker, “two or more years of receipt of a particular type of variable income is recommended; however, variable income that has been received for 12 to 24 months may be considered as acceptable income, as long as the borrower’s loan application demonstrates that there are positive factors that reasonably offset the shorter income history.”
Having at least a year of experience as a travel nurse can bolster your profile when applying for a home loan. This duration of professional practice demonstrates to lenders a level of stability and commitment, making it a wise decision to explore applying for mortgages for travel nurses.Find the best mortgage for travel nurses. Start here
4. Deciding on taxable or non-taxable income for mortgage applications
Most travel nurses receive their pay in the form of taxable income plus non-taxable income.
The non-taxed portion of their pay is per diem pay. Per diems are reimbursements for meals, housing, travel, and incidentals while they are working away from their “tax home,” an IRS term meaning where they live when they’re not traveling for work.
Per diem income is not considered by the IRS to be income or compensation.
However, travel nursing agencies do include this pay on the nurse’s paycheck. And many agencies bump up per diem pay, and pay lower rates for the actual work. This is advantageous for nurses at tax time, but not so much for when they apply for a mortgage.
The income of a travel nurse might seem lower to a lender than it actually is, due to the structure of taxable and non-taxable pay. This discrepancy underscores the importance for nurses to thoroughly understand the nuances of their compensation, particularly when applying for mortgages for travel nurses.
The per diem payments, often non-taxable, could be perceived as a liability in the eyes of lenders, affecting the overall assessment of a travel nurse’s financial stability.
Can per diem pay be used to qualify for a mortgage?
Fannie Mae and other rule-making agencies — like the Department of Housing and Urban Development (HUD), which oversees FHA — don’t address most per diem pay specifically. Therefore, some underwriters may be able to use it, while others won’t. It’s up to each individual lender.
The fact that it doesn’t show up on tax returns doesn’t help. Typically, a lender uses tax returns to verify a stable income history. In any case, keep all your contracts, pay stubs, and any other paperwork that documents your pay structure.
One bright spot is around housing stipends. Fannie Mae states that you can use housing reimbursement as qualifying income if it has been received for the most recent 12 months and is likely to continue for three years.
Should you agree to receive non-taxable income?
Gibson says, “If I were giving advice to a travel nurse who wants to buy a home someday, I would say to take as much money as possible in taxable pay, rather than per diem. It’s just too much of a risk to work for two years, only to discover a lender can’t use all that income history.”
And if you’ve already got a history of high per diem pay? You might as well try to apply at a few lenders. They might say they can’t use the income to qualify. In that case, start negotiating lower per diem pay and higher base pay. Starting immediately will increase your average pay and help you qualify sooner.
If you’re really in a hurry to buy, you could take a staff nurse position. You can most likely use your pay structure to qualify after a few months of pay stubs, or in some cases even just an offer letter.
This approach might appear extreme, but it’s important to remember that mortgage regulations don’t permanently restrict you from changing jobs. After your loan is finalized and you’re comfortably settled with your new house payments, you have the freedom to pursue different career paths, including returning to travel nursing. This flexibility is a significant aspect to consider, especially for those looking into mortgages for travel nurses.Check your home buying options. Start here
Mortgage approval tips for travel nurses
The Mortgage Reports asked former travel nurse recruiter and current content director for Nurse.org, Angelina Gibson, for her advice to nurses looking to buy in the near future. Here’s what she had to say about mortgages for travel nurses.
1. Save all travel nursing contracts
Keep physical copies of the contracts between yourself and your travel nursing agencies for all your travel nursing assignments.
Your broker will ask you to explain all gaps in employment and to also provide proof of consecutive assignments. It is also a good idea to keep copies of your contracts online in a cloud service like Dropbox or another digital format for easy access.
If you are able, save copies of your pay stubs. You should also be able to ask your agency for a copy of your deposits. Keep in mind that some agencies may not keep these records or they may not be readily accessible. Save yourself the hassle by keeping all your own records.
2. Avoid non-taxed stipends and low-taxable income
If you’re planning to buy a home in the near future, do not accept travel nursing assignments with high non-taxed stipends and low taxable pay. Though it may be tempting at the time to accept an assignment offering a low taxable hourly rate and a high non-taxed stipend, it will not be worth it in the long run. Especially if you have plans to purchase a home.
Why? Because non-taxed stipends are not considered wages by the IRS, your broker may not count the stipend as income. If your taxable hourly rate is too low, it may decrease the amount of your loan.
As a rule of thumb, Gibson recommends rejecting assignments offering a taxable hourly rate of less than $39 per hour, the national average hourly pay for registered nurses.
3. Understand IRS tax guidelines for traveling contract workers
Travel nurses are paid very differently than staff nurses. That’s because they travel for work and receive non-taxed stipends to help with housing and living expenses while they are away from work on assignment.
Why do travel nurses receive non-taxed stipends? Because they are duplicating expenses. This means that they are maintaining a tax-home residence while maintaining a temporary residence where they are working on a travel nursing assignment.
The IRS categorizes non-taxed stipends as reimbursements rather than wages, which is an important distinction for borrowers seeking mortgages for travel nurses. As a travel nurse, it is up to you to understand why you are eligible for non-taxed stipends and to make sure that you are paying the appropriate taxes when required.
Get acquainted with IRS publication 463 for additional information regarding travel, entertainment, gifts, and car expenses.
4. Maintain a tax-home
If you are a travel nurse and are receiving non-taxed stipends, you must maintain a tax-home.
There are three requirements to establish and maintain a tax-home. Travel nurses must meet two out of three of the requirements to be eligible to receive non-taxed stipends. If you do not meet at least two of these requirements, you should not be receiving or accepting non-taxed stipends.
The requirements include:
- Maintain regular employment within the area of your tax home
- Maintain a permanent address within your tax-home area. The permanent address must be a physical address, not a P.O. box. You must also maintain the residence while you are away for work. This includes paying the mortgage, handling repairs, and paying utility bills.
- Do not abandon your tax home. Travel nurses must return to their tax-home area about every 12 months to work (this helps maintain requirement no. 1.) We recommend working in your tax-home area for at least 30 days per year. Otherwise, the IRS may assume that you’ve abandoned your tax-home, in which case you are not eligible for non-taxed stipends because you are not duplicating expenses.
By understanding travel nurse taxes and the non-taxed stipend, you are setting yourself up for the best-case scenario for purchasing a home.
Specialty mortgage loans for travel nurses
Many nurses, particularly those looking into mortgages for travel nurses, are curious about specialized home loan programs, including options to refinance for lower interest rates. They may have heard of doctor loans and wonder if there are similar home purchase options for nurses.
There are two popular nationwide programs that provide home loans for nurses and other healthcare professionals: Nurse Next Door and Home for Heroes.
Nurse Next Door
The Nurse Next Door program program serves as a valuable resource for RNs seeking mortgages for travel nurses, offering tailored home buyer assistance. According to the program’s website, “housing grants of up to $8,000 are available to all healthcare employees, including nurses, medical staff, and doctors.”Check your home buying options. Start here
The site further explains that borrowers may be eligible for down payment assistance of up to $10,681. You may also get reduced closing costs through the elimination of a home appraisal and other fees.
Homes for Heroes
Homes for Heroes is a nationwide housing program that aims to make home buying more affordable for first responders, teachers, military, and healthcare professionals.
The website says, “Most heroes save at least $3,000 when they buy or sell a home with us. When you add up the savings from real estate agents, loan officers, title companies, home inspectors and other everyday deals, the savings is way beyond what you’ll get from other national programs.”
Down payment assistance programs
Down payment assistance (DPA) programs offer grants and low-interest second mortgages to help healthcare professionals, firefighters, law enforcement, educators, and other first-time home buyers afford a house. The money you get can be used for your down payment and often closing costs, too.
There are thousands of DPAs nationwide, and each is managed on a city, state, or county level. This guide will introduce you to DPAs in every state, and your real estate agent or Realtor should have additional information for programs near you.
Discover mortgages for travel nurses. Start here
Mortgages for travel nurses
In addition to nurse home loans, standard loan types are worth looking into. Contrary to popular belief, no home loans today require a 20% down payment. The following popular loan types can offer affordable financing with lower interest rates to first-time home buyers, including travel nurses.
Also known as conforming loans, conventional mortgages are the most common home purchase loan available, and their rules are set by Fannie Mae and Freddie Mac. Some first-time home buyers may qualify with as little as 3% down.
While anything less than 20% down requires private mortgage insurance (PMI), conventional loans may still be advantageous even with that extra expense. Plus, you don’t have to save forever to make that huge down payment. These loans are best for borrowers with good credit and at least 3-5% down.Check your conventional loan options. Start here
Backed by the Federal Housing Administration, FHA loans require just 3.5% down and are very flexible in terms of employment gaps, changes in work history, and credit score. These are the go-to loans for first-time home buyers who don’t fit into the conventional loan “box” and require leniency on certain aspects of their financial situation.Check your FHA loan options. Start here
For nurses with military service in their backgrounds, VA loans may be the best mortgage option available. They require zero down and are lenient about credit scores and income types. These loans typically require a two-year history of active service or six years in the Reserves to be eligible.Check your VA loan options. Start here
Guaranteed by the United States Department of Agriculture, USDA loans may be the best-kept secret in mortgage finance. They require no down payment whatsoever and no ongoing mortgage insurance. But they do come with income limits, and you must purchase a house within an eligible rural area. Beyond those requirements, USDA loans are not that different from other home purchase loans.Check your USDA loan options. Start here
Strategies for managing your home and mortgage while on the road
One concern travel nurses have is what they will do with the home while you are gone on travel nurse assignments. Why pay all that money when you’re not there?
- One option is that you can break even or even make money by using your home as a short-term rental while you are gone
- You could also opt for a roommate (long-term renter) who looks after the house and provides ongoing passive income when you’re not home
To some extent, organizations that set rules for mortgages for travel nurses are okay with these practices. Just remember that you have to actually move into the home and live there while you are not traveling.
Most mortgage rules say you have to move into a home within 60 days of buying it. So make sure you can do that, even if you have some extended contracts coming up.
If you plan to set up some short-term rentals, get familiar with Airbnb and consider hiring a property management company. You likely won’t want to be handling bookings and other details while working 12-hour shifts a few states away.
Many companies will manage your property for 10–20% of your rental fee. There are plenty of companies to choose from, but do your homework before selecting one. Make sure they provide the services you need and aren’t too expensive. Check out Airdna’s list of recommended management companies.
Finding good renters as a travel nurse
Are you worried about renting your new home while you’re away on assignment? That’s understandable.
One option is to simply put up an ad in a travel nursing forum or Facebook group and only rent it to fellow travel nurses who will be in your area.
Because of a shared profession and online community, there’s instant trust and accountability between you. You are much less likely to get taken advantage of or incur damage to your new home.
FAQ: Mortgages for travel nurses
Absolutely! Getting approved for mortgages for travel nurses is entirely possible. Lenders often understand the unique nature of a travel nurse’s income and employment structure. It’s important to work with mortgage professionals who are experienced in dealing with variable incomes and non-traditional employment histories common among travel nurses.
To get a mortgage as a travel nurse, start by gathering documentation that reflects your income stability and financial health. This includes tax returns, employment contracts, and pay stubs. Seeking mortgages for travel nurses often involves finding a lender who recognizes the unique financial circumstances of travel nurses and can offer flexible mortgage solutions tailored to your needs.
The key requirements for getting mortgages for travel nurses include a stable income history, a good credit score, and sufficient savings for a down payment. Lenders will also look at your debt-to-income ratio. It’s beneficial to maintain thorough and organized financial records to demonstrate your reliability as a borrower.
Yes, the FHA does allow per diem income to count towards mortgages for travel nurses, under certain conditions. To include per diem income, you typically need to demonstrate a history of receiving this type of income and the likelihood of its continuance. FHA loans are often a good fit for travel nurses due to their more flexible income requirements and lower down payment options.
Fannie Mae’s guidelines for mortgages for travel nurses are designed to accommodate the unique financial situations of professionals in this field. These guidelines may include considering variable income streams and employment gaps common among travel nurses. To qualify under Fannie Mae guidelines, travel nurses should provide detailed employment and income documentation, including tax returns and employment contracts, to establish income stability and reliability.
Are you ready to explore the best mortgages for travel nurses?
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Concerned about your credit score? Rest assured, applying for pre-approval has minimal impact on it. Click below to explore your options for mortgages for travel nurses and take that first confident step towards realizing your dream of homeownership.
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