The professional mortgage loan overcomes the challenges several young
professionals face, including crucial student and personal loan indebtedness, higher
paying position, limited down payment availability, and in numerous situations an
urge to close on a new house before their prices hike up.
These programs let high-earning professionals secure home financing with lesser
restrictions than standard home loans. These loans have come into the picture to
specifically accommodate the individual financial state of professionals.
However, you may have this question – what exactly is a professional mortgage loan,
and how is it different from a conventional loan? We have curated a list of all the
unique features of these loan programs for you so you are totally informed as you
proceed to buy your home.
Features of Professional Mortgage Loan
Exempt From Lender’s Mortgage Insurance (LMI)
The primary advantage of home loans for professionals is that they are exempt from
paying LMI. LMI refers to Lenders Mortgage Insurance, which is a cost incurred by
borrowers who have a down payment that is less than 20% of the property’s value. A
down payment can be made up of genuine savings, home equity, or guarantor
equity. Typically, borrowers with a down payment below 20% will be required to pay
LMI, which can be a considerable expense.
This is because borrowers with little genuine savings are viewed as high-risk by
lenders, who want to protect themselves against the possibility of the borrower
defaulting on their repayments.
However, with a professional package, borrowers can provide a down payment as
low as 10% without incurring LMI. As high-income earners, professionals are seen
as less likely to miss a payment. Given that LMI can amount to tens of thousands of
dollars, this waiver can result in significant cost savings.
Better Financing Options
Another advantage of a professional loan is the potential to qualify for greater loan
limits with less money down.
A few existing programs will finance as much as a $2.5M loan amount with as less
as 5% down. Most conventional huge loans would require a minimum of 20% down.
Can Qualify with Future Income
Instead of needing pay receipts to prove income, several professional loan programs
will require borrowers to submit their employment contracts to prove their income
rather than current pay receipts (which is needed for a conventional loan).
Some professional mortgage programs also allow for loan closings up to ninety days
before the future employment begin date.
Ability to Qualify with Income-Driven or Deferred Student Loan
Payments
Professional mortgage programs also use a different method when calculating debt-
to-income ratios.
When a borrower’s income surpasses a specific limit, they are required to pay a fixed
percentage of their total income towards their loan for that year, starting from the first
dollar earned. The percentage increases with the borrower’s income, resulting in a
repayment system that is progressive in nature.
Numerous mortgage lenders calculate these payments in different ways. At APW
Finance, we can qualify most professionals for loans dependent on income-based
payments. This can considerably reduce the debt-to-income ratio and qualify you
when other payment structures are not able to. We can also fully exclude student
loans that are in deferral for professionals.
Who Qualifies for a Professional Home Loan?
Most lending institutions provide these specialised programs only for high-earning
physicians. Nonetheless, we at APW Finance apply similar underwriting guidelines to
other professionals too, including:
– Registered Nurses (RN)
– Physician Assistants (PA)
– Certified Registered Nurse Anesthetists (CRNA)
– Doctors of Medicine in Dentistry (DMD)
– Doctors of Physical Therapy (DPT)
– Doctors of Veterinary Medicine (DVM)
– Doctors of Dental Surgery (DDS)
– Lawyers (JD)
– Pharmacists
– Certified Public Accountants (CPA)
– and a few other professional designations
Conclusion
A professional mortgage loan can be a great solution to help you qualify for a home
loan when you might not qualify for conventional loan.
However, it is essential to note you may have a unique situation and there are
numerous loan options available for you. A professional loan program may not be
the best choice for you even though you are a high-earning professional.
For this reason it is important to select a lender who understands your circumstances
and can compare and explain all the loan options available to you.
As mortgage experts, we can help you get the best loan package, taking your
financial situation into account, while also creating a solution that is most suited to fit
your needs. Contact us today to get a quote.
