CRNAs face several significant challenges when seeking real estate financing which can make it a challenge to obtain conventional mortgage financing. This should come as no surprise as most nurse anesthetists have a negative net worth (typically student loans exceed assets) and expect a large increase in income upon graduation.
How does one qualify for a mortgage with a negative net worth and little if any documentation of current or future income?
To solve these challenges, the CRNA home loan was created to overcome the challenges some CRNAs face when trying to qualify for home loans.
What is a CRNA home loan?
There are three primary benefits of a CRNA home loan that you should know:
- These loans typically require lower down payments than conventional loans. Down payments from three to five percent are available in all fifty states. CRNA home loans also do not typically have mortgage insurance. Mortgage insurance is a forced insurance policy that protects the bank in case of borrower default; it is paid by the borrower but only protects the bank issuing the loan. This insurance is expensive and in most cases is not tax deductible like mortgage interest is.
- CRNA home loans allow you to close up to ninety days before you begin a new employment contract using future income. Most conventional and FHA loans require 30 days paystubs before you can close on the purchase of a new home.
Bear in mind, no two employment contracts are created equal. When applying for a home loan, even a CRNA loan, you should have your employment contract reviewed by the lender as early as humanly possible so you can plan accordingly.
I recommend you insist that your employment agreement is not only reviewed and approved by the loan officer, but also by the underwriter who will eventually have the final say on your mortgage approval.
Mortgage loan officers are prone to saying yes, while mortgage underwriters are more prone to saying no; especially if something does not fit exactly in the box. Truly, the underwriter is the gatekeeper of the mortgage transaction. They are risk control for the bank and they are literally paid to say no if certain risk factors are present. They are the protectors of the banks’ assets.
You should understand this relationship and INSIST an underwriter review of your application and employment contract before making an offer on a home. This step can save you an incredible amount of heartache and stress.
- CRNA loans also look at your student loan debt differently than conventional or FHA loans. Most do not count deferred student loans or they will allow you to use an IDR (income driven repayment) payment to qualify. This can make the difference between qualifying and being declined for a loan.
For CRNAs with high student debt loads, this factor can make a CRNA loan the only option, as conventional and FHA mortgage loans are not nearly as accommodating to student loans and how they calculate their impact on the overall debt to income ratio limits.
What other challenges are CRNA likely to face when seeking to buy a home?
As I write this article, there is less than a four month supply of homes on the national market. That means the pace of monthly sales would eliminate the supply of listed homes for sale in less than four months (if no new homes were listed for sale).
Anything less than 6 months supply is considered a sellers market. Many areas of the country are in an extreme sellers market, which means sellers dictate the terms of the deal and the speed they want the transaction to close. You either have to agree to those terms or they pass you up and find another buyer, often a cash buyer, who can meet their terms.
This can be a monumental challenge for many mortgage companies and you, their perspective clients.
Many mortgage companies that serve CRNA are large national (think, “too big to fail”) banks and they are layered with bureaucracy, government regulations, antiquated IT systems, and status quo (good is good enough).
This is similar to the level of care you might expect to get at the largest hospital systems in New York or Los Angeles on a busy Saturday. They mean well, but they can only do what they can do with the resources they have. Nimbleness and speed to respond might not words or phrases you would use to describe them.
The fact is that many of the larger banks who serve CRNAs simply cannot keep up with today’s fast-paced real estate market.
You can protect yourself by carefully reviewing the client experiences of your fellow nurse anesthetists. Do some Googling about client experiences, ask for references, and request your lender put in writing how long it takes on average to close their CRNA clients. This is rarely thought through in detail but can make all the difference between you getting a home and a home getting away from you.
A CRNA home loan can be a powerful tool to help you into a home with the least amount of cash possible, sooner than most conventional loans; in many cases, with less overall expense because you will likely avoid mortgage insurance. This does not mean they are the proper prescription for everyone.
In the end, a trusted advisor who can help you navigate the mortgage and real estate process is going to offer you the highest probability of successfully closing on your new home.
Josh Mettle is an industry leading author and mortgage lender, specializing in financing physicians, dentists, CRNA, and physician assistants. You can enjoy great physician real estate and mortgage advice here or by visiting his book site. Josh is also a fourth generation real estate investor, and owns a number of rental homes, apartment units and mortgages. Josh is dedicated to helping physicians become more financially aware and able; listen to “Physician Financial Success” podcast episodes or download Josh’s latest tips and advice here.
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