What are my loan options as a healthcare worker?

As a nurse, doctor, or other healthcare professional, you can choose between conventional loans and a few special federal loan programs. You are also eligible for certain loan forgiveness and payment assistance programs.

FHA Loans

These are loans insured by the Federal Housing Administration, an institution created by congress in the 1930s to combat the effects of the Great Depression on the housing market. FHA loans offer lower down payments, and require a minimum credit score of only 580 in order to take out a mortgage loan. Loan limits vary by county, but they typically range from about $350,000 to about $800,000. And loan terms are usually longer than that of conventional loans.

To qualify, you’ll need to have a relatively stable income and good credit history. Most nurses, doctors, and other medical professionals are automatically eligible.

Note: FHA loans for healthcare professionals come with Mortgage Insurance Premiums (MIP) for the life of the loan. The current rate is about .85 and the cost would be added to your regular monthly loan payments. For a loan of $400,000 that’s an additional $340,000 that you will need to pay over time. It’s a lot of money, which is why these lenders can offer loans to people with low credit scores and less cash in the bank.

FHA loans could be a good option if you know you will continue with the same job for a long time.

USDA Loans

The United States Department of Agriculture provides mortgage loans to people with very low incomes by providing them with payment assistance. These loans have lower fixed interest rates and no down payment is required for healthcare workers. There are no loan limits, meaning that you can finance 100% of the property value. And loan terms are generally longer than those of conventional loans (about 30 years).

That being said, applicants seeking to take out a USDA loan must use it to purchase a home that is 2,000 square feet or less in a rural area. The USDA defines “rural” as a town with a population of less than 35,000 people. So while this does not mean a move to the prairie, it does put a limit on where you can buy a home.

Aside from living in a rural area, applicants will need a minimum credit score of 640 to qualify. You must also be unable to obtain a loan through other sources and be currently without housing (like living rent-free at a friend’s or family member’s home). There are also income limitations depending on the state and county. And if you make more than a certain amount you will not be eligible for USDA loans.

Student Loan Forgiveness

Healthcare workers who have federal student loans can apply for student loan forgiveness. One of the 17 executive actions President Biden signed on his first day in office was an extension to the Department of Education's payment pause and interest waiver to at least September 30, 2021. This means that you do not have to make payments on your federal student loan until Fall of 2021.

There is also a temporary 0% interest rate. Both the payment pause and waived interest rate are automatic but you can choose to take advantage of the interest waiver by paying down the principal balance now.

Another option to eliminate student loan debt is to refinance your student loan. Interest rates are at an all-time low due to the ongoing COVID-19 pandemic. Refinancing now could save you thousands of dollars in interest.

Loan Assistance Programs for Healthcare Professionals

Checkout these programs for additional information on the loan options and assistance programs available:

• Teacher Next Door
• Homes For Heroes
• Nurse Loan Programs
• Everyday Hero Housing Assistance Fund
• Mortgages For Champions

Be sure to compare multiple loan offers before deciding to apply. After taking care of so many, you deserve the best care in return. We want to ensure you achieve your financial goals and provide you with only the best options for your situation.