According to one study, about 64% of people own their own homes.
If you’re thinking of joining this percentage of people and buying your own home, you’ll likely need to apply for a loan first.
Depending on your job, you could apply for a professional home loan. But what is it, and how do you qualify? Keep reading to find out!
What is This Type of Loan?
When the market crashed in 2008 because of bad loans, the government rewrote the laws to restrict who mortgage lenders could loan to.
Because of this, you’ll now need to show proof of a steady income when you apply. You’ll also need to be able to have 20% of a down payment on your house if you don’t want to pay for private mortgage insurance. And finally, your mortgage loan can’t go over $510,400.
While these rules were put in place to make sure that the housing market doesn’t crash again, it does hurt some people. For example, doctors, attorneys, and other high-paid professionals have problems with this.
This is because of how much money it costs to become a doctor or a lawyer for example. They often have a lot of student debt and no savings for a house. Once they do have a job and make more money, they may want to buy a house that exceeds the mortgage limits.
But because of these limits, many people are now offering a professional home loan as a way around these stipulations. But in order to get one of these loans, you’ll have to make sure you qualify.
Who Can Qualify?
Because these loans go outside of the limits for a standard loan, only a few types of people will be able to apply for doctor home loans or lawyer home loans.
In addition to doctors and lawyers, dentists, architects, CPAs, healthcare professionals, engineers, pharmacists, optometrists, and professors who have a Ph.D. can apply for these types of loans.
If you do qualify for this type of loan, you also don’t have to get private mortgage insurance as well, which can help save a few hundred dollars each month.
However, if you’re going to use a professional loan to buy your home, you will have to plan on occupying that home and not using it as an investment property.
Advantages vs Disadvantages
There are many advantages to getting professional mortgages; however, there are a few things to consider as well.
One of the main reasons you should consider this type of loan is that there are often no down payment requirements. Some of them have a lower requirement, but many of them don’t have any requirements at all.
If you’ve just graduated with a lot of student debt and no savings, this might be a great choice for you.
Another benefit is that you won’t have to pay private mortgage insurance even if you don’t pay any down payment. This can help to save you a lot of money each year as well.
However, if you’re in a position where you have money but the mortgage limit is the problem for you, you can also use this type of loan to go beyond the limit and get a more expensive house.
One bad thing about this type of loan is that people tend to overreach and borrow more than they need or buy a house that they really won’t be able to afford. Even if you’re going to have a lot of income, you’ll still want to make sure that you’re buying within your limits.
Keep in mind, also, that depending on the bank, you may be charged a higher interest rate as well, so make sure you ask about that.
Why Do Lenders Offer It?
This seems like such a good deal, so why do lenders offer it to professionals?
This is a way for lenders to go through a loophole and avoid the standards set by the government, but it also helps the company build a reputation as they cater to higher-paying customers.
For example, the bank knows that even though a doctor or lawyer may not make a lot of money right now because they just got out of school, they’ll make a lot in the future. This helps ensure that the bank will likely get their money back.
Should You Go With This Option?
You might be wondering if this is the best option for you when it comes to buying a house. If you’ve had to wait longer than the average person to start making money and buy a house, this may be a great way to get a house and own some of your own property.
If you went with a regular loan, you’d have to wait a few years until you have some steady income and proof of past work history. If you’re okay with waiting a little while longer, you may want to consider the conforming loan.
Because a professional loan will often leave you with a higher interest rate, you may want to start with that and then consider refinancing it later on down the road when you have some work history under your belt.
Learn More About a Professional Home Loan
These are only a few things to know about a professional home loan, but there are many more details you should be aware of.
We know that buying a home can be stressful and overwhelming, and it’s easy to overlook small details. However, we’re here to make sure that doesn’t happen!
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