Projected income mortgages for doctors, dentists, medical residents, fellows and veterinarians may help qualified professionals purchase a home before their current earnings reflect their future earning potential.
Many professionals spend years completing university, specialized training, residency programs and licensing requirements. Although they may be building a stable and rewarding career, their present income may not represent what they are reasonably expected to earn once they complete their training or become fully established.
A traditional mortgage application is usually assessed using the income the applicant is currently earning. This can make qualification difficult for a medical resident, fellow, newly licensed doctor, dentist or veterinarian whose income is expected to increase.
Fortunately, certain banks and mortgage lenders offer professional mortgage programs that may consider projected income when reviewing an application.
What is projected income?
Projected income is a qualifying income amount that an eligible lender may use instead of relying only on the applicant’s current earnings. The lender considers the professional’s career path, licensing status, area of practice, stage of training and expected future earnings.
For example, a medical resident may currently earn a salary that is considerably lower than the income expected after completing residency and entering full practice. Under an eligible professional mortgage program, the lender may be able to use an approved projected income amount to assess the mortgage application.
Projected income is used for mortgage qualification purposes. It is not guaranteed income, and it does not guarantee mortgage approval.
Who may qualify?
Professional mortgage programs differ between lenders, but eligible applicants may include medical residents, medical fellows, newly licensed doctors, newly licensed dentists, newly licensed veterinarians and, under certain programs, final year veterinary students.
Applicants must normally provide documents confirming their professional status. These documents may include proof of residency or fellowship, an employment or appointment letter, proof of licensing, confirmation of an expected completion date, an employment contract or information about a future practice.
The lender will decide whether projected income can be used and how much income it is prepared to recognize.
What else will the lender review?
Projected income is only one part of the mortgage application. The lender must still review the applicant’s complete financial position.
This includes credit history, available down payment, source of down payment, student loans, professional lines of credit, vehicle payments, credit card balances and other financial obligations.
The property must also meet the lender’s requirements. An appraisal may be required, and the applicant must have enough money available for the down payment and closing costs.
Professional status does not remove normal mortgage requirements. It provides an alternative way for an eligible lender to assess income when the applicant’s present earnings do not fully reflect their professional career path.
Approval and affordability are different
A professional mortgage program may increase the amount a person can qualify to borrow, but the maximum approval may not always be the most comfortable choice.
New professionals may also have licensing fees, professional insurance, student loan payments, relocation costs, childcare expenses, practice expenses and other financial responsibilities.
Before purchasing, it is important to consider the mortgage payment, property taxes, utilities, maintenance costs, insurance and everyday living expenses. A mortgage should support your long term financial plans without placing unnecessary pressure on your monthly budget.
Plan of Action
- Confirm your professional status, licensing stage and expected completion date.
- Gather your employment letter, contract, recent pay statements and professional documents.
- Obtain current statements for student loans, professional lines of credit and other debts.
- Confirm the amount and source of your down payment.
- Review your credit before beginning your property search.
- Complete a mortgage assessment to determine which professional lending programs may fit your situation.
- Establish a comfortable purchase budget before making an offer.
If you are a medical resident, fellow, newly licensed doctor, dentist or veterinarian, your home purchase may be able to begin sooner than you think.
Contact Keisha Johnson at RTS Mortgage Financial for a personalized mortgage review.
Call 647 580 7421
Email kj@rtsmortgagefinancial.com
Visit www.rtsmortgagefinancial.com
FSRA #13593
Mortgage programs, projected income amounts and eligibility requirements vary by lender. All applications are subject to lender approval, credit review, property approval and applicable terms and conditions.