If you’ve chosen the path of medicine, dentistry or veterinary studies as your career, you may qualify for a mortgage as early as your first year of residency or fellowship (see notes below). This is possible with projected income mortgages in Vancouver.
The premise of these mortgage programs is that lenders are aware your future income will double or triple in a few years. Based on this probability, they can use your future income to assess your ability to afford a home purchase.
Not only that, but these mortgages can apply to similar situations, such as medical professionals in their first 24 months of practice, or foreign-trained doctors transferring their licenses to Canada.
There are some intricacies to projected income mortgages, however. Their rates and qualifying factors can vary depending on your situation (such as your exact specialization, field of study, and year of residency, to name a few).
To find out the type of home loan you can get, we advise that you contact one of our mortgage brokers directly. They’ll learn more about you, your projected income and the type of home you want to purchase. From there, they can recommend a mortgage program that you are likely to qualify for.
They can also guide you on the information required to apply for a mortgage. Then, they can package it all together to present to a lender on your behalf.
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Below we’ll answer some questions about projected income mortgages for medical professionals, including dentists and veterinarians.
Why use a projected income mortgage instead of a conventional mortgage?
Projected income mortgages are useful when you would like to borrow more, to buy a higher-priced property.
Before we go any further, we should mention that, regardless of your projected income, you will still need to come up with a down payment to use this program (see below for more on this).Read more
Now, let’s say you only have $150K for down payment. Under normal circumstances, this would mean you can afford a property of about $750K, if using a 20% down payment. That would bring your loan amount to $600K.
But, using projected income, you could qualify to borrow $1M towards a home purchase.
So, if you want the $1M home, you can use your $150K with an insured mortgage to provide a 15% down payment. The bank is more likely to allow this if they can see proof that you are in residency or fellowship, and will soon earn far more than your current salary.
If you were not in residency, and if your income could not support such a large mortgage repayment (when considering other factors, like debt and interest rates), then the bank would be more wary of lending you this much. They may say “no” outright, or they may ask for a higher down payment amount.
Now, if you only want the $750K home, and if you can qualify for that amount without using the projected income program, then you don’t need to use it.
In any case, it will be up to you to determine your own budget when deciding what you can comfortably pay in monthly living expenses. This should be the main factor in deciding which mortgage program to apply under.
If you’re not sure how to go about determining your affordability, or which program to use, we can help! That’s what we’re here for as mortgage specialists.
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What will my projected income need to be to qualify for a higher mortgage loan?
Each lender offering a projected income mortgage will have different rules about what your income should be, and when, in order to pass their stress tests.Read more
However, in general, you can expect the following income qualifying amounts:
- First and second year medical residents or fellows – $185K.
- Third year and above medical residents or fellows – $225K.
- Last year family medicine residents or fellows – $225K.
- Last year speciality medicine residents or fellows – $225K – $379K (depending on the specialty).
- Those within their first 24 months of practice – $225K – $379K (depending on the specialty).
- Foreign-trained physicians licensed by a provincial college within the last 24 months – $225K – $379K (depending on the specialty). Must be Canadian residents.
- Last year dental residents, fellows or students, or those within their first 12 months of practice – $124K.
- Last year veterinary medicine residents, fellows or students, or those within their first 12 months of practice – $86K.
In all of the above cases, you will need to provide:
- Proof of your current income, assets and debts. These will be verified as per usual.
- Proof of your residency enrollment and year of completion.
Note: If you are a first-year medical student who has not yet begun your residency, but have been accepted into a program, you may be able to use an acceptance letter to qualify.
How much do I need for a down payment when using a projected income mortgage?
When using a projected-income mortgage, you’ll have a few down payment options. These are going to be based on either insured or uninsured mortgages. You can learn more about mortgage insurance here.Read more
Insured mortgage down payments using projected income must be at least 10% of the purchase price of the home.
Uninsured mortgage down payments using projected income must be at least 20% of the purchase price of the home.
Generally speaking, only half of your down payment can be from borrowed or gifted funds.
However, each lender can have different rules around this. So, it’s best to speak to a mortgage broker who can better direct you, based on your circumstances.
Contact us today – we’re ready to help!
How will debt affect my projected income mortgage application?
Debt will be accounted for in your application review. This includes foreign debt, student loan debt and lines of credit, whether or not they are currently due for repayment. These will factor into your debt service ratios.Read more
But, your projected income may be the key to your mortgage approval, nonetheless. It will show that you can afford to pay off existing debt and take on a home purchase.
This is another reason medical students may want to use projected income mortgages. Otherwise, their debt with their current income may not leave many options open for a low-rate mortgage.
If you are concerned your level of debt may exclude you from a mortgage, we encourage you to get in touch. When we learn a little more about your case, we’ll be able to advise on whether or not you may still qualify. It doesn’t take much time, and there’s no risk to you.
Can I use a projected income mortgage to buy an investment property?
No, this type of mortgage program is only for owner-occupied, principal residences.
However, if you are looking to buy an investment property, there may be other mortgage programs you can apply for. Contact our team of mortgage brokers, and we’ll help you find a lender to meet your needs.
What exclusions apply to projected income mortgages?
This mortgage program does have some exclusions you should be aware of. Generally, they are only available for new purchases, refinances or mortgage transfers for traditional homes, like condos or houses in residential neighbourhoods. As mentioned above, the home must be your primary residence.Read more
Projected income mortgages are not available for secondary homes, rental properties and mobile homes. They also can not be used for purchase plus improvements programs or progress draw mortgages (for building a new home).
Other exclusions may apply. It’s best to speak with a mortgage broker to find out if you can qualify for this program. Some lenders can be more lenient than others, which can make this a bit of a ‘gray area’ when it comes to qualifying for a mortgage.
Contact us today, and we’ll learn more about your case to be able to recommend a mortgage program that works for you.
Start your medical career in the home you want to own and live in; a projected income mortgage can help
There’s no need to wait until you’re half-way through your medical career to purchase a home! You may be able to get into the property market a lot sooner!
By speaking to one of our Vancouver mortgage brokers, we can help you navigate the home financing process a lot easier. We’ll be able to speak to your unique case and financial situation. And, like other mortgage brokers, we work free of charge to you.
You have nothing to lose! Contact us today and we’ll begin researching your mortgage possibilities.