CPA Home Loans: 3 Reasons Accountants Should Take Professional Mortgages
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In a challenging real estate market, buyers need any advantage or help they can get. But with home prices and interest rates both high, thousands of prospective buyers have found themselves priced out of the market, at least for the time being.
Luckily for some, professional mortgages can provide the flexibility needed to find and buy a home, even in the most complicated real estate markets. One such occupation that oftentimes qualifies for these mortgages are certified public accountants (CPAs).
If you're a CPA, here's what you need to know about the world of special home loans that may be available to you.
What are CPA professional mortgages?
A CPA mortgage loan is a special type of home loan program that allows accountants to receive advantageous financing and other perks when buying their first homes.
Traditionally open to physicians, dentists, lawyers, accountants, and those in other higher income fields, each program works a little differently, depending on the specific lender.
Typically, though, you'll find loans offering 90-100% financing without any private mortgage insurance requirements.
What are some benefits of CPA mortgage loans?
Professional mortgages are popular among those that qualify, for a number of reasons. These include:
Low or no down payment options: Many professional mortgages offer relaxed, or even zero, down payment requirements. The potential to receive 100% financing is oftentimes intended to appeal to high-earning and recent graduates.
Higher allowed debt-to-income ratios: College graduates with high levels of student loan debt may be disqualified from buying homes under many traditional programs, given the impact of debt on a borrower's debt-to-income (DTI) ratio. But professional mortgages oftentimes waive or relax these requirements, since participants tend to be highly educated and have completed postgraduate education.
Waived PMI requirements: Not only can many accountants buy homes without a down payment, but they may also be able to do without paying private mortgage insurance either. PMI is a monthly surcharge that, under normal circumstances, you'll pay monthly until you have at least 20% equity in your home.
Competitive financing rates: Accountant borrowers are typically seen as lower risk than average, so you may even be able to qualify for lower interest rates than other borrowers, regardless of prevailing rates at any given time.
Accountants should use professional mortgages
I'm a huge proponent of physician loans. Here are 3 reasons why I recommend accountants and CPAs use them if they can.
1. You can invest your down payment
Since many professional mortgages allow those with CPA designations a chance to buy a home with no down payment, they can provide you a once in a lifetime opportunity to invest the down payment that you otherwise would have used for your home.
So long as your expected rate of return is greater than the interest rate on your mortgage, your accountant home loan can provide you the opportunity for cheaper financing, no PMI, and the ability to invest funds for the future. That's a win-win-win!
2. Buy more home with the same monthly payment
Accountant home loans provide a great opportunity for you to buy more home with the same monthly payment. Remember - these savings are two-fold. Since you'll likely be able to avoid private mortgage insurance (PMI) and secure a better loan rate, you may be able to buy a home with more square footage, an extra bathroom, or other features that you may not be able to afford otherwise.
In time, with real estate appreciation, this could become a smart financial decision that yields you a higher sales price if you look to sell your home in the future.
3. You may get started before you start working
"Normal" people that don't qualify for professional programs, myself included, typically need to have a documented history of stable income in order to be considered for a mortgage.
Many professional mortgages for accountants and others, on the other hand, allow participants to apply for home financing as long as they have an accepted offer of employment set to begin within a set period of time, normally 90 days.
This means that you may be able to buy a home before you even start your career!
Should you take a CPA loan?
So, you're an accountant and want to know whether or not you should take a professional loan or not. This is, of course, the million-dollar question.
Generally, my advice is that you should think through your short, medium, and long term financial and life goals before you make a decision. Consider an accountant, fresh out of the CPA exam, with $140,000 in student loan debt that may make getting approved for a Conventional mortgage a long-shot.
This accountant, in essence, has two choices. He/she may either:
Wait to buy a house for a period of time
Use a professional loan to buy a home
Ultimately, it comes down to life goals and preferences. Buying the home now with the special program may make sense if an accountant lives in an expensive state with a pricy real estate market. Similarly, it makes more sense if this accountant is ready to settle down, is married (or engaged), or falls in love with a home.
If you're unsure about homeownership or just aren't ready for the responsibility, it is best to wait it out. It isn't like there is a ton of value in the current real estate market anyway.
Here comes the weird part, though. Someday, even when you may be able to afford a home yourself, without a CPA mortgage. Yet, it still may make more sense to take the professional loan, particularly if you have a "money-making" use for your down payment, like investing.
Ultimately, in this scenario, you should compare the financing rates offered to you, as well as consider if your prospective down payment would have been enough to avoid PMI anyway (typically 20%).
Lenders professional mortgages for CPAs
Accountants may opt for a professional mortgage loan from a number of both national and local lenders across the United States. Among these lenders are:
First National Bank of Omaha (FNBO)
U.S. Bank
Broadway Bank
1. First National Bank of Omaha (FNBO)
FNBO is the first bank on our list that offers professional loans to accountants.
There is no 100% financing option, but the bank does offer loans up to $1 million with 95% financing (5% down payment). Additionally, PMI requirements are waived for borrowers in the program.
Borrowers looking to use FNBO must be buying homes in CO, IL, IA, KS, NE, SD, TX, or WY.
2. U.S. Bank
U.S. Bank offers professional mortgages to physicians, but accountants and CPAs can take part in a similar program that offers something called 80-10-10 loans. Under the plan, you'll be able to avoid PMI by taking 2 separate loans:
One for 80% of your home's purchase price
Another for 10% of your home's purchase price
These two loans, combined with a 10% discount, will help you avoid any PMI requirements that you'd otherwise by subject to.
Accountants looking to take place will need to be in the following states: AL, AK, AZ, CA, CO, DC, ID, IL, MA, MD, MT, MI, MN, MS, NE, NV, ND, NM, NY, NJ, OK, OR, RI, SD, TX, UT, WA, WY, WI
3. Broadway Bank
Broadway Bank is a smaller regional option for those in South and Central Texas. Accountants are eligible to borrow up to $1 million with a 5% down payment, all with no PMI.
Additionally, those looking to build their own home can borrow up to $1 million with a close construction mortgage, with up to 90% financing.
Conclusion
Accountants have a number of advantages when it comes to buying a home, but none of them are as large as having access to a professional mortgage program.
Are you a CPA looking to buy a home in the short term? If so, have you considered a professional mortgage loan? Tell me why or why not you're interested in the comments below!
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