My day yesterday was taken up getting into an interesting debate over “Fellowship Income” vs “Being a Fellow”. What I learned was that Fellowship Income is not the same as being a “Fellow” paid directly as a W-2 employee by the hospital or employer. Fellowships are generally paid by grants and are viewed as being a student.
Being in Boston, the mecca of Medical Fellows, this is an extremely important topic. Two of the most important factors when banks determine income is predictable and stable.
If you are a medical fellow, there is a 99.999% you are a W2 employee. To avoid confusion when applying for a home loan, when the banks asks for your position, use the term physician, and make it clear you are a W-2 employee.
Employee paid with a base income fall under the category “Expiration Date Not Defined” – which means you do not have to have a three year (or other specific length of) guaranteed contract. However, it is strongly suggested, if your tenure with the hospital is ending soon, you have another job lined up.
For the person that is on fellowship income, and essentially is a contract employee, the lender is going to ask:
- does the borrower have a history of receiving this income,
- is there an expiration date on the fellowship and is it likely to be renewed,
- is it dependent on grants,
- is it a stipend or a salary,
- does the employer indicate a likelihood that the borrower will continue in that role?
Lenders are looking for two year history and three year continuance. Essentially the lender is trying to determine if the income is predictable and stable.