Lenders Love Doctors!
A conventional home loan is typically the most common type of mortgage. It’s what most of your friends and neighbors probably have. However, some banks offer special mortgage products called Physician Loans. A Physician home loan can be available to physicians and dentists. Other medical professionals can also be included, depending on the lender. These loans have fewer restrictions when compared to conventional loans.
Below are some Pros and Cons of using Physician Loans.**
**Although these loans represent a terrific opportunity for physicians, physician loans may not always be the best option, especially in high-demand, competitive markets. Other products, such as conventional home loans, FHA, VA, and Adjustable Rate Mortgage options, are also available.
Pros
More accommodating to a doctor’s unique situation
Allow for 0% down payment in some cases
No private Mortgage insurance (PMI)
Special considerations given to student loan debt when calculating your debt to income ratio (DTI)
You are able to qualify based on your physician’s contracted income (allowing physicians to qualify before you start working)
Limited cash reserves are required
Cons
Can have higher interest rates
There can be fewer fixed rate options
I can help you find the right lender for your specific needs. I have a network of preferred lenders ready to meet with you!
Physician Loan FAQs
How do I qualify for a physician loan?
Each lender has different criteria, but you typically have to be a qualified medical professional, employed, and have a good credit score.
Can I qualify for a physician loan as a resident or fellow?
Yes, there are loan products available at all stages of your medical journey.
What properties are eligible?
The property purchased must be your primary residence. It can be a townhome, condo, single family home, etc.
I have student loan debt…does that make me ineligible?
Physician Loans consider the burden of student loan debt and have special treatment when calculating the debt-to-income ratio (DTI), employment history, and student loan repayment options.
Proof of employment and income are required. Depending on the lender and program, physician loans are flexible with these requirements. A contract is sufficient for most lenders and can help you purchase a home before your start date.
Student loan repayment obligations are a significant component of applying for a conventional or physician loan. A standard calculation is 1% of your outstandisng student loan balance as your monthly obligation. However, Physician loans have flexibility such as income-based repayment options as well as deferment.
Since most doctors have student loans that are well over six figures, their DTI would render them ineligible for homeownership. That’s not the case with doctor home loans. Other types of loans still count toward DTI, including auto loans, credit card debt and personal loans.
What is PMI?
When you attempt to purchase a home with a down payment of less than 20%, the lender typically requires the purchasing of Private Mortgage Insurance, or PMI. Its purpose is to protect the lender in the case that you end up in default or foreclosure. The fee is typically around 0.3% to 1.5% of the original loan amount per year. Physician mortgage loans do not require private mortgage insurance (PMI) when a borrower puts down less than 20%.
