If you’re reading this, you’re most likely a physician just starting practice. After long days of treating patients and several years of renting, you want to retreat to a comfortable home that you can build equity in and relax.
Finding the right home is just part of the home buying process. Qualifying for a mortgage may be harder than finding a home given your unique financial situation. On the one hand, you have substantial earnings potential. On the other hand, you have little income history, a massive amount of student loan debt, and little to no savings. So how do you buy that perfect home?
Mortgages Designed for Medical Professionals
One potential option is a physician home loan, often referred to as a doctor loan. This type of mortgage loan is specifically designed for the unique challenges facing doctors and dentists who are starting out their careers later in life than other professionals, and doing so with a massive amount of student loan debt.
Lenders who provide physician loans will waive or reduce many of the requirements of traditional mortgages, including:
Income history: Whereas traditional loans require proof of historical income (e.g. W-2s, 1099s, or pay stubs), physician loans will allow doctors to close on their homes before they begin work, provided they have a signed contract or offer letter in hand.
Self-employed medical professionals can qualify with as little as six months of historical income, versus traditional mortgages that require two years’ worth of 1099s.
Debt-to-income: Traditional mortgages usually stipulate that a borrower’s total debt-to-income ratio, including the mortgage, not exceed a certain percentage. This can be difficult for physicians who have student loans well into six figures. Physician loans either recalculate the impact of student loan debt or dismiss it altogether, making it easier to qualify.
Down payment: Even the most accommodating mortgages in the conventional marketplace require a 3% down payment. For a $500,000 home, you would need $15,000 for a down payment.
Doctor loans, on the other hand, will often allow qualified buyers to purchase high-valued homes with no money down.
Private mortgage insurance (PMI). PMI is often a requirement on conventional mortgages in which the down payment is less than 20% of the purchase price. This is designed to protect the lender from the risk of default and is added to the borrower’s monthly payment.
Physician loans, however, do not require PMI, even if you do not make a down payment. Many lenders who offer this type of loan vary the benefits they offer based on:
Whether you are a resident/fellow or a practicing physician
How much you intend to borrow For example, some lenders will offer a $500,000 mortgage with no down payment requirement for residents and fellows and a $1 million mortgage with a 5% down payment. That cap rises to $650,000 and $1.5 million, respectively, for practicing physicians.
We offer a doctor loan product! Please call us to get specific information tailored to your situation.
Janus Mortgage Corporation is a mortgage broker licensed in the State of California, under the auspices of the California Bureau of Real Estate license number 02038085 and the National Mortgage License Registry NMLS Number 1690954, . All offers for loan programs are made for loans on California properties only.