Owning a home is still the cornerstone of the American dream and financial success. A study from Harvard’s Joint Center for Housing Studies found that the average net worth for homeowners was 47.5 times greater than the comparable net worth for renters. It’s no secret that physicians are high salary earners, but they still often face frustration when applying for home loans despite their prominent financial standing. One solution, in particular, the Physician Mortgage Loan, has helped thousands of doctors streamline their way through the homeownership process. This article is going to dissect the physician home loan so you can see if it’s right for you.
No Down Payment and No PMI
For everyday buyers, a home loan requires some sort of down payment in order to secure the property. Ideally, buyers put 20% down to avoid paying extra insurance. Most people can’t afford that number and end up putting 5% or 10% down. A doctor’s mortgage loan, on the other hand, requires little or nothing down to purchase a home. That’s a significant saving that can go to paying down student loans or into other investment vehicles. And of course, you don’t have to pay for private mortgage insurance either.
Student Loan Debt
Every physician and medical professional is familiar with student loans. The average M.D. now graduates with $200,000 in student loan or educational debt. Lenders typically qualify prospective mortgages based on a ratio of debt-to-income with other factors. They are checking to see if burrows can really afford the mortgage payment while paying other debts.
Since doctors have higher levels of student loan debt, it’s a big challenge to fit into a “healthy” debt-to-income ratio in the eyes of lenders. But with a doctor’s home loan, the student loan payment obligation isn’t counted against you when the bank calculates the ratios. The result is it’s much easier for doctors to qualify for a doctor’s mortgage loan.
Avoid Jumbo Loan Fees
In most areas of the country, your loan needs to be under $453,000 to not be considered a jumbo loan. Jumbo loans come with higher interest rates, fees, and more difficult qualifying requirements. This is a huge challenge if you’re home shopping in California and other pricey markets. The good news is, physician loans are immune to jumbo loan limits.
Expedited Closing
When you’re buying a home because you just moved to a new location to start a new position, you want to get in your new home as soon as possible. New work responsibilities will be taking up much of your time. A physician’s loan allows you to close your home loan 90 days before starting your new job, easing the stress and hassle when you arrive at your new destination. Most times, lenders will accept a job offer letter as proof of income for upcoming posts.
Are You in the Market for a Physician Home Loan?
