Getting a doctor mortgage loan gives physicians a quick path to homeownership. The mortgages come with competitive terms that aren’t available to buyers who aren’t doctors. The reason is doctors are considered to be very low-risk borrowers.
According to a 2018 Doximity report, family medicine, and internal medicine top the list of the most in-demand specialties. For lenders, this is attractive, because they know their burrower will have plenty of work opportunities, and at a good salary.
If you’re a doctor the good news for you is you can avoid all the obstacles that keep most prospective home buyers out of the market.
Advantages of a Physician Mortgage Loan
The biggest advantage of a doctor mortgage loan is avoiding the private mortgage insurance that is added to loans when buyers don’t have a 20% down payment. Buyers save hundreds of dollars each month by avoiding a PMI.
Additionally, doctors can get 100% financing in most cases. If you add in a good credit score you can access the best rates available as well.
How to Qualify for this Loan
You don’t have to do a lot to qualify for a doctor mortgage loan. The loans are considered portfolio loans, meaning they will not be sold to another servicer like Fannie Mae or Freddie Mac. Each lender will have their own qualifications, but there are some things that will significantly increase your chances of qualifying.
- Proof of Medical degree
- Signed contract indicating your physician job will start within 3 months
- FICO score of 700 or higher
- Deferred student loans
- A debt-to-income ratio (DT) of 45% or less, not including student loans
Downsides to Doctor Mortgage Loans
There aren’t a lot of downsides to a doctor mortgage loan. However, if you think you’ll move again in less than a year you probably shouldn’t go through the process of buying. If you have a low, or no down payment, you’re not going to have enough time to build up much equity. It’s best to stay in your new home for three to five years after getting a doctor mortgage loan and build up some equity.
You should also be wary of taking on too big of a loan, especially if it’s a starter home. Banks are happy to give doctors loans, but that doesn’t mean it’s in your best interest. It’s wise to avoid mortgage payments that account for more than 50% of your monthly take-home pay.
Should you Get a Physician Mortgage Loan?
There’s no doubt that physician mortgage loans can be a valuable tool for young doctors purchasing their first homes. If the timing is right, you may be ready to put down roots and start a family after you complete your residency. The favorable terms and conditions of a doctor mortgage loan will go a long way in helping you get a home you would have otherwise not been able to afford.
