Doctor Home Loans: Buy Now Or Wait?

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2023 Physician Mortgage Loan

The housing market is still hot going into 2023. The overriding consensus is that home prices will not drop at a noticeable rate anytime soon in most housing markets. 

Many potential home-buyers are hesitating to purchase their homes, waiting to see if 

housing prices will drop. The realities of the 2023 real estate market do not support this decision.

The reality is that though home prices may, in fact, decrease slightly over the next year, mortgage rates are more likely to be higher due to rate hikes. This can cost homebuyers more per month, and many will refinance when rates get lower. According to Forbes, today’s market has only 1.7 months of supply. Since rates will continue to rise and the housing supply is historically low, there is no better time than the present to seek a mortgage.

New construction may be a better investment. Physician doctor loans include mortgages for new construction as well as traditional home buys. 

Advantages for doctors include qualifying for a loan with zero to very little money down and no private mortgage insurance (PMI.) Healthcare professionals can circumvent the added expense of buying a home in a hot market by taking advantage of the ability to put down less than 20% – and still secure financing.  

Additionally, physicians don’t have to carry PMI (IE insurance that covers the mortgage loan balance in the event borrowers default on their loan), so they can easily save anywhere from an extra $100 to $300 a month.

Lenders understand that physicians are in a better position when compared to the average home buyer. They are borrowers banks can bet on due to high income and job security.  However, some lenders restrict their zero PMI physician loans to those working within the first decade of their careers.

The good news is that several different types of Physician loans exist in a market, such as the current one. 

With fixed rate options, the loans have a fixed interest rate for the entire life of the loan.

With Adjustable Rate Mortgages (ARM), a fixed interest rate is included for only a portion of the loan term. This can be beneficial in the near term, but with rates fluctuating, the former may be the better option, even with a doctor’s salary growth in the future. 

Here are some examples:

Fixed Rate Physician Mortgage Loans with a 30 yr fixed rate of 4.75% versus an ARM Physician Mortgage Loans: 7/1 ARM  – 3.75% which can increase after the initial 7 year period is up

Compared to:

Conventional Mortgage that includes PMI: 30 yr fixed rate – 4.25% plus PMI

Now would be an optimum time to take advantage of physician loans and purchase a house instead of waiting.
That said, finding a lender that specializes in these types of loans can be confusing. Not all banks or credit unions offer the doctor mortgage loan program and all programs vary. MD Mortgage Loans makes it easy. We have compiled a list of Physician Mortgage Lenders and Banks by state and qualifications.

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