The Physician Home Loan Program, or “doctor loan” – is a mortgage that makes it both faster and easier for medical professionals e.g. (Medical Doctors, Dental Surgeons, and Doctor of Podiatric Medicine), qualify right out of medical school with a low-down payment mortgage without mortgage insurance.
These programs have been around for decades and were designed to entice young medical professionals into new banking relationships. Physicians are a low credit risk for banks as, according to ZipRecruiter. they have approximately a 0.2% default rate – much lower than the national average. Lenders also base loans on the future earnings by physicians with most forecast to have an annual income between $150,000 and $312,000.
On average, physicians carry a six-figure medical school debt. This has historically been an obstacle to those trying to obtain a mortgage. Lenders are more flexible with debt-to-income (DTI) ratios, in respect to student loan debt, on the Doctor Mortgage Loan Program. Student loan debt can often be waived from the DTI, if deferred for 12 months.
The other two major advantages of this type of loan are that lenders can offer a mortgage with very little money down – only 0%, 5% and 10% down depending on the lender. Additionally, these loans require no private mortgage insurance (PMI.) This type of insurance protects the bank if a mortgagee defaults or fails to make payments. Normally, PMI is expensive and not tax deductible. With a doctor mortgage loan, physicians can borrow 95% to 100% of the home price with no PMI.
Other advantages of a Doctor Home Loan include:
- Fixed rate options
- Up to 100% financing (with no monthly mortgage insurance payments)
- Employment contract can be used as evidence of income
- Early closing on a loan: up to 60-90 days before starting any new employment (depending on the lender)
- Competitive Fixed and Adjustable rates available
- Gift funds or seller contributions may be used for closing costs
The criteria for lending will differ according to how far along a medical qualified borrower is in their training and career. Finding a qualified lender to work with is crucial to the process and not all banks or credit unions offer these types of doctor mortgage loans.
Buying a home is an important decision with future-centric consequences. MD Mortgage Loans can help physicians find the right lender while weighing all the pros and cons of each program.
MD Mortgage Loans compiled a list of Physician Mortgage Lenders and Banks by state and qualifications. They can help narrow down the right lender fit for a medical professional looking to take advantage of the program.