Those entering the medical field know they have a longer road ahead than most students looking to get their degree and enter the workforce. Medical students contend with four years of medical school, a minimum of three years for residency, and more if there’s a specialized fellowship. Therefore, most med students don’t even become independent physicians until they are in their early thirties.
The average age for first-time homebuyers in the U.S. is 34 years old. This means most med-students are behind the eight ball when it comes to being a first-time home-buyer.
It is certainly worth understanding what options there are for home ownership while still in med school and even residency.
The Doctor Mortgage Loan Program is designed to help those in the medical field qualify for a mortgage loan with zero to little money down and no private mortgage insurance (PMI). Lenders understand the multistage process involved in becoming a physician. Because of this, the criteria for lending vary depending on how far along a student or resident is in their career.
A “qualified borrower” is defined as a Licensed Medical Resident, fellow, or attending physician with a signed contract for employment. So though most don’t qualify while technically in school, it’s never too early to start the process of understanding what will be required and what comes next.
These types of loans also provide some type of leniency in securing licenses. Though conventional loans normally require physicians to be licensed, these loans usually only require documentation that indicates a physician has been “matched” with a residency program.
The Physician Mortgage Loan Program helps those just coming out of med school in that these loans require zero to very little down and, importantly, no private mortgage insurance (PMI) bringing the monthly cost up.
Maybe most important to med students is the fact that while conventional mortgages take debt-to-income (DTI) ratios as an important component when it comes to both loan approval and terms, with physician loans med school debt is not included.
DTI is the percentage of gross monthly income that is spent on monthly debt payments – all of a potential borrower’s monthly debt payments divided by their gross monthly income converted into a percentage. An example of DTI calculation would be a potential borrower who pays $1500 a month for rent, $100 for their car note, and $400 for the rest of their bills. The total monthly payment is $2,000. If the gross monthly income is $6,000, then the DTI ratio is 33 percent. This is ideal as a 43 percent DTI ratio is normally the highest ratio a borrower can have and still get a conventional Mortgage.
With Physician Loans, the incredible amount of med school debt (normally six-figures) that students usually carry is not factored into this ratio. Doctor loans make allowances for med school debt with flexible DTI ratios.
Additional advantages of a Doctor Home Loan include:
- Fixed-rate options
- Up to 100% financing and no monthly mortgage insurance payments
- Higher maximum loan amounts though these are higher for attending physicians rather than for interns, residents and fellows.
Additionally, most participating institutions offer loans to physician borrowers with a credit score higher than 700. So med students should be cognizant of this and make sure to keep up a good to excellent credit score in order to qualify for one of these loans once the time comes.
The next important step would be to find a qualified lender to work with. Each state has their own requirements and locating a qualified lender who works with those just coming out of medical school is important. Since not all financial institutions offer Physician mortgage loans, MD Mortgage Loans can help students find potential lenders while also taking into account the pros and cons of the program for each individual.
Whether a recent graduate, licensed medical professional, or medical resident, MD Mortgage Loans have compiled a list of Physician Mortgage Lenders and Banks by both state and qualifications.
Sorting through industry-leading competitive rates that fit a variety of financing needs is the first step to finding a program that works for the individual and their specific circumstances.