According to real estate marketplace Zillow, the age of the typical first-time homebuyer in the U.S. is 34 years old. For those in the medical field, four years for medical school, a minimum of three years for residency (maybe more to specialize with a fellowship) means most medical students do not even become independent physicians until they are in their early 30s. Medical students and new physicians typically have a harder time when it comes time to purchasing their first home.
Combined with the lack of inventory attributed to the current pandemic-era real estate market, relaxed loan options are a valuable tool. Physician loans, or “Doctor loans,” can help elevate some of the obstacles of home ownership and provide rewards for those in the medical field for all their time and training.
The Doctor Mortgage Loan Program is designed to help those who qualify receive a mortgage loan from participating lenders with zero to very little money down and no private mortgage insurance (PMI). The doctor loan generally makes allowances for deferred student loans. Doctors would normally be at a disadvantage by a lenders’ DTI requirements, as most physicians carry a six-figure medical school debt. Therefore, many doctor loan programs don’t count med school debt if the payments are deferred or in forbearance for a certain period.
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.
- An employment contract can be used as evidence of income
Lenders base these loans on future earnings by physicians. Most physicians will earn an annual income between $150,000 and $312,000 according to ZipRecruiter. Doctors are also shown to have lower default rates on loans with an average of just 0.2% default rate.
So who qualifies for the Doctor Home Loan Program?
A “qualified borrower” is normally defined as a Licensed Medical Resident, fellow or attending physician with a signed contract for employment. Medical Physicians (MD) and Doctors of and Osteopathic Medicine (DO). Some lenders also include Dentists (DDS/DMD), veterinarians, and other doctors such as Podiatrists and Optometrists. For a full list refer to the MD Mortgage Loans website here.
Lenders understand that the path to becoming a doctor or dentist is a multistage process. The criteria for lending will differ according to how far along a medically qualified borrower is in their training and career.
Some lenders will allow qualified borrower to satisfy their employment requirement by producing an employment contract even before their residency begins. Still, other lending programs will lend to those with less than two years of self-employment or work as independent contractors.
The next important step would be to find a qualified lender to work with. Though a challenge, as not all banks or credit unions offer the doctor mortgage loan program, MD Mortgage Loans can help. They have compiled a list of Physician Mortgage Lenders and Banks by state and qualifications.
Whether a recent graduate, licensed medical professional, or medical resident, MD Mortgage Loans can help to find professional physician mortgage programs and industry-leading competitive rates that fit a variety of financing needs.