Doctor home loan mortgages offer unique terms setting them apart from traditional home loans. These types of loans are made available to professionals in the healthcare space – such as doctors and dentists. The Physician Home Loan Program, or “doctor loan,” makes it easier for medical professionals to purchase a home.
These types of mortgages have more flexible guidelines. This means they don’t have to adhere entirely to more strict parameters – such as those set forth by Fannie Mae or Freddie Mac.
Even though the guidelines differ from lender to lender, some things are similar. IE most doctor loans are obtainable with lower down payments – from 0% to 15% than conventional loans. These types of loans are unique because they usually don’t require Private Mortgage Insurance (PMI.)
Additionally, since physicians usually carry a large amount of med school debt, their student loan burden is calculated differently or may not be included when determining approval. These types of loans follow different guidelines regarding proof of employment – for instance, they take fellowships and residencies into account. Many lenders accept contracts as evidence of future earnings instead of proof of income, such as pay stubs or W-2s.
Though it varies from lender to lender and bank to bank, in general, Residents (MD), Fellows (MD), Attending (MD), Physicians and Doctors (MD), Doctors of Ophthalmology (MD), Doctors of Podiatric Medicine (DPM), Doctor of Osteopathy (DO), Doctors of Dental Science (DDS), Doctors of Dental Medicine (DMD) as well as Veterinarians, Pharmacists and some Nurses qualify depending on the physician mortgage lender’s program.
Why would banks and lenders offer this type of product?
Lenders and banks believe that physicians and those in the healthcare industry are a “good bet.” Their income will continue to grow over the years, and more than likely, these borrowers will invest in more property in the future. Additionally, these banks can “cross-sell” doctors who will eventually become “high-earners” by serving as a firm where borrowers can bank and invest.
These borrowers are also a safe bet due to their traditionally low default rates. Over the years, default rates on these types of loans have been substantially below expected levels compared to more traditional loans.
Lenders and banks also believe that healthcare professionals run in circles where word-of-mouth and referrals can benefit them. By making these physicians long-term customers, they in turn, are more likely to recommend their bank or lender to their equally financially proficient colleagues.
Doctors and healthcare professionals work hard for years before even entering the workforce and purchasing a home. Banks and lenders know this type of commitment and work ethic will carry on, making these types of borrowers “Safe Bets” when it comes to financial investments.
Finding a proper lender can be equally hard work. MD Mortgage Loan has compiled a list of Physician Mortgage Lenders and Banks by state and qualifications. Qualified borrowers can narrow the list to find the right lender for their needs. The first step is sorting through industry-leading competitive rates that fit various financing needs.