Zero Down Payment Options for Physician Mortgage Loans

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Healthcare workers who take advantage of physician home loans can usually afford their own homes better than with a conventional home loan. The Doctor Mortgage Loan Program is designed to help professionals who qualify to receive a mortgage loan from participating lenders with zero to very little money down and no private mortgage insurance (PMI.) 

A common requirement of a conventional mortgage has a 20% down payment. This opens up a world of opportunity for homebuyers. Many potential home buyers can put down less than 20% and still secure financing.  However – there is a catch. Lenders will also require an extra monthly fee covering the cost – IE PMI. PMI is insurance that covers the mortgage loan balance if borrowers default on their loans. This became the industry standard after the 2008 housing debacle. Many lenders automatically include PMI, where the down payment is less than 20% of the purchase price.  Thankfully doctors can usually bypass this with a doctor mortgage loan from one of our top physician mortgage lenders.

How do potential homeowners determine how much to put down? Is it wise to put 0 to 5 percent down? Or should one wait to do the full 20 percent? The beauty of the physician home loan program is zero down options and having no PMI required- which can save anywhere from $100 to $300 extra a month.

Lenders can also be picky about where the down payment is coming from. Though many Doctor Loan programs allow for a small down payment, the guidelines concerning where the funds are derived can be complicated.

Even with a minimum of 5% of the purchase required from a lender, that money will have to come from personal funds – such as checking, savings, investment accounts, and more. 

Most lenders ask for 60 days of a person’s most recent statements to stand as evidence of the down payment.

Many lenders won’t accept gift funds – so a chunk towards the down payment from a third party should not be deposited within a two-month window of applying for a loan. However, with physician loans, many lenders welcome gift funds as part of the down payment. 

Some first-time buyers want to wait until they save up the full 20% for a down payment. 

That said, saving up for a full 20 percent has become more difficult with inflation. 

Potential borrowers who are renting will also have trouble as rents are increasing over the next several years. For many, buying a house makes more financial sense than renting, as mortgages remain very affordable. And more affordable still for healthcare workers who take advantage of a physician loan.

Banks understand that physicians are unique compared to the general public and are attractive borrowers because of income and job security. 

While zero percent down is only offered by a select few regional banks and is not available in all states, a typical physician loan program requires 5% down for loans under $750,000 and 10% down above that. 

Bear in mind that some banks restrict their no PMI physician home loans to doctors within the first decade of their attending career. After ten years in practice, lenders believe doctors should be able to save up enough for a full 20% down payment. So the time to act is now.

Now would be an optimum time to take advantage of physician loans. However, finding a loan officer specializing in physician home loans with no PMI can be harrowing.  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. 


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