While most active home buyers are familiar with common forms of financing like FHA loans, VA loans, or a conventional 30-year fixed home loan, another unique mortgage product that is out there and available to a certain segment of borrowers is a Physician Home Loan.
Specifically designed to provide medical professionals with a way to finance a new home purchase before their income potential is fully achieved, Physician Mortgage Loans have fewer restrictions than a conventional home loan and are certainly something to consider if you just started your residency or even freshly out of med school. And in case you’re wondering just how Physician Home Loans differ from other traditional forms of financing, here are 5 key things to know about this affordable and effective way to purchase a home:
• Many lenders who offer Physician Home Loans accept a low down payment of just 5% but some will even accept 0% down, which is not only unique but also quite rare for the mortgage industry.
• Many Physician Home Loan borrowers receive 100% financing, don’t have to pay private mortgage insurance (PMI), and also take advantage of the same mortgage rates as everyone else with good credit.
• Student loans won’t be considered when lenders analyze your debt-to-income ratio, even if your student loan debt is substantial.
• In order to apply for a Physician Home Loan, here’s a quick summary of what you’ll need: proof of medial degree; signed contract or job offer that states you’ll be starting within 60 to 90 days; minimum credit score of 700, although some lenders may approve an application with a credit score of 680; a debt-to-income ratio (DTI) of 45 percent or less that doesn't include student loans.
• Physician Home Loans don’t have a cap on how much can be borrowed. Additionally, you likely won’t have to pay a higher interest rate for an amount that’s equal to or greater than a jumbo loan, which was set at $484,350 in 2019 for most of the U.S.
