A physician mortgage is a type of loan specifically tailored to meet the requirements of physicians and other high-income professionals. 

But why would a high-income professional need a special loan? Though medicine is a lucrative field promising a plethora of job opportunities and high-earning potential, medical schools can be quite expensive. According to the Association of American Medical Colleges, an average medical student graduates with a debt of $203,062.

With student loans weighing you down, your high debt-to-income ratio can make it difficult to get approved for a regular loan. This is where a physician loan enters the picture. 

If you are considering a physician mortgage loan, here are a few important factors you should know

How is a physician loan different from other mortgage options?

As previously mentioned, doctors may fail to get approved for a regular mortgage. Whether you have just graduated or started residency, your large debt-to-income ratio will come in the way. 

Fortunately, physician loans or doctor loans make special allowances that aren’t typically offered by other lenders. The most attractive feature of physician mortgage loans is that borrowers are usually not required to make a downpayment. It is a convenient and hassle-free financing option. Moreover, you can also skip Private Mortgage Insurance (PMI) with doctor loans.

Are doctor loans only available for physicians?

Contrary to what the name suggests, doctor loans aren’t exclusively accessible to physicians. While most loans are available to medical doctors with M.D. or D.O. degrees, some are also available to dentists, podiatrists, veterinarians, optometrists, orthodontists, Certified Registered Nurse Anesthetists (CRNA), and Advanced Practice Clinicians (PAs, NPS). Besides professionals in the medical field, certain lenders offer physician loans to high-income attorneys and accountants. 

Are professionals with student loans eligible for physician loans?

The short answer is yes. Your student loans may have come in the way of getting a regular mortgage, but they won’t be an issue when you’re seeking a physician mortgage loan. In fact, that’s the main purpose of physician loans. 

However, you should know that physician loans can have higher interest rates than traditional mortgages. That’s because you are not required to make a down payment or pay PMI. We urge you to shop around to find economical rates. 

Is there a credit score requirement?

Yes, you require a good credit score to qualify for a physician loan. Typically, borrowers are required to maintain a 720-740 FICO score range. However, you may get a mortgage with a lower credit score of 680 if you have at least 6-12 months of cash reserves. 

That being said, a credit score lower than 720 indicates that you may not be financially ready to purchase a house yet. It would be better to pay your credit card bills and make other payments to improve your credit score. You can rent for a few years and then consider taking out a mortgage with a better credit score. 

Can you refinance a physician mortgage loan?

Yes, you can refinance your physician mortgage loan. Since your income will likely increase, credit score will improve, and debt will decrease in the subsequent years, refinancing enables you to adjust the loan terms to better suit your needs. 

However, it’s crucial to find the right time to refinance your mortgage. You also need to think about choosing a fixed, variable or adjustable-rate mortgage. 

Final Words

If you are early in your medical career, a physician loan is a beneficial mortgage option allowing you to own a house. Otherwise, buying a house would take a lot longer with your student loans. Hopefully, the above-mentioned details will help you make an informed decision.