How Much Do Physicians Need for a Down Payment?
Physicians may need anywhere from 0% to 20% or more for a home down payment, depending on the mortgage program, lender, loan amount, credit profile, and property. Some physician mortgage programs allow qualified doctors to purchase a primary residence with little or no down payment, while conventional mortgages may require a larger down payment to avoid private mortgage insurance (PMI).
For physicians, the right down payment is not always about putting as much money into the home as possible. After years of medical school, residency, and fellowship, a physician may be balancing student loans, relocation expenses, emergency savings, and other financial priorities. A lower down payment may preserve cash, while a larger down payment can reduce the amount borrowed and potentially lower borrowing costs.
How Much Is a Typical Down Payment for a Physician?
There is no single down payment requirement for every physician. The amount depends on the mortgage program and the lender's underwriting requirements.
For example, some medical professional mortgage programs currently advertise financing with 0% down for certain loan amounts, while others may require 5% or more. TD Bank, for example, lists 0% down financing up to $1 million under its medical professional mortgage program, with higher down-payment requirements at larger loan amounts. Other physician mortgage programs advertise financing with as little as 5% down.
These examples do not mean every physician will qualify for the same terms. Loan limits, eligible professions, property types, location, credit requirements, and underwriting guidelines vary by lender.
Do Physicians Have to Put 20% Down on a Home?
No. A physician does not necessarily need a 20% down payment.
A 20% down payment is commonly associated with conventional mortgages because borrowers putting less than 20% down will typically have to pay private mortgage insurance. The Consumer Financial Protection Bureau notes that mortgage insurance is generally required on conventional loans when the down payment is below 20%, although specific loan programs and lender requirements vary.
Physician mortgage programs can work differently. Some are specifically designed to allow qualified medical professionals to finance a home with a smaller down payment and, in some cases, without PMI.
How Much Would a Physician Need to Put Down on a $500,000 Home?
The amount depends on the percentage required by the loan program.
For example:
Down Payment Amount on a $500,000 Home
0% $0
3% $15,000
5% $25,000
10% $50,000
20% $100,000
These are simply mathematical examples, not a statement that a physician will qualify for a particular down payment option.
A physician should also remember that the down payment is not the only cash needed to purchase a home. Closing costs, prepaid expenses, moving expenses, immediate repairs, and emergency savings can also require cash. The CFPB specifically recommends accounting for costs beyond the down payment when planning for a home purchase.
Why Might a Physician Choose a Smaller Down Payment?
A smaller down payment can allow a physician to keep more cash available for other financial needs.
This can be particularly relevant for physicians who have recently completed residency or fellowship and are dealing with student loans, relocation costs, or the transition into an attending position.
For example, instead of putting $100,000 down on a $500,000 home, a physician using a qualifying 5% down-payment program could potentially keep $75,000 more in liquid funds. However, the tradeoff may include a larger mortgage balance and potentially different interest rates or fees.
The important question is not simply, "How little can I put down?" It is also, "How does this down payment affect my total borrowing costs and financial reserves?"
Does a Larger Down Payment Help Physicians?
It can.
A larger down payment means borrowing less money. The CFPB explains that a larger down payment can reduce the loan-to-value ratio and may affect mortgage pricing and mortgage insurance requirements.
For example, putting 20% down on a $500,000 home means borrowing approximately $400,000 rather than $475,000 with a 5% down payment.
However, putting more money into the home also means having less cash available for emergencies, investments, moving expenses, or other financial priorities. A physician should consider both the mortgage savings and the value of maintaining adequate cash reserves.
Can Physicians Buy a Home With No Down Payment?
Some physicians may qualify for physician mortgage programs that offer 100% financing, but availability is lender-specific.
For example, TD Bank currently advertises 100% financing for eligible medical professionals on mortgage amounts up to $1 million under its medical professional mortgage program. Other physician mortgage programs may require a minimum down payment.
Therefore, "physician loan" does not automatically mean zero down. Physicians should review the specific program's requirements before assuming they can purchase a home without a down payment.
Does a Physician Mortgage Require PMI?
Not necessarily.
Traditional conventional mortgages generally require PMI when the down payment is below 20%, although the exact requirements depend on the loan.
Some physician mortgage programs are structured with high loan-to-value financing without PMI. For example, Mascoma Bank's physician mortgage program states that it can offer financing up to 95% LTV without PMI for eligible borrowers.
A physician should still compare the complete cost of the mortgage, including interest rate, fees, closing costs, and other requirements, rather than focusing only on whether PMI is charged.
What Other Costs Should Physicians Budget For?
The down payment is only one part of the upfront cost of buying a home.
Physicians may also need to budget for:
Closing costs
Homeowners insurance
Property taxes
Prepaid interest and escrow
Appraisal and inspection costs
Moving expenses
Immediate repairs or improvements
Emergency savings
The CFPB notes that closing costs can include items such as origination charges, appraisal fees, credit-report costs, title insurance, government fees, and prepaid or escrow expenses.
This is especially important for physicians who have recently relocated for a new position and may have several large expenses occurring at the same time.
Should Physicians Put 20% Down or Choose a Lower Down Payment?
The answer depends on the physician's financial situation and the terms available.
A larger down payment can reduce the loan balance and may reduce mortgage insurance or other borrowing costs. A smaller down payment can preserve cash and may allow a physician to purchase sooner.
For a physician with substantial liquid savings, putting more money down may be worth comparing against keeping those funds available. For a resident or new attending with limited savings but strong future income potential, a low-down-payment physician mortgage may be another option to investigate.
Rather than focusing on a particular percentage, physicians should compare the total cost, monthly payment, cash reserves, and long-term financial implications of each mortgage option.
What Should Physicians Ask a Lender About the Down Payment?
Before choosing a mortgage, physicians can ask:
What is the minimum down payment for this program?
Is 0% or 5% down available for my loan amount?
Is PMI required?
Does the interest rate change with the down payment?
Are there lender fees or points?
What closing costs should I expect?
Can I use gift funds toward the down payment?
Are residents and fellows eligible?
Can an employment contract be used for qualification?
Are there maximum loan amounts?
Does the program have property or location restrictions?
Comparing several loan options can help a physician understand how the down payment changes the overall cost of the mortgage. The CFPB recommends asking lenders how different down-payment amounts affect interest rates and other loan terms.
What Is the Bottom Line for Physician Down Payments?
Physicians may have access to mortgage programs requiring 0%, 5%, 10%, or another down-payment amount, depending on the lender and the borrower's qualifications. A 20% down payment is not universally required, but putting less than 20% down on a conventional mortgage will typically trigger PMI.
The most appropriate down payment depends on more than the physician's income. Student debt, cash reserves, credit, loan amount, interest rate, closing costs, and long-term plans should all be considered before selecting a mortgage.
FAQs About Homeownership for Physicians
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Some physician mortgage programs offer 0% down financing to qualified physicians, but eligibility, loan limits, property requirements, and other terms vary by lender.
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No. Some physician mortgage programs allow significantly lower down payments, while conventional mortgages generally require PMI when the down payment is below 20%
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A 5% down payment on a $500,000 home is $25,000
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