Physician Mortgage Loans for Physicians & Doctors
Physicians, especially those early in their careers, have rapidly increasing income levels and need a specialized home loan to reduce the burden of their mortgage payments. Being in a profession that requires 24 hours attendance, it becomes tough for them to manage their finance and loan obligation.
A Doctor Loan Program is a specialized home loan financing program for medical doctors, including residents and fellows, willing to purchase a primary residence with a minimal down payment. A doctor loan program is a blessing for practicing physicians as it is designed keeping in mind their specific need and therefore they are the one who can benefit from it the most. The several benefits of the physician home loan over any conventional one are-
• Higher chance of Approval- Physician Loan Program or Doctor Loan Program holds a higher chance of approval as most often new in-practice physicians are approved with physician home loans. It does not require much of documentation, therefore physicians find it easy to avail.
• Low Down Payment- It has extremely low down payment of 0-5%. Depending on the bank making the loan, the location of the property, and the loan amount, usually 90-100%of the loan value is financed.
• Flexible Proof of Income- It allows flexibility regarding proof of Income for a self-employed physician to qualify with as little as a six-month history of income, enabling them to buy a home almost two years earlier with a doctor loan than a conventional loan. An employment contract is also considered as a proof of income for physicians who are at the start of their career.
• Higher Loan Limits- It provides higher loan limits depending on where the doctor is located and also depends upon the philosophy of the institution that offers the loans. However, it is offered at a higher loan limit than any conventional loan amounting between $ 850k to $1.5 million.
• PMI not required-Principal mortgage Insurance (PMI) is a costly insurance policy that protects the bank if the mortgagee, fails to make the promised payments on their home loan.Doctor Mortgage Loans does not require the doctors to purchase PMI as it is considered that a physician’s odd of defaulting the loan is very low.
• More Liberal Guidelines- Banks underwrite the loan with more liberal guidelines for the physician mortgage loan, but for taking on that added risk that general guidelines do not allow, they charge a slightly higher rate. If typically the doctor mortgage is going to save .5% to 1% in annual PMI, this enables physicians to pay .25% to .5% higher rate for this loan type.
• Waive off Medical School Loans- For physicians carrying heavy student loan burdens early in their careers, the Doctor Loan Program is a huge benefit as it waives off medical student loans from their debt ratio.
• Allow Gift Funds for closing costs- Some Physician Loan Programs even allow physicians to use gift money for a down payment.
The Physician Mortgage Loans allow doctors/physicians many benefits as mentioned above like making principal reductions that trigger both lower mortgage interest rates and lower minimum monthly payments. For these reasons, a doctor loan is considered an extremely lucrative idea, but not everybody qualifies to apply for one.
Doctor Loan Program or Physician Loan Program benefits only a few selected groups of doctors that include medical physicians (MD), doctors of osteopathy (DO), dentists (DDS/DMD), and veterinarians (DVMM). Some banks or lenders also offer physician mortgage loans to podiatrists (DPM) and optometrists (OD). These loans are frequently restricted to individuals/ students that have graduated from medical school within the past three years only. Health care providers such as chiropractors, registered dieticians, and respiratory therapists are not considered eligible for Physician Mortgage Loans.
Before Doctor Mortgage Loans, it seemed impossible for a medical student to get his residence, with zero earnings history, no cash, and abundant student loan, to qualify for a loan. Doctor mortgage loans have benefitted the early-career physicians by lending them a more significant amount of money with fewer pre-requisites. The goal has been to help physicians get a kick-start to their career and has been incredibly appealing because of being marketed as a unique program just for physicians.