Physician Loan? Veterinarian Loan?
Is a Physician Loan Right for You?
Are you a physician? Dentist? Veterinarian? Optometrist? Nurse practitioner? Or physician assistant? If so, you could qualify for a specialized home mortgage program for physician loans. Your physician loan has a low down payment, doesn’t require mortgage insurance, and is available in jumbo loan amounts.
Physician Loan Guide
This guide from Good to Go Mortgage covers the details of a Physician Loan. This is provided so you can decide what is best for you. We will cover:
- What medical professionals qualify?
- What are the features of a Physician Loan that make it different from other mortgages?
- What are the requirements to qualify?
- What about mortgage insurance (PMI)?
- What about a down payment?
- What about the interest rates?
- What terms are available?
- Can I refinance my physician loan?
- Is a physician loan always a good idea, if I qualify? If not, what is better?
The popularity of physician loan programs has been on the rise lately. Greater awareness of the programs have lead to physicians taking advantage of the exceptional offers available to them.
Doctors are seen as low-risk borrows to lenders. The medical profession offers a stable job market and high salaries. That’s why the physician loan program has grown over 9 fold in the last 10 years.
What medical professionals qualify for Physician Loan programs?
The physician loan programs are designed to give those with medical training a specialized mortgage option. Many medical professionals deal with excessive student loan debt. This gives you a way to realize the dream of home ownership much sooner than would otherwise be possible. A signed contract for employment is the first step.
Professionals who may qualify include:
- Physician Assistants
- Nurse Practitioners
- Medical Residents
- Attending Physicians
If you have medical training of any type, check to see if you qualify.
What are the features of a Physician Loan that make it different from other mortgages?
A physician loan is different from other typical home mortgages. The focus on specific challenges that physicians face in qualifying has shifted the key features. How is it different than typical mortgages?
Here’s some of the common features:
- Student loan debt is considered less critically
- Very low or zero down payment options
- Private mortgage insurance is not required (PMI) even with less than 20% equity
- Jumbo Loan amounts don’t increase the interest rate
- Your signed employment contract is considered to be proof of income
It is this combination of features that make it possible for many physicians to purchase real estate. New doctors look for property close to the hospital where they work, since rental options are often scarce. More seasoned physicians look for jumbo loans on luxury properties.
What are the requirements to qualify?
Qualification requirements for a physician loan have some differences from typical mortgages. There are some requirements that are the same.
Your signed employment contract is considered as proof of income. Supplying the last few years of your taxes may not be necessary.
A traditional mortgage will limit your DTI (debt to income ratio)to 35 to 40%. Physicians often have high DTIs because of high student loan debt. A physician loan can exceed these normal ratios. Either the impact of your student loan debt will be recalculated, or in some cases dismissed completely. Once your DTI is lowered, you qualify more easily for financing, and for better terms.
Your credit score is important when applying for any loan. The better your credit score, the more likely you are to qualify, and have a choice of terms.
What about mortgage insurance?
Usually, you have to pay a monthly fee, called PMI, until there is 20% equity in your property.
- Typically PMI costs between 0.3 to 1.5% annually, based on the face value loan.
- A 20% down payment means no PMI on any mortgage.
- Avoid paying the PMI even before you have 20% equity.
What about down payments?
A physician loan is specifically designed for doctors who have high income, and low savings. This is usually attributed to the high cost of medical education.
- You can choose to purchase a home based on your current income level, not on your past debts or expenses.
- Low or zero down payments are typical.
- The down payment requirement is based on a combination of your income and the property. That’s why every situation is unique.
What about the interest rates?
Interest rates are highly competitive.
- Medical professionals are considered to be extraordinary clients, so rates are excellent.
- Rates vary based on the property you are looking to purchase, or to refinance.
- The interest rate is also based on your income, credit score, debt, retirement savings and liquid cash reserves (money in your savings or checking accounts).
What terms are available?
Physician loan mortgages have the same terms as other mortgages. Many physicians choose shorter terms if they believe they will not be remaining in the same property, or area for the longer terms lengths.
The professionals at Good to Go Mortgage can advise you on the best term options for your situation.
Can I refinance my physician loan?
Yes, absolutely. If you already have a physician loan you will want to review it, just like you would any other mortgage. It is time to review and decide if refinancing is a good idea when:
- There is now more than 20% equity in your home
- The interest rates drop
- Your credit score goes up
- You pay off your student loans
- The balance on your loan is now lower than the jumbo loan limits in your area
- You are thinking of changing your plans
- You could use some of the equity in your property in cash
Most doctors who have had a physician loan for a few years are best to have it reviewed to see if it is a good idea to refinance.
Is a physician loan always a good idea if I qualify?
No. A physician loan is an exceptionally good idea in many situations when medical professionals and their property qualify. In other situations, other mortgage options can be a better idea. Consider these aspects of your situation:
- If you already have a 20% down payment, a conventional mortgage is better.
- If you are in the military, are a veteran, or are in the reserves, a VA loan is another option.
The physician loan program is designed to allow medical professionals to secure their futures by owning real estate. With student loan debt, and high rental costs near medical facilities, all kinds of doctors are taking advantage of this exceptional opportunity.
A physician loan can help you stop wasting money on rent, or move into the luxury house of your dreams. Prequalify today.