Physician Loan

You’ve worked hard to get through medical school and are ready to jump into what lies ahead. Don’t let concerns over student debt and a starting salary stop you from enjoying the benefits of your hard work.

If you’re ready to purchase a home, a physician loan provides unique benefits to those in the medical field. Finance your home before you even start your new job. Get a loan that offers flexible income and debt requirements, options for no or low down payments, and waves the need for mortgage insurance.

What is a Physician Loan?

You have a handful of options when choosing the right loan to buy a home. Loan types often differ based on their qualification requirements and the terms they offer, such as the loan’s length, interest rate, and minimum down payment amount.

Physician loans, also known as doctor loans, are made available to those with high-earning careers to finance a home with fewer restrictions than conventional loans.

As someone emerges from medical school and begins their career, they have unique circumstances that not all professionals face. Medical school often brings high amounts of student loan debt, but this investment also leads to high-earning and secure careers. Physician loans consider these unique factors to help with home financing.

With a physician loan, you don’t need to have earned a consistent salary yet. A contract of employment may be enough. You also may not need to make any down payment at all, or you may need one up to 10% of the home’s value, which is significantly less than the maximum recommended for conventional loans.

Regardless of your down payment amount, mortgage insurance is waived, saving you from paying extra costs upfront and over the life of the loan. Loan limits are also higher than conventional loans, allowing for financing up to $2 million in some cases.

Student loan debt is considered differently as well. We consider your current payment amount rather than the total owed and work with you even if student loans are deferred or you have an Income-Driven-Repayment plan.

These features make physician loans a popular option among first-time homebuyers and those in the early stages of their careers. They can also be used more than once.

How to Get a Physician Loan

To learn whether a physician loan is the best option for purchasing your home, connect with us. To get you started, we’ve outlined the steps and documentation needed to help you understand the process.

The Financing Process

By sharing basic information about your potential home purchase, we’ll work with you to pull your credit report, check your eligibility, and discuss your financing options.

As we move through the process together we’ll arrange for an appraisal of the house to determine its value. 

We’ll also discuss the terms you qualify for and your options, as well as request various documentation for the underwriting process to make sure the loan begins on a solid foundation.

We’re with you through each step, leading to closing where we’ll finalize your affordable loan when you’re ready to purchase.

Physician Loan Requirements to Meet

These are the common requirements often needed to qualify for a physician loan. If you have questions about these requirements, we’re here to help.

  • Those who are currently physicians, or who are completing their internship, fellowship, or residency are eligible. This includes Medical Doctors (MD), Doctors of Osteopathy (DO), Doctors of Dental Medicine (DMD), Doctors of Dental Surgery (DDS), Doctors of Veterinary Medicine (DVM), and Doctors of Pharmacy (PharmD).
  • To prove eligibility you’ll need to show a degree or other proof of education and may need an employment contract that shows your future salary.
  • Credit score requirements vary. In most cases, a credit score of 680 or higher qualifies. With higher credit scores often comes better interest rates.
  • Through underwriting evaluation, you’ll need documentation of your Debt-to-Income ratio, which shows how much of your monthly income goes to paying debt. Physician loans have special considerations for student loan debt making these requirements looser than other traditional loans.
  • The type of property you want to purchase needs to be your primary residence and a single-family home.

Physician Loan FAQs

Financing a home is an important investment. It’s ok to have questions. We’ve compiled answers to the frequently asked ones, but don’t hesitate to ask more.

What is the difference between a physician loan and a conventional or FHA loan?

All three of these loan types offer flexible financing options. Physician loans differ in that they consider the unique factors that those going into the medical profession are juggling when also wanting to buy a home. Qualifying is easier for those with high student loan debt and unique income factors.

Conventional loans have stricter qualifications for credit score, income, debt, and down payment amount. Those who qualify for conventional loans may see lower interest rates and better terms.
FHA loans are backed by the government and provide options for those with lower credit scores while also offering competitive interest rates and down payment options. 

Depending on how much you put down, you may end up paying mortgage insurance for conventional and FHA loans, but physician loans don’t require any mortgage insurance costs.

How do I know if I’m eligible for a physician loan?

Eligibility for physician loans is based on your status as a student, intern, fellow, resident, or professional within the medical field. In many cases, you will be eligible if you’re less than 10 years out from medical school.

This applies to Medical Doctors (MD), Doctors of Osteopathy (DO), Doctors of Dental Medicine (DMD), Doctors of Dental Surgery (DDS), Doctors of Veterinary Medicine (DVM), Doctors of Pharmacy (PharmD), and may apply to other high-earning professions.

We’ll help you understand whether you’re eligible for a physician loan based on your situation.

How will my student loans affect my ability to qualify for a physician loan?

Because the physician loan is meant specifically to help doctors afford a home, your student loan debt and current income will not hinder your ability to qualify.

The loan qualification requirements take into consideration your career trajectory. Although income may be low now and student debt may be high after finishing school, a medical professional will make significantly higher income as their career progresses.

This shows the lender that, although the loan might currently seem like a risk, factors will change that impact the borrower’s ability to pay back the loan as their career moves forward.

For this reason, requirements are more flexible for Debt-to-Income ratio, meaning your DTI doesn’t have to be low to qualify. While other debts such as credit cards, car loans, etc. are still considered, student loans are an expected piece of the equation rather than something that will disqualify you.

Your student loans can also be in deferment or on an Income-Driven Repayment plan without negatively impacting your ability to qualify for a physician loan.

Can I use a physician loan to buy a house more than once?

As long as you meet the eligibility criteria, you can buy a house more than once with a physician loan and can even have more than one physician loan at a time.

In some cases, your eligibility may change if you’re more than 10 years out from medical school or residency. If you want to qualify for another physician loan, the property you’re interested in purchasing will also still need to be your primary residence and a single-family home.

Can I refinance a physician loan?

You can refinance a physician loan. They have no repayment penalty, meaning you can pay off your current loan early without a fee and get a new mortgage that may have better terms or a better interest rate. 

You may not be able to refinance your current loan into another physician loan but this can vary depending on your situation.