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The Truth About the Physician Home Loan

Updated: Mar 5, 2020

Via PhysicianSense

What Every Doctor Should Know Before Buying a House

Most doctors would say they chose their career to help others. But let’s be honest, the trappings of being a doctor — chiefly the salary — are very attractive. That salary can buy a lot of nice things, like the house of your dreams. But before you sign that mortgage, take a minute to study up on the big three housing mistakes that doctors make.

“Too much house. Too soon. Wrong form of financing. We’ll break it down for you."

We’ll break it down for you.

Too Much House

Before you enter the housing market, study the ways of the hermit crab. Hermit crabs don’t go out and buy the largest shell that they can afford, they find the closest shell that they can comfortably occupy. If you can, find a home that is close to where you need to be, that is a comfortable size, and plan to move up.

Children are the primary reason for using this approach, but not for the reason you might think. Children are the last great uninsurable risk. You don’t know what educational needs your child might have. The likelihood of you landing on top of the right school is dicey.

The housing market crash of 2008 was only 10 years ago, but many people, including doctors, have forgotten its lessons. Buying the nicest house in the neighborhood at the top of the market means you could end up $150,000 underwater on a house you can’t get rid of.

Think of buying a house like buying a pair of shoes; You know what my shoe has in common with a house? My shoe fits me now. If your family outgrows your home, you can always buy another. I can afford my shoes. My shoes are going to wear out. I can replace them. You have to have a home like you have to have shoes. A home is not an investment. Do you really need that pool?

Too Soon

How well do you understand your financial situation? Do you have a budget? Do you have an emergency fund? Do you have a plan for repaying your student loans and are you making progress? Start with these. Once you know your budget and have an emergency fund in place, start saving for a 10-20 percent down payment.

That will make most people fall out of their chairs, but it forces you to consider competing goals. These are priorities, such as saving for retirement or your children’s college, that will compete for the dollars you may be devoting to purchasing a home.

The process should be done in this order: Plan your finances, begin the loan-qualification process, find the house you like, and then talk to a real estate agent.

Wrong Form of Financing

Often, the best recommendation is for doctors to opt for a 15-year rather than a 30-year loan. The larger payments of a 15-year loan will ensure that you don’t buy too much house. Also, invariably, doctors who take out 30-year loans will make extra payments once their income picks up.


Avoid the big-three home-buying mistakes for doctors:

Too much house: Buying a house that’s bigger than you need

Too soon: Buying before your financial house is in order

Wrong form of financing: Buying without considering your earning prospects

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