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What is a Physician Loan?

Updated: Jul 21, 2020


There is a good reason why many mortgage brokers and lending institutions are today offering physician loans, which also go by the name of doctor mortgage loans or MD loans.

Doctors, in the course of their training, sacrifice more in terms of years than many other professions.

 

While most of their high school friends have completed college, found employment, bought homes, and settled down, doctors are still working hard to complete their education and training. Physician loans exist to help young doctors get a footing in life as soon as they enter the job market after years of education and training.


Physician loans can be quite attractive and offer several unique advantages. For instance, the home loans have no jumbo limits, do not require money down, and are even offered without private mortgage insurance (PMI).


If you are a new doctor and feel like you are ready to buy your first home, a physician loan can be a great option. In this article, we cover a few important things you need to know before you take this mortgage product.


So, What Exactly is a Physician Loan?


A physician loan is a form of exclusive low down-payment home financing product tailored to meet the unique needs of medical professionals such as general physicians, dentists, and surgeons just to mention a few.


Home financing is also known as a doctor home loan and is often classified as a jumbo mortgage because it allows borrowers to have higher loan balances than Conventional, FHA and other traditional loans.


Some of the key features of physician loans are:

+ The home loan doesn’t require private mortgage insurance even with a down payment of between 1 and 10%.

+ They provide special treatment for the borrower’s student loans.

+ The loan will close even before you begin working as long as you have a contract.


Who Qualifies for a Physician Loan?


You can qualify for a physician mortgage loan if you are a licensed medical doctor or a medical resident. Doctors in other fields of medicine such as optometry and dental medicine/science also qualify for the home loan.

However, in most cases, eligibility for approval for a physician loan depends on the mortgage broker or lender you are working with, so be sure to double check your eligibility. Remember, not all lenders operate in every state or nationally so eligibility for the loan may also depend on where you live and work.


Most lenders of physician loans may also limit the loan based on factors such as:

+ Which area of medicine that you practice in. For instance, a lender may stipulate specific medical designations that qualify for a home loan, such as MDs, DOs, DMDs, DVMs, DPMs, and ODs.

+ Your experience in your field of specialization. For example, some lenders do not provide physician loans to residents while others exclude doctors who have been practicing for more than 10 years.

+ Your credit score also matters. Some lenders may require a minimum score of 700 or 720. However, keep in mind that a higher credit score means better loan terms.


Conclusion


One of the best features of physician loans is the fact that the borrower is not required to pay private mortgage insurance (PMI).


Lenders are also more accommodating to borrowers with a minimum income history and high student loans, especially in consideration of the comparatively longer duration of medical education and training.

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