Physician Home Loan
Remove The Barrier Of Buying A New Home While Entering The Medical Professional’s Field.
A home loan tailored to you!
Starting a career in medicine is about as noble of a career choice you can find. It takes years of schooling and rigorous testing to finally reach success and credentials. What’s more significant than saving lives, leading medical breakthroughs, and improving the quality of life for others?
Some physician loans “doctor loans” as they are often called, exclude student loan payments for qualifying. Often they allow you to buy a home with no money down.
You can celebrate the start of your career in your new home with as little as 0 down.
Benefits of the Medical Professional Loan “Physician Loan”
- 100% Financing available up to $1,250,000.00 in Loan Amount
- If you don’t qualify with 100% financing, you may be able to put down as little as 3% or 5%, even on homes $850,000.00 and above.
- Student loan debt can be excluded or calculated as a lower payment amount, helping you qualify for a larger home purchase as your income increases.
- The physician loan is available to us citizens and foreign nationals with a valid social security number and work visa.
- You may even be eligible to qualify if you have joined a partnership “new practice”, or work on a 1099 payment schedule. If you have an employment agreement and/or offer letter outlining your compensation you may be able to qualify.
- Exited your most recent training program within the last 10 years.
Who is eligible for a physician loan?
- Medical Doctors (MD)
- Medical Resident or Fellow
- Ophthalmologist (MD)
- Dentist (DMD)
- Dental Surgeon (DDS)
- Osteopath (DO)
- Veterinarian (DVM)
If you are currently training or working in the medical field but are not sure whether you qualify for a physician loan, its worth reaching out to a NorthPort Funding Loan Officer who specializes in this type of loan and your profession type.
What’s needed to qualify for a physician loan?
Understanding that you are in one of the eligible medical fields, you have passed the first step to qualifying for a physician home loan. The next step is to review the financial and employment criteria to be approved for a physician home loan.
- Credit score 640 or higher
- May need to have as little as 3% of the purchase price saved for reserves and closing costs. This can come from sources like a 401K, IRA, Savings, Checking, and Gift from a direct relative.
- You are unable to qualify for a conforming conventional loan product like FHA, VA< or USDA) because of student loan debt.
- You are the sole wage earner in your household
- You have employment that does not start within 60 days of closing on the home
- You do not meet the cash reserve requirements for a conventional jumbo or conforming mortgage.
- You have an executed employment agreement with your new or future employer
- You have passed and received your medical license in the state you are going to be practicing in.
The NorthPort Physician Home Loan allows you to buy a primary home and 2-unit home under the program. The program is specific to a primary residence, second homes and investment properties are ineligible for the physician home loan.
If you are not sure whether you qualify for a physician home loan, contact one of the loan officers at NorthPort Funding. They will walk you through the guidelines, programs, and features of the physician home loan. You may be eligible for another type of low down payment program that has better terms and features than a physician loan.
What are the down payment requirements?
Physician Home Loan vs. Conventional Loan
There is a very distinct difference between physician home loans and conventional loans. They are more commonly known in the lending world as a portfolio loan. A portfolio loan is a mortgage that is borrowed from the lending institutions balance sheet or deposits and held with that bank until the home is refinanced to another lender or the home is sold. Because the bank is lending its own money, it is taking a calculated risk by not taking out a mortgage insurance policy or by paying for it outside of the loan. A conventional loan is secured by an investor and a servicer, where the mortgage can be pooled together with other similar mortgages and sold. Because of this process a conventional loan does require PMI or private mortgage insurance to cover losses potentially incurred by the investor should a borrower fail to repay the mortgage.
Physician Home Loan vs. Conventional Private Mortgage Insurance
Physician Home Loans are designed to increase the affordability of homeownership for individuals that go into the medical doctor field. As a physician or medical doctor, you have a set income type that has a likelihood of increasing over time. This allows for the lender to limit the down payment requirements, and not likely require mortgage insurance for the loan down payment loan. A conventional mortgage requires mortgage insurance for any amount borrowed over 80% of the homes value. This is because a conventional mortgage is likely to be pooled together with other conventional loans and sold to an investor and or servicer for the mortgage. The private mortgage insurance is required by most investor and or servicers to purchase the loan from the originating lender. It will ultimately protect the investor from any potential loan losses arising from a borrower not repaying the mortgage as agreed.
Physician Loan Interest Rates vs. Conventional Mortgage Loan Rates
Mortgage rates are tied closely to the 10yr Treasury, widely the topic of financial news channels. Physician Home Loans tend to have better interest rates than conventional mortgage rates. This is because physician home loans are borrowed against a bank’s balance sheet. This means that the bank can set their own rates, terms, and margins. This allows them to offer a lower mortgage rate than the conventional mortgage market. Conventional mortgage rates are loosely tied to the 10yr treasury and a likely to be sold and serviced by different companies. This requires more margin or profit per loan to generate the value for these companies to purchase and service the mortgage.
Which is better: Physician Home Loan or a Conventional Home Loan
This is a controversial question because both types of mortgages offer different pros and cons to each other. They are very transaction and borrower specific for better or worse. If you are a new physician going into a specialty field or investing in a practice, then a physician loan is likely going to be a better option for you. It will allow you to buy a more expensive house closer to your hospital or place of employment. If you are a resident physician who will be moving for residency, fellowship, and then final practice, a conventional loan might be better for you. A conventional loan will offer more flexibility if you wanted to retain that home as an investment property and purchase a new home.
We recommend speaking with a loan officer about the difference between a conventional mortgage and a physician home loan. They will be able to help you determine which is the best option for you based on your plan.
I have a new job I just started, or I have an employment contract and would like to close prior to my start date
One of the benefits of a physician home loan is the ability to close prior to starting your new job. Some physician loan programs will let you close as early as 120 days prior to starting your new full-time employment. The lender may require additional assets for reserves after closing to ensure you can make the mortgage payment. And with a physician loan, you can use that future income to qualify to buy the home. This also adds to the benefit of you the physician, allowing you to buy a dream home and get situated before starting your busy work schedules.
I am currently in Residency or Fellowship; do I still qualify?
YES! The physician home loan is not just for those going into practice. It is also for these just entering residency or fellowship. With the ability to borrow 100% o the homes value and reduce or exclude student loan debt form qualifying for the purchase, the physician loan is a great option for those just starting their career.
Speak with a loan officer at NorthPort Funding to learn more about buying a home when just starting in the medical profession.
What if I just started my own practice or receive 1099 income
Because a physician home loan is a portfolio mortgage product. It is at the discretion of the lender to accept newly self-employed income for a physician. Depending on the practice type or employment contract type, it is possible to buy a home on a new 1099 income as a physician.
Book a time with a NorthPort Funding Loan Officer and find out your options as a newly self-employed physician.
Physician Home Loan Product Options
- 3/3 ARM Construction Loan
- 5/5 ARM Renovation Loan
- 7/1 ARM Land Loan
- 10/1 ARM Cash Out Refinance
- 30yr Fixed: Refinance
- 15yr Fixed: Home Purchase/ First Time Home Buyer