Physician Home Loans- Things You Need to Know

Physician mortgage loans are a particular mortgage product available to physicians. Doctor home loans have fewer limitations for borrowers compared to traditional loans because lenders generally expect physicians/doctors to be responsible borrowers. 

Doctors frequently apply for these mortgages when they are in residency or soon after graduating from med school. Lenders will take an offer letter as evidence of earnings, which is a very rare scenario. 

Most banks want to find a stable history with a current employer. In actuality, some will allow you to take a mortgage out months before your residency formally starts.

The physicians’ mortgage loan program also don't charge private mortgage insurance when a borrower puts down less than 20%. Almost every other sort of mortgage lender requires PMI when the borrower has less than 20% equity in the house.

Lenders who provide physician home loans frequently extend the exact same interest rates to jumbo loans, which are loans which are more than the Federal Housing Finance Agency conforming limit. In 2018, the jumbo loan limit is $456,100.

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Doug says that among the biggest reasons why physicians love physician mortgage loans is that banks do not count student loans as part of their debt-to-income ratio, which they use to determine if an applicant is creditworthy. 

Normally, lenders want to see DTI percent of 43% or less. As most physicians have student loans which are well over six figures, their DTI would render them ineligible for homeownership. 

That's not true for doctor home loans. Other kinds of loans still rely on DTI, including automobile loans, credit card debt and personal loans.

If you are a self-employed doctor, the salary requirements are a bit different. You're going to need to present two year's worth of revenue and show either a constant or increasing income. 

The bank will average the two years to ascertain how much home you can afford. Self-employed physicians should still have a solid credit profile and reduced DTI percentage.