Understanding Physician Loans: A Guide for Medical Professionals

Doctors go through an arduous, multi-step process in their education. Most don’t graduate medical school until their mid-twenties, which is then followed by several years of internship and residency. If they intend to specialize, they may have another full decade between graduation and the time their careers fully launch. 

That’s a long time to wait to buy a home – and there is no reason why these medical professionals should. However, most young doctors don’t exactly have piles of cash sitting around that they can put toward a 20% down payment on a home while they’re still interns or residents. They may also have significant medical school debt hanging over their heads, and this can adversely affect their debt-to-income ratios on paper – even if those loans are in deferment. Finally, young doctors may have to relocate to take advantage of prime internships and residencies, which often leaves them with a perilously short work history with their current employers. 

All of those things skew a doctor’s “loan-to-value” (LTV) score – which is what lenders use to decide if someone is a good risk for credit – toward the negative, making a conventional loan impossible to obtain. That does not mean, however, that homeownership is out of reach. This is where physician loans come into play. 

What Exactly Are Physician Loans? 

Physician loans are financial tools that have been tailored specifically toward the unique needs of doctors. Some of the key features of physician loans include:

• Minimal Down Payment Requirements: Physician loans typically feature minimal down payment requirements, ranging from 0% to 5% of the home’s purchase price. This aspect is particularly advantageous for medical professionals who may have limited savings due to the significant costs associated with their medical education and training.
• Waived Private Mortgage Insurance (PMI): Private mortgage insurance (PMI) is a standard requirement for conventional loans when the down payment is less than 20% of the home’s value. The absence of PMI translates to lower monthly mortgage payments, often by hundreds of dollars a month.
• Flexible Debt-to-Income Ratio (DTI) Consideration: While traditional mortgage products may have stringent DTI requirements, physician loans recognize the unique financial circumstances of doctors and adjust their criteria accordingly. Some programs don’t count student loans as part of a doctor’s debt, especially if those loans are in forbearance or deferred.
• Easier Standards on Employment Verification: Typically, mortgage lenders want to see a two-year history with an employer before they will approve a loan, but physician loans can be approved right after a doctor starts a new job.
• Higher Loan Limits: Physician loans often feature higher loan limits compared to conventional mortgages, accommodating the housing needs of medical professionals, especially in regions with soaring real estate prices. The increased loan limits enable doctors to purchase homes that align with their career aspirations and lifestyle preferences without resorting to jumbo loans, which typically carry stricter eligibility criteria and higher interest rates. 

Essentially, physician loans look ahead, recognizing that doctors have unique debt profiles that often belie their actual earning potential.

Let F.C. Tucker Company Help You Explore Your Options for A Physician Loan

At F.C. Tucker Company, our physician program is nothing if not robust. Our program is geared toward doctors who have their M.D., D.O., D.D.S., or D.M.D. degrees. We also accept veterinarians, podiatrists and ophthalmologists. 

Some of the main features of our physician loans are:

• We permit gift funds to be used for down payments and closing costs.
• We offer both fixed-rate and adjustable mortgages to give buyers more flexibility.
• We can work with homebuyers with credit scores as low as 680.
• We can offer financing up to $2 million for buyers with low loan-to-value ratios.
• We offer 100% financing to buyers with good credit (720 or above), without any private mortgage insurance requirements.
• We will accept employment contracts as verification of income, so doctors can qualify immediately after obtaining an internship or new position.

Almost any property that will be used as a primary residence qualifies for financing under our program, whether that’s a single-family home, a home in a planned development or a warrantable condominium. Investment properties, second homes, co-operatives and pre-manufactured homes are generally ineligible.

If you’re a physician who is ready to be a homeowner, we have the program you need. Reach out to one of our mortgage professionals to learn more.