What is a Physician Mortgage Loan?

By: Fairway Independent Mortgage

The physician mortgage loan was born to overcome the challenges many medical professionals face when applying for home financing: significant personal and student loan debt, limited down payment availability, and in many instances a desire to close on a new home before starting a new, higher-paying position.

Physician mortgage programs allow doctors and other medical professionals to secure home financing with fewer restrictions than conventional loans. These loans are designed specifically to accommodate the unique financial situations of medical professionals.

But what exactly is a physician mortgage loan, and how does it differ from a conventional loan? We’ve gathered all the unique features of these loan programs for you so you can be fully informed as you begin your home buying process.

Features of Physician Mortgage Loans:

No Private Mortgage Insurance

Perhaps the most notorious feature of a physician mortgage loan is the option to avoid private mortgage insurance (PMI). With conventional loans, PMI is required on homes financed with less than a 20% down payment. This insurance protects the lender should you fail to make your payments and can range from .1% to 3% of the loan amount depending on the amount financed and your credit score.

Choosing a physician mortgage loan allows you to greatly reduce or exclude mortgage insurance altogether and potentially save hundreds of dollars every month.

Better Financing Options

Another benefit of a physician mortgage loan is the ability to qualify for higher loan amounts with less money down. There are some programs in existence that will finance as much as $2.5 million with as little as 5% down. Most conventional jumbo loans would require a minimum of 20% down.

Ability to Qualify with Future Income

Rather than requiring pay stubs to prove their income, doctors applying for physician mortgage loans only need to submit their employment contracts to prove their income instead of current pay stubs as would be the case for a conventional loan. Physician mortgage loans also allow for loan closings up to 90 days prior to the future employment start date.

Ability to Qualify with Deferred or Income-Driven Student Loan Payments

Physician mortgage loans also take a different approach when calculating debt-to-income ratios. Typical guidelines would require applying a 1% student loan payment to your monthly liabilities regardless of what the credit report shows.

Many mortgage lenders differ in how they calculate these payments. At Fairway, we are able to qualify physicians based on income-based payments. This can significantly decrease the debt-to-income ratio and allow for qualification when other payment structures could not. We are also able to completely exclude deferred student loans that are in deferment for physicians.

Programs Available for Other Professionals

While most lending institutions offer these specialized loans strictly for physicians, Fairway applies similar underwriting programs to other professionals, such as:

Registered Nurses (RN)
Certified Registered Nurse Anesthetists (CRNA)
Physician Assistants (PA)
Doctors of Physical Therapy (DPT)
Doctors of Medicine in Dentistry (DMD)
Doctors of Dental Surgery (DDS)
Doctors of Veterinary Medicine (DVM)
Pharmacists
And several other professional designations.

Conclusion

Physician mortgage loans can be an excellent solution to help you qualify for a home when you might not otherwise with a conventional or FHA loan.

However, it is important to note that just because you are a physician or other medical professional it does not mean a physician mortgage loan is the best option for you.

You have a unique situation, and there are many loan options available to you. As a medical professional you have more options than most and it’s important to review a total cost analysis showing you the total cost of all the solutions available to you.

We’d invite you to schedule a consultation with one of our mortgage advisors who will educate you on all the available programs and create a solution that will fit your needs. You can learn more about our medical student mortgage programs and schedule a consultation at fairwaystudentloansolutions.com.

(This is a Sponsored post by Fairway Independent Mortgage, a financial supporter of LifeofaMedStudent.com. For a full list of who supports the site, check out our Sponsors page.)

Fairway Independent Mortgage:

Financing your home should be simple, easy, and fun. Unfortunately, medical student loans create unique challenges that can stump conventional mortgage lenders and lead to a stressful and uncertain experience for you and your family.

The Physician Lending team at Fairway Independent Mortgage Corporation offers specialized loan programs that are designed to help medical students achieve their dream of homeownership without the stress. Their team of mortgage advisers can help guide you into a home with student loans in deferment or forbearance, credit scores as low as 640, and down payments as low as 0%.

Don’t let your student loans stop you from securing a stable financial future. Visit their Medical Student Mortgage Programs website to get started.