Is a physician loan a conventional loan? No, a physician loan is not a conventional loan. Physician loans are far more accommodating to the medical profession than conventional loans. In fact, physician loans were created by mortgage lenders specifically because conventional loans do not meet the unique financial backgrounds of physicians, dentists, and other high-earning medical professionals. For starters, physician loans are exclusively offered to doctors. Lenders who offer doctor mortgage programs rarely require private mortgage insurance (PMI) and will accept little to no money down. Lenders are willing to offer these products early on in a physician's career because the risk of default among the medical profession is much lower than that of other professions. Here are two other unique features of doctor mortgage loans: Relaxed debt-to-income ratios. Nowadays, the vast majority of new doctors enter professional practice with significant student loan debt. This makes meeting the debt-to-income requirements on traditional mortgages a major hurdle to obtaining financing and becoming a homeowner. Fortunately, doctor loans feature much more relaxed guidelines. In fact, some lenders do not even factor student loan debt into the mortgage underwriting process.

No income history needed. Doctor loan programs allow eligible borrowers to close on a home before they begin professional practice as long as they can provide proof of a signed employment offer. Many lenders will allow closing up to 90 days prior to starting a job. Self-employed doctors are sometimes able to qualify with as little as 6 months of income history. While features and requirements may vary from lender to lender, this is what the typical physician mortgage loan looks like.

How do you qualify for a physician loan? First and foremost, to qualify for a physician loan you need to be an eligible medical professional. Every mortgage lender that offers a doctor loan program will specify which medical specialties it serves, whether or not it is available to residents in training, and what states it is available in. Lenders with doctor loan programs will also specify maximum loan-to-value ratios and a variety of other qualifying factors. Of course, it's important to understand that all of these factors may vary widely from one lender to the next. At LeverageRx, we help busy doctors like you compare all of this important information side-by-side to make your home financing experience as simple as possible.

Can I buy a house with no down payment? If you're a new doctor who is just beginning professional practice, homeownership may still seem unrealistic due to down payment that a traditional mortgage requires. Sure, your earning potential is sky-high. But a decade of education and training has likely left you with minimal savings and a mountain of debt. This common doctor dilemma underscores what is perhaps the most appealing benefit of doctor loans: they require little to no down payment to obtain financing. Most lenders typically place a cap on no down payment home loans between $500,000 and $750,000; loan balances that exceed the cap will require the borrower to place a downpayment. Even then, these relaxed guidelines knock down barriers for many young medical professionals who could not otherwise become homeowners.

Do doctors pay mortgage insurance? Almost all mortgage lenders require private mortgage insurance (PMI) if the borrower puts less than 20 percent down on a traditional home loan. PMI covers the lender in the event that you, the borrower, fail to make your mortgage payments on-time and in-full. In other words, it adds to the cost of homeownership without benefiting the homeowner. However, doctors often receive special treatment given their low-risk financial profile. Physician mortgage loans rarely require PMI for borrowers despite the low to now down payment lenders are willing to accept. This is yet another example of how mortgage lenders are willing to bend traditional rules to accommodate the unique financial needs of high-earning, low-risk medical professionals.

How much home can I afford? Although physician loan interest rates vary by lender, they are typically higher than what you would see from a conventional mortgage with a higher down payment. That's because physician loans do not require PMI, whereas conventional mortgages with a down payment of less than 20% will require you to obtain PMI. This trade-off is important to consider when asking yourself: How much home can I qualify for?



Putting a smaller down payment on a home will also result in higher interest over the life of the loan. Consider the following examples:



Scenario 1: $500,000 mortgage with no down payment $400,000 mortgage balance

30 year fixed rate at 4.50%

Monthly payment of $2,027 (not including taxes) In this first scenario, the borrower would be making monthly payments of $2,027. The total cost of the loan over the entire term would equal $729,627 with a total interest cost of $329,627.



Scenario 2: $500,000 mortgage with no down payment $500,000 mortgage balance

30 year fixed rate at 4.50%

Monthly payment of $2,533 (not including taxes) In the second scenario, the borrower has more flexibility in not making a down payment, but the total monthly payment rises to $2,533. The total cost of the loan over the 30-year term also increases to $912,034. With no down payment, the borrower will pay an extra $82,407 in interest cost.

Can you refinance a physician loan? Yes, you can refinance a physician loan. Given the cost analysis shown above, it's important to understand the value of physician loan refinancing and how it works. Most doctors stand to gain a great deal from the flexibility of a physician mortgage loan early on in their professional careers — even if it comes at a higher interest rate for the time being. However, once doctors have become more established in their careers and accumulated home equity, they can then refinance their physician mortgage loan into a conventional loan with a lower interest rate. It's. important note that there are additional costs associated with physician loan refinance, as there are with the refinance of any other type of mortgage.

How do I choose a lender? Whether you are in the market for your first home or your dream home, finding the right mortgage loan for your financing needs is no small task. That's why LeverageRx helps doctors cut through the noise to determine which bank has the lowest home loan interest rate. By partnering with over 20 of the best mortgage lenders for doctors nationwide, we help medical professionals compare their best available options all in on place. Simply fill out an online form, select the lenders you would like to work with, and compare physician mortgage loan rates. Of course, the final decision is ultimately up to you.