Should I Get A Physician Loan?

With high interest rates and home prices, many are questioning whether now is the right time to buy a home. Many individuals and families are getting priced out of the market. Doctors, dentists, vets, pharmacists, and other qualified physicians have some advantages that still make buying a home a good investment. A physician loan may be the answer.

Physician Loan

A physician loan – a home loan specifically designed for doctors, residents, and other qualifying medical professionals – is one benefit physicians have in this market. Unlike conventional loans, this loan from Physician Bank offers 100% financing and no private mortgage insurance (PMI) payments. Borrowers can buy a home earlier than usual because they don’t need to save for a down payment first.

If you’ve already started saving up for a down payment, you can put that money to good use by:

• Paying off credit card debt and other loans
• Keeping up with student loan payments
• Investing (let your money work for you)
• Buying home furnishings and appliances (after you’ve closed, of course)
• Taking a much-needed vacation
• Starting an emergency fund
• Saving for retirement

Is a Physician Loan the Same as a Conventional Loan?

Physician loans differ from conventional loans in many ways. Physician loans don’t require a down payment for loans up to $1 million. Conventional loans typically require at least a 5% down payment.

At Physician Bank, physician loan borrowers do not pay PMI, regardless of the amount of down payment. Borrowers of conventional loans typically will pay PMI if their down payment is less than 20% of the price of the home.

Interest rates for physician loans don’t fluctuate based on credit score but do require a score of 660 or higher. With conventional loans credit score plays a large part in determining interest rates and a credit score of 620 or higher is typically required.

Interest Rates for Physician Loans

Physician loans aren’t immune to the higher interest rates of our current market. One way to get a better interest rate is to take advantage of an adjustable-rate mortgage (ARM). Physician Bank offers two types of ARMs for physicians:

1. 10/6 ARM: With this loan the rate is fixed for the first 10 years of a 30-year mortgage. After 10 years, it’s adjustable every 6 months.
2. 7/6 ARM: The rate for this loan is fixed for the first 7 years of a 30-year loan. After 7 years, it’s adjustable every 6 months.

With both ARMs there is no prepay penalty, so you can refinance for a better rate when the market improves.

Qualifying for a Physician Loan

Physicians with the following degrees can apply for a physician loan:

• Medical Doctor
• Doctor of Dental Surgery
• Doctor of Medicine in Dentistry
• Doctor of Optometry
• Doctor of Osteopathic Medicine
• Doctor of Podiatric Medicine
• Doctor of Veterinary Medicine
• Registered Pharmacist

You will be required to provide proof of your degree and employment when you apply. This can include an employment offer or pay stubs and a medical license to practice. If you’ve just completed medical school, you can provide any combination of 2 of the following documents:

• Medical school diploma
• Evidence of passing boards
• Acceptable transcripts
• Application for licensure

Other Benefits

Physician Bank offers these additional features:

• Financing up to $3 million. For 100% financing, loans must be $1 million or less.
• Loan closings up to 90 days prior to starting employment. There may be a requirement of cash reserves in this case.
• 90-day interest rate lock.
• Debt-to-income ratio up to 45%.

Physician Bank Advantage

Physician Bank offers more than just physician loans, including:

• A high-interest checking account with easy-to-use digital banking to make paying your physician loan simple.
• Personalized private banking services.
• A partnership buy-in program with 100% financing, no partner collateral needed, and no down payment needed.
• Credit education and guidance.

Physician loans can be a great way to buy a new home, even when interest rates are high. If you’re a doctor, dentist, vet, pharmacist, or other medical professional looking for a new place to live, we encourage you to apply today. Our team of mortgage lenders is here to help you find the best solution for your needs.