Physician Bank Loans – 42 Helpful Answers For Physicians

The purpose of this article is to describe what a physician loan is and how it is used. It will also answer some of the top questions people have regarding these loans. In addition, we will investigate investment property issues, private mortgage insurance (PMI), credit scores, loan payments, buying a home, loan types and loan programs. If you are thinking about getting a doctor loan, buying a home, or refinancing your existing home to reduce your interest rate or decrease your monthly payments, complete the Pre-Qualification below.

WHAT IS A PHYSICIAN BANK LOAN?

A Physician Bank Loan is a mortgage that is available to licensed physicians, dentists and other qualifying medical licensees who are looking to purchase, refinance or build a home. These loans typically offer more favorable terms than those available to the general public such as zero-dollar down payments and higher loan-to-value ratios.

HOW DO THESE LOANS WORK?

Physician Bank loans are built around the financial stability doctors are known for. Doctors generally have more stable income and very good credit allowing lenders to be more aggressive in lending to them. In addition, these loans often have lower interest rates, lower down payment requirements and borrowers are not required to pay for private mortgage insurance (PMI). These features can save borrowers thousands of dollars over the life of their home loan.

WHAT ARE THE BENEFITS?

There are many benefits including the ability to finance up to 100% of the purchase price of a home, no private mortgage insurance (PMI) required, lower down payments, higher loan-to-value ratios, student-loan payment calculation flexibility and flexible repayment options. They also offer the flexibility to choose between a fixed-rate or adjustable-rate loan.

WHAT ARE THE DIFFERENT LOAN TYPES AND LOAN PROGRAMS AVAILABLE?

Like most conventional mortgages, a home loan with Physician Bank offers two options: Fixed and Adjustable-Rate Mortgages (ARM). The fixed option provides a thirty-year loan where the interest rate will never change. The ARM loan offers a couple different options: The 10/6 ARM and the 7/6 Arm. Both options provide a period where the loan has a fixed interest rate, for either ten years or for seven years. Following the selected fixed period, the loan can adjust semi-annually. The rate can adjust either up or down depending on how the market and the interest rates have changed over time.

Most lenders offering loans for medical professionals will have a limit regarding the Loan-To-Value (LTV) they will lend to. The LTV determines how much of a down payment the borrower will need to qualify. Most lenders will only lend to 97% of the purchase price (3% down payment). However, there are lenders who will lend up to 100% of the purchase price, requiring no down payment. Physician Bank is one of the lenders offering financing up to one-million dollars ($1,000,000) with no down payment required.

WHAT IS THE DIFFERENCE BETWEEN A FIXED-RATE AND ADJUSTABLE-RATE LOAN?

Fixed-rate loans are best for borrowers who want to know exactly how much they will have to pay each month. This type of loan is also good for borrowers who plan on staying in their home for a long time. However, fixed-rate loans typically have higher interest rates than adjustable-rate loans.

Adjustable-rate loans are best for borrowers who want to save money on interest over the life of the loan. This type of loan is also good for borrowers who plan on selling their home or refinancing within a few years.  Adjustable-rate loans typically have lower interest rates than fixed-rate loans.

In most cases, physicians are better served with an ARM as they save money on interest and upgrade their home or move to another area more often than most people.

WHAT ARE THE DRAWBACKS?

While a Physician loan offers many advantages, there is one drawback.

Limited availability: Not all lenders offer these types of loans and many that do don’t lend in all 50 states. Physician Bank offers this in all 50 states.

WHO QUALIFIES FOR THESE LOANS?

To qualify, you must be a licensed doctor, dentist or another qualifying medical licensee and be in good standing with your state medical board. You’ll also need to have good credit and a strong, verifiable income.

CAN I GET PRE-QUALIFIED?

Yes, you can get pre-qualified.

DO I NEED TO BE EMPLOYED TO QUALIFY?

Not necessarily. Physician Bank can qualify doctors and close on a new home up to ninety (90) days prior to them beginning their contracted employment.

DO I NEED TO BE A U.S. CITIZEN TO QUALIFY?

In general, no, you do not need to be a U.S. citizen to qualify.  However, specific visa documentation is required in these instances and will be reviewed for eligibility.

WHAT IF I AM IN MY RESIDENCY OR FELLOWSHIP?

If you are in your residency or fellowship, you may still qualify. Some lenders require that you have a contract with a hospital or group practice before they will lend to you. With Physician Bank, select licensed medical professionals and medical residents are eligible. For doctors, you must be licensed with one of the following medical degrees: Medical Doctor (MD), Doctor of Dental Surgery (DDS), Doctor of Medicine in Dentistry (DMD), Doctor of Optometry (DO), Doctor of Osteopathic Medicine (OD), Doctor of Podiatric Medicine (DPM), Doctor of Veterinary Medicine (DVM), or Registered Pharmacists (PharmD).

CAN A MEDICAL STUDENT GET A LOAN WITH PHYSICIAN BANK ?

No, you must be a licensed medical professional or have verified copies of passing transcripts, boards, or verification of a medical license application. Residents qualify but students do not.

WHAT ABOUT MY MEDICAL SCHOOL DEBT?

Some lending institutions provide the ability to “ignore” student loan debt that can be verified to be in forbearance. This option allows the applicant to qualify at a higher debt-to-income (DTI) ratio than they would normally qualify for. Physician Bank provides this option for its applicants.

CAN THIS LOAN BE USED TO PAY FOR SCHOOL?

No. Physician Bank loans are used to purchase, refinance, or build a home.

CAN I USE THIS LOAN TO BUY A HOUSE?

Yes! These loans can be used when purchasing a home either for a primary residence or for a 2^nd home.

DO DOCTORS GET BETTER MORTGAGE RATES?

These loans often come with very competitive interest rates and terms. However, your interest rate will ultimately be based on your credit score, DTI, LTV, and other factors.

IS IT EASIER FOR DOCTORS TO GET LOANS?

Physician Bank loans are designed for doctors, so the application process is usually simpler than it is for other types of loans. However, you’ll still need to meet the lender’s requirements to qualify.

HOW MUCH HOUSE CAN I AFFORD AS A DOCTOR?

How much you can afford to borrow will depend on several factors, including your income, debts, and the down payment you’re able to make. Typically we allow you to borrow up to 100% of the purchase price of the home, so you may be able to finance your entire purchase without putting any money down.

CAN I USE THIS LOAN TO BUY AN INVESTMENT PROPERTY?

No. Investment properties do not qualify.

WHAT IS THE DIFFERENCE BETWEEN A LOAN WITH PHYSICIAN BANK AND A CONVENTIONAL LOAN?

The biggest difference is that our loans are designed specifically for doctors. This means that our loans often have lower interest rates and down payment requirements than conventional loans. In addition, we offer more favorable terms and no PMI payments.

DO I NEED GOOD CREDIT TO QUALIFY FOR THIS TYPE OF LOAN?

Yes. Although “perfect” credit isn’t a requirement, the ability to show good debt and credit management is a must.

WHAT IS A GOOD CREDIT SCORE?

You will typically need to have good credit. A good credit score is generally considered to be 720 or above. If your credit score is below this threshold, you may still be able to qualify, but you may have to make a larger down payment.

WHAT CREDIT SCORE DO I NEED?

The minimum credit score is 660. The higher your credit score the better your rate & terms will be and the smaller your required down payment will be.

CAN I GET APPROVED IF I HAVE BAD CREDIT?

“Bad” credit is a relative term. What is bad to one person isn’t so bad to another. The minimum credit score to qualify for this type of loan is 660. However, Physician Bank provides options for those that fall below this threshold to rebuild credit for future qualification.

HOW LONG DOES IT TAKE TO GET APPROVED?

The approval process can take between 1-15 days. The speed of the approval is based largely on how quickly the applicant can provide the requested documentation required to obtain an approval.

CAN I USE A CO-BORROWER?

Yes, you can use a co-borrower.

DOES MY CO-BORROWER NEED TO BE A PHYSICIAN?

No. However, the co-borrower must occupy the property as their residence. Non-occupying co-borrowers are generally not allowed.

DO I NEED TO OWN PROPERTY TO QUALIFY?

No. This can be your first home purchase.

DO I NEED TO HAVE A CERTAIN AMOUNT OF MONEY SAVED?

No, you do not need to have a certain amount of money saved to qualify for this type of loan. There are costs that will need to be paid for when closing but there is no “standard” amount required.

HOW MUCH CAN I BORROW?

The amount you can borrow depends on the financial institution, but most will lend up to only $750,000. Physician Bank can qualify physicians up to $3,000,000+¹

IS THERE A LOAN LIMIT?

No, there is no limit. Many lenders put a cap on the available loan amount. Physician Bank does not.

CAN YOU HAVE TWO LOANS AT ONCE?

Yes, our program allows for a primary residence and second home.  You can have up to 2 loans.

WHAT ARE THE INTEREST RATES?

The interest rates can vary depending on the lender and are based on several factors, including credit score, loan type, DTI, LTV and length of loan. Typically, the rates are similarly priced to conventional mortgage loan rates.

IS THERE A PREPAYMENT PENALTY?

No, there is no prepayment penalty. You can pay it off at any time without penalty.

WHAT ARE THE FEES?

The fees vary depending on the lender but generally remain consistent with conventional mortgage loan fees.

WHAT ARE THE TERMS?

The terms can vary depending on the lender and their product mix. Regardless of whether the loan is fixed or adjustable, the loans are amortized and paid over the amortized term, which is typically 15 or 30 years.

WHAT ARE THE DOWN PAYMENT REQUIREMENTS?

Down payment requirements vary from lender to lender. At Physician Bank, there is no down payment required for loans up to one-million dollars ($1,000,000) and credit scores 720 and over.

WHAT IS PRIVATE MORTGAGE INSURANCE (PMI)?

PMI is an insurance that protects the mortgage lender in case you default on the loan. PMI can add to your monthly payment, so be sure to factor it in when you compare Physician Bank loans to other types of loans. Physician Bank does not require borrowers to pay PMI.

HOW CAN I AVOID PMI?

On a conventional loan, the best way to avoid PMI is to put down 20% of the purchase price of the home.  We do not require borrowers to pay PMI.

WHY IS PMI REQUIRED?

PMI protects the lender in the event of a default and is typically required on loans with higher LTV’s. Many lenders require the borrower to pay PMI on their loans…We do not require this.

SHOULD I GET A LOAN WITH PHYSICIAN BANK?

If you’re a licensed Physician and in the market for a new home, our loans may be just what you’re looking for. Although there are many options available, licensed medical professionals find a Physician Bank loan saves them time and money in their home purchase.

HOW DO I APPLY?

You can start the process by completing the form above or contact us at your convenience.

IS THERE ANYTHING ELSE I NEED TO KNOW ABOUT A PHYSICIAN BANK LOAN?

If you’re a physician or medical professional looking for 100% financing to purchase a home with flexible purchase options, Physician Bank may be your best choice. If you have any other questions about our loans, please let us know and we will respond within a few short minutes.

¹ Subject to approval, 100% financing not available on loans over $1,000,000. Contact us to learn more.