Are you a doctor considering purchasing a home? Becoming a homeowner can be a significant milestone in life, but because of doctors’ unique financial situations, they may face challenges in obtaining a mortgage. That’s where a doctor mortgage comes in.
What is a doctor mortgage loan?
A doctor loan (also known as a physician loan, physician mortgage or white coat mortgage) is a type of home loan designed specifically for doctors and other healthcare professionals (not just physicians). Because of high debt loads and low pay early in a doctor’s career, this mortgage type provides more flexible lending terms to help these individuals purchase a home.
Most residents and early career doctors have not had the time or income to set aside a large down payment, but lenders base doctor mortgages on future earnings. Doctors are seen as good loan candidates for mortgage lenders because of their low default rates.
What makes a doctor mortgage/physician loan different from a traditional mortgage?
The primary difference between a doctor and traditional mortgage is the down payment requirements. Conventional mortgages require a down payment of anywhere from as low as 3% to 20% of the total purchase price of the home. Additionally, typical mortgages require private mortgage insurance if putting less than 20% down.
Doctor mortgages often have a lower down payment requirement and may waive the PMI requirement, depending on the lender. Some physician loan lenders even offer 0% down payment options!
Benefits of doctor mortgage loans
Here’s why a physician loan or doctor loan could be a good option for you.
- No/low down payment
- No PMI
- Debt won’t hold you back – A high debt-to-income ratio can prevent you from being approved for a traditional mortgage, but doctor mortgage lenders see high student debt differently, giving you a greater chance of being approved.
- Less restrictive loan limits – Conventional loans have a cap on how much you can borrow, but doctor mortgage maximums are more flexible.
Drawbacks of doctor mortgage loans
Here are some potential drawbacks of a doctor loan.
- Interest rates – Doctor loans may have slightly higher interest rates or use variable interest rates, rather than the slightly lower and fixed rates of a conventional loan. Learn more about fixed vs. variable rates here.
- Credit scores – Generally, doctor loans require higher credit scores than conventional loans.
- Limited lender options – Not all lenders offer doctor/physician loans.
- Home type limitations – Doctor mortgage loans often can’t be used to purchase condos, and they are only for primary residences. Vacation or rental properties can’t be purchased with a doctor mortgage.
Who qualifies for a doctor mortgage?
Though it can vary by lender, you usually have to be one of the following to qualify for a doctor loan:
- Physician
- Dentist
- Veterinarian
- Resident or fellow
Finding a doctor mortgage loan
It is important to note that not all lenders offer doctor mortgages, and the terms and eligibility criteria can vary widely between lenders. Therefore, it is essential to research and compare different lenders before deciding on a doctor mortgage.
Doctor mortgages from Primis Mortgage
At Panacea Financial, the bank for doctors, by doctors, we understand the financial challenges that come with being a doctor because we’ve been there before.
You deserve excellent service. That’s why we’ve partnered with Primis Mortgage to help you purchase or refinance your home. Find competitive rates and a dedicated mortgage team here.
Learn more about doctor mortgages
Buying a home is a big step with plenty to consider. We have resources with tips and guidance for this milestone. Explore our Resources page or check out one of our curated articles:
