When it comes to purchasing a home, doctors face unique challenges that set them apart from the average homebuyer. Physicians often face significant student loan debt and delayed entry into the workforce due to the additional training required for the profession. These challenges can impact a physician’s ability to own a home.

There is a doctor-specific mortgage option that takes these unique circumstances into account: physician mortgage loans. Here are the key differences between physician mortgage loans and traditional loans that you should know.

Physician Mortgage Loan Vs. Traditional Loan

Physician mortgage loans or doctor loans are mortgages built specifically for doctors (and other high earning professionals).They typically have lower down payment requirements and more flexible terms.

Traditional or conventional mortgage loans are one of the most common types of mortgage loans. These loans often have stricter requirements and less flexible loan terms.

Differences Between Physician & Traditional Mortgages

Down Payments

Traditional Mortgages: Traditional loans require a down payment, typically ranging from 3% to 20% of the home’s purchase price. The higher the down payment, the lower the monthly mortgage payments and interest rates.

Physician Mortgage Loans: Physician mortgage loans provide doctors with the ability to secure financing with little to no down payment. Because of low pay in residency and high student loan debt, young physicians often lack the savings needed to pay for a down payment. Eliminating or reducing the down payment can allow these healthcare professionals to become homeowners.

Debt-To-Income Ratio

Traditional Mortgages: Conventional home loans typically require DTI ratios of 43% or less, which can present a challenge for doctors who carry high student loan debt. This can prevent doctors from securing this type of mortgage.

Physician Mortgage Loans: Unlike conventional loans, physician mortgage loans don’t use your entire student loan payment to calculate your DTI, and some allow for the exclusion of student loan payments altogether, making your DTI lower than if calculating using the full payment.

Private Mortgage Insurance

Traditional Mortgages: If a homebuyer puts down less than 20% on a traditional loan, they are required to pay private mortgage insurance. This additional expense can be challenging for doctors looking to purchase a home.

Physician Mortgage Loans: Doctor mortgages don’t require PMI. This can result in significant cost savings for a physician.

Loan Terms

Traditional Mortgages: Traditional loans generally come with conventional terms, which may not be as flexible as those offered by physician mortgages. This lack of flexibility could pose challenges for doctors, especially those who are early in their careers.

Physician Mortgage Loans: Physician loans are more flexible and can help doctors secure a loan without the strict requirements of traditional mortgages.

Loan Amount

Traditional Mortgages: Conventional mortgages have limits to the amount an individual can borrow. As of 2024, conforming conventional mortgages are limited to $766,550 or less in most counties and may be as high as $1,149,825 in high-cost counties.

Physician Mortgage Loans: Physician mortgage loan amounts aren’t limited in the same way, which can provide flexibility for physicians looking to purchase a home. Typically, 100% financing may be available up to $1,000,000 and 95% financing up to $1,500,000.

Choosing the Right Option: Physician Mortgage Loan Vs. Traditional Loan

The decision between a physician mortgage loan and a traditional loan depends on various factors, including the individual doctor’s financial situation, career stage, and long-term goals. Here are some considerations to help guide this decision:

Current Financial Status

Assess your current financial standing, including student loan debt, savings and available down payment. If a large down payment is challenging, a physician mortgage might be a more accessible option.

Career Stage

Consider your current career stage and future income potential. If you are in residency or early in your medical career, the flexibility of a physician mortgage loan may be better suited to your evolving financial situation.

Long-Term Plans

Evaluate your long-term plans, both in terms of homeownership and career trajectory. If you anticipate significant income growth in the future, the accommodating terms of a physician mortgage loan may align better with your goals.

Learn More About Mortgages

Whether considering a physician mortgage loan or a traditional mortgage, educating yourself about the differences can help you choose the right option with confidence.

Learn more about down payments, debt-to-income, and more with our Mortgage Basics e-book, available for free! Find this doctor-specific resource here.