How do you qualify for a physician loan?
This is a great question, and it’s essential to ask if you’re a doctor, dentist, veterinarian, chiropractor, or even a nurse practitioner who’s thinking about buying a home and using a physician’s mortgage to do so.
First, let’s start by defining the term:
What is a physician mortgage?
To put it simply, a physician mortgage is a financial product that was created to help doctors with the home-buying process when their debt-to-income ratio might otherwise keep them from getting a home loan soon after leaving medical school.
As a doctor, you no doubt realize that student loans can be crazy—and that it can seem impossible to qualify for typical home loans very soon after getting out of college.
And this is precisely what physician mortgage loans are for.
Generally, you can get them without putting any money down. They don’t include any jumbo limits. And they generally do not require private mortgage insurance.
It sounds like a pretty good deal, right? Well, it is.
However, qualifying for them will still take a bit of work.
So in this blog post, you’re going to learn about the 2 biggest requirements that you’ll need to accomplish in order to qualify for one.
You’ll also learn some tips for how to make it happen.
Let’s dive into it.
1. You Must Have A Job And/Or A Contract
In order to count as a qualified borrower for a physician mortgage loan, you usually need to be either a medical resident, fellow, or attending physician who has a signed contract for employment.
This is a pretty important part of the process.
See, when you’re fresh out of medical school with a bunch of student loans throwing your debt-to-income ratio out of whack, the problem is that getting a conventional home loan isn’t possible.
But there’s a point where that doesn’t make sense either, because medical professionals tend to make above-average incomes.
Therefore, you get put into a situation where you can probably afford to buy a house, but you can’t technically qualify for the loan, which is admittedly frustrating and kind of a ridiculous problem.
Hence, as long as you have a signed contract of employment as a medical provider, you have a decent shot at qualifying for the physician mortgage.
2. You Must Have A Good Credit Score
You’ll still have to authorize a credit check whenever you apply for a physician mortgage loan.
Now, with that being said, as a general rule of thumb, it’s advisable not to authorize the credit check until you’ve actually run the numbers and determined that this lender’s physician mortgage loan product is the best one available to you.
See, it pays to shop around to find the best physician mortgage loan available.
Once you find it, however, you will need to authorize that credit check so that they can run your credit and determine that you have a good enough credit score to qualify for the loan.
Even though this type of loan is specifically designed to help medical professionals buy homes, you’ll still need to have pretty good credit.
And don’t forget that having multiple lenders pinging your credit during the application process can bring down that credit score enough to hurt your chances of qualifying.
You Won’t Need A Down Payment
One of the huge upsides to physician mortgage loans is that they don’t typically require you to put any money down.
Here’s how LeverageRX describes it:
“100% financing options promise borrowers no-down-payment mortgage loans, so by not providing this option, borrowers are more limited in which loans they can pursue. With 100% financing, families who may not otherwise be able to afford home loans are able to begin investing in their permanent residences.”
That said, putting money down on your home loan can save you a lot of money on interest in the long run.
For this reason, many people recommend that if you have money to put down on the home loan, you may want to get a more conventional loan first before going for the physician’s loan.
And the reason for this is pretty simple.
Conventional loans are actually a better deal in terms of interest rates than physician mortgage loans.
But physician mortgage loans are easier to get if you’re a medical provider right out of medical school, due to that skewed debt-to-income ratio.
There you have it.
The two most significant requirements you need to meet in order to qualify for a physician’s mortgage loan are.
Hopefully, this post has helped you understand the process’s ins and outs and how to navigate it effectively.
You’ve got this.
Now get out there and apply for your next home loan, so that you can join the ‘homeowners club’ with pride.