Can You Get a Mortgage if You’re a Doctor with Student Loan Debt?
Often, doctors are not aware they can get a mortgage loan right after completing medical school. It’s not uncommon for a doctor to carry a massive student loan debt, which makes it very difficult, if not impossible to get a conventional mortgage. However, this doesn’t mean they cannot get a mortgage at all.
Doctors can use a special mortgage program, which will not factor the student loan debt the same way. It’s designed specifically for the unique situation doctors face, giving them a solution to this issue.
Many banks and lenders now offer physician mortgages to help doctors get the home loan they desperately need. These banks have seen a rise in their business for these programs over the past few years.
With more doctors seeking home loans, it’s important to understand why student loan debt won’t get in the way. Here are some of the things you should know about these special physician loans if you’re a doctor looking to buy a home.
Why Doctors May Struggle to find a Mortgage
It seems like doctors would have no issue qualifying for a loan due to their higher than normal income. But the general public doesn’t understand that physicians don’t make high incomes right outside of medical school. Normally, there is a period of additional training from 3-5 years afterwards where physicians make a much lower salary.
Also, doctors face unique challenges with well above average student loan debt. This factors into the debt-to-income ratio making the doctor high risk for a mortgage. With a good amount of savings, doctors can mitigate this issue, but this may not completely solve the issue.
How Special Physician Mortgages Help
With a physician mortgage, doctors can get the loan they need to buy a house. These programs may have a bit higher interest rate compared to a conventional mortgage, but they often don’t require a down payment or may only require a small down payment.
One of the requirements of this special mortgage loan is a future work contract. Doctors have to be able to show they will have a steady income in the future.
While the loan may come with a bit higher interest rate, it does come with the benefit of no private mortgage insurance requirement. Typically, if a home buyer puts less than 20% of the purchase price down on a home, they must pay for private mortgage insurance. Physician loans don’t have the same requirement, which saves doctors thousands of dollars each month.
Also, as long as the student loan debt is still deferred, those monthly payments won’t be added into the debt-to-income ratio used to qualify a home buyer for a mortgage.
Lenders are Seeking Doctors
Eventually, doctors have an average salary of $300K, according to Medscape. This amount of income makes a doctor a lower-risk borrower for lenders. In addition, most lenders understand that if they create a relationship with the doctor, they will use the lender again and again for other financial needs, such as car purchases or home remodeling.
With this in mind, lenders actually seek doctors right out of medical school for these special physician loan programs. They want to help doctors buy homes and use these specially designed programs. If you’re a doctor looking to buy a home, don’t let student loan debt stand in your way. You can use a special physician mortgage and own a home instead of throwing your money away on rent.