Physician Home Loan: Is it the Right Choice for You?
Often, physicians don’t have the ability to qualify for a conventional loan. When this happens, they have the option to use a physician home loan instead. While this type of loan doesn’t fit for everybody, it will work for many physicians in specific circumstances.
Why Might You Not Qualify for a Conventional Loan?
One of the main reasons physicians struggle to qualify for a conventional loan is student loan debt. After medical school, you may have a large amount of student loan debt and no real way to pay it off anytime soon. When this happens, a physician loan may be the perfect solution for you.
Another reason physicians may struggle to qualify for a conventional loan is the limited work history they have, or they may be paid on a 1099 instead of a W-2. This can make it harder to prove income. In addition, if you don’t have much saved for a down payment, it can be difficult to qualify for a conventional mortgage.
What is a Physician Home Loan?
When you find out you cannot qualify for a conventional loan, you may be ready to turn to a physician home loan. This type of loan is also known as a special portfolio loan. It’s designed to help you quality even though you have specific obstacles in your way.
Typically, physician home loans are used for existing fellows, residents, and new doctors looking to buy a house. Banks offering these types of portfolio loans understand why physicians are such good candidates. A few of the top reasons they are willing to offer a physician home loan include:
– Physicians have very low default rates
– Physicians have current and future high earning power
– Physicians have jobs less affected by changes in the economy
Benefits of a Physician Home Loan
When you want to buy a house, but a conventional lender tells you that you can’t, a physician home loan is the answer. This loan will offer several key benefits including:
– Lower down payments – Often, you will only need to put 0% to 10% of the purchase price down on the home.
– No PMI – PMI or private mortgage insurance is usually required for down payments lower than 20% of the purchase price.
– Great Interest Rates – Even though it’s not a conventional loan, you’ll still get a good rate.
– Very flexible with Student Loan Debt – As the most common obstacle of getting a mortgage for physicians, the physician home loan doesn’t consider student loan debt as heavily as a conventional loan will.
While you won’t find physician home loans from just any bank, there are several that offer this type of program. The guidelines may vary a bit from one lender to another, but these loans are designed to help physicians buy a house. They cut through the many obstacles you will face and give you the financial ability to own your home now instead of many years in the future.