Physician mortgage loans (or physician home loans) are for medical professionals seeking to own a home, often before their student loans are paid off and their income potential is fully realized. The main feature of a physician mortgage loan is that a doctor can put 0- 20% down while avoiding Private Mortgage Insurance (PMI).
Banks often favor lending to physicians as they generally possess a high income with lower chance of defaulting on the loan. Their goal is to establish a long-term relationship with the physician to foster other business transactions such as checking and savings accounts, HELOCs, future mortgages, investing, insurance, estate needs as well as referrals.
Though lenders are more lenient with physicians, a minimum credit score of 700 is required to open a mortgage loan with the highest scores paying the least amount in interest. Some lenders offer a professional loan or a physician loan for other related professions and doctorate degrees; not just to medical doctors.
Physician mortgage loans can also be risky as they allow borrowers to take on a loan, oftentimes with no down payment, thus reducing client equity. This is why it is important to take the time to assess how this loan will affect your future property valuation, your budget and if the monthly payment is affordable on top of your student loan payments. Getting locked into a pricey mortgage can affect your future options, so careful consideration is a must.
The financial planners at Doctors Financial Resources can review your circumstances, discuss all the pros and cons and help you choose the mortgage that best fits your current status and your budget. Give us a call today at (888) 855-2345.