Mortgage Loan Programs for Medical Professionals [Varying Disciplines]
Most homeowners looking to purchase real estate do so with a conventional mortgage loan. Conventional loans require you to have a good credit score, a low debt-to-income ratio, and make a 20% down payment (or pay that dreaded private mortgage insurance).
But for medical professionals looking to buy a home, there is another option:
The physician mortgage.
Physician mortgages, also called doctor loans, aren’t just available to MDs — they are available to a wide range of medical professionals, including nurses, veterinarians, chiropractors, and even medical residents who are still in training.
Here’s our guide to the doctor mortgage loan programs available to medical professionals of varying disciplines.
Why the Physician Mortgage Is Such an Attractive Option
Before we look at the specific loan programs available, let’s quickly recap why the physician loan is such an attractive option for medical professionals.
There are a few key reasons.
Zero or Low Down Payment
Unlike conventional mortgages that require a 20% down payment, physician mortgages offer zero or low down payments, and they don’t require you to pay private mortgage insurance (PMI).
With a traditional loan, you must make PMI payments until your loan-to-value ratio (LTV) drops below 80%.
With a doctor’s loan, you don’t have to pay PMI, regardless of your LTV.
Flexible Debt-to-Income Requirements
All lenders look at your debt-to-income ratio (DTI) when deciding if you qualify for a mortgage, and most require that your debt-to-income ratio be 43% or lower. For medical professionals still carrying large amounts of student loan debt, reaching a DTI of 43% is often impossible.
With a physician mortgage, lenders don’t factor your student loan debt into the equation. Instead, they’ll consider your other financial obligations, such as credit card debt and personal loans.
Purchase Based On Future Income
Conventional mortgage lenders consider your current income and current level of savings when deciding how much they’re willing to loan you. Physician mortgage lenders look at your potential future income instead, allowing you to purchase a more expensive home based on what you stand to earn in the future as opposed to the amount you’re earning or have saved today.
By providing your lender with proof of your education or degree, as well as a copy of a valid employment contract, medical professionals in varying disciplines can secure a low down payment doctor loan with zero PMI and more flexible DTI requirements.
Mortgage Loans for Medical Doctors and Doctors of Osteopathy
Many healthcare professionals think that the physician’s mortgage is reserved for medical doctors and doctors of osteopathic medicine.
That is not the case, but it is true that these physicians have one significant advantage over other medical professionals:
All lenders that handle physician mortgages provide them to MD and DO designations.
If you’re an MD or a DO, that’s excellent news.
Why?
Because it means you’ll have lots of lenders to choose from. With more options to choose from and more banks competing for your business, you may be able to get better interest rates or take advantage of other incentives the bank is willing to give you in the hopes that you will choose them over another lender.
While not all of these lenders operate in all 50 states, here is a short list of some of the best physician mortgage lenders for MDs and DOs:
US Bank
KeyBank
BMO Harris Bank
Huntingdon
TD Bank
Mortgage Loans for Nurse Practitioners, Registered Nurses, Certified Registered Nurse Anesthetists, and Physician Assistants
With select mortgage lenders, NPs, RNs, CRNAs, and PAs may be able to get a physician’s home loan, but it’s not typical.
The physician mortgage exists primarily to give doctors an opportunity to buy a home based on their income earning potential and without being penalized for all of the medical school debt they’ve incurred along the way. Because most nursing professionals and PAs don’t have the hefty student loan payments that physicians do, banks are less likely to grant them a physician mortgage.
However, there are two financial institutions that do:
Evolve Bank & Trust
First National Bank of Omaha (FNBO)
Healthcare professionals that don’t meet the eligibility requirements for a doctor loan have other ways to obtain financing for a home:
Conventional loans
FHA loans
VA loans
Conventional Mortgage
Everyone is eligible to apply for a conventional mortgage, though you will need to have a good credit score and a debt-to-income ratio lower than 43%.
When applying for a conventional loan, it can be beneficial to apply with a lender that you already have a relationship with, such as the bank with which you do your online banking or where you already maintain a savings account.
FHA Loans
FHA loans are loans backed by the Federal Housing Administration. They are a great option for first-time home buyers, including healthcare professionals with lower or more moderate incomes.
FHA loans also allow for higher debt-to-income ratios, which can be beneficial if you’re still burdened with some student loan debt.
VA Loans
For nursing professionals that are a veteran of the U.S. military or have served the minimum active-duty requirement of 90 continuous days of service, a VA loan may be the best choice.
Like the physician mortgage, VA loans don’t require you to pay PMI, plus they have competitive, low-interest rates and limited closing costs.
Mortgage Loans for Pharmacists
If you have a PharmD or RPH designation, doctor loans are available through a limited amount of lenders:
Evolve Bank & Trust
Fulton Bank
UMB Bank
Fulton Bank offers loans for purchase or refinance up to $1 million with $0 down. They also offer jumbo loans up to $1.5 million with only 5% down.
UMB Bank is the preferred option of many pharmacists and physicians in varying fields, in part because it is one of the few lenders that grant home loans for secondary residences. They offer loans up to $1 million with 100% financing and up to $2 million with 10% down.
Mortgage Loans for Doctors of Dental Medicine and Doctors of Dental Surgery
Among those that hold a DDS or DMD, the dentist mortgage is a popular option. Like MDs and DOs, dental professionals are eligible to obtain a low down payment, and no PMI loan with just about every lender that offers a doctor loan program.
Lenders that provide dentist loans include:
Huntington National Bank
TD Bank
KeyBank
BMO Harris Bank
UMB Bank
First National Bank
Citizens Bank
Truist Bank
PNC Bank
With so many options to choose from, it can seem overwhelming trying to decide which lender to apply with. Contact LeverageRx now, and an expert can help you compare loans from over 20 different lenders in a matter of minutes.
Mortgage Loans for Optometrists
There are a limited number of doctor mortgage programs available to optometrists. The two best options are:
Fifth Third Bank
UMB Bank
UMB Bank is one of the best lenders for doctor loans, offering $0 down payments on loans up to $1 million. UMB Bank also offers fixed-rate loans so that your monthly payments remain the same each month, as compared to many other lenders that offer adjustable-rate loans that increase rates and payments over time.
Mortgage Loans for Podiatrists
Podiatrists are excluded from the doctor loan by some lenders, but there are five that extend mortgages to DPMs. Those include:
TD Bank
Fifth Third Bank
KeyBank
First National Bank
Truist Bank
With zero to low down payments, no need to pay PMI, and relaxed DTI ratio limits, podiatrists can purchase the home of their dreams, typically up to a loan limit of $2 million.
Mortgage Loans for Chiropractors
Chiropractors are well-respected in the medical community, but most loan lenders do not extend doctor loans to DCs. With the exception of Evolve Bank & Trust, chiropractors typically rely on conventional loans to finance home purchases.
DCs that are first time home buyers may want to look into the FHA loan, which allows for a higher debt-to-income ratio than conventional loans.
Mortgage Loans for Veterinarians
DVMs aren’t eligible for doctor loans with most lenders, but there are a few reputable ones that extend low down payments, zero PMI loans to veterinarians:
Huntington National Bank
Fulton Bank
Fifth Third
First National Bank
Offering 100% financing on homes up to $1 million and 90% financing on homes up to $2 million, Huntington National Bank is one of the top-rated physician mortgage lenders of 2023. Loans are available for both purchasing and refinancing, but only on primary residences.
Though it only operates in thirteen states, First National Bank is one of the few lenders that offer doctor loans on secondary residences. If you’re looking to build a custom home from the ground up, FNB offers construction financing as well.
Mortgage Loans for Medical Residents
As a medical resident, the idea of homeownership may seem like an unattainable dream, but it’s more realistic than you may think. There are several banks that will approve medical residents for a physician mortgage, as long as you have an employment contract to prove what your future income will be.
Residents finishing their training may obtain a doctor loan with:
Huntington National Bank
Evolve Bank & Trust
Fifth Third Bank
When purchasing a home, it’s important for residents to be realistic about what they can afford. Yes, your potential earnings may be five or ten times what you’re earning right now, but you’ll still need to be sure that you can (comfortably) cover your monthly mortgage payments. Lenders are known to approve borrowers for more than they want to spend, so beware of the risks.
Taking a large loan with a $0 down payment can put you at greater risk of going underwater.
Things to Look Out for When Applying for a Mortgage
If you think you’re ready for a physician mortgage, there are a few things to keep in mind before you apply.
The biggest downside to the doctor loan is that sometimes the only option is to choose an adjustable-rate mortgage.
With an adjustable-rate mortgage, interest rates can increase over time, leading to higher monthly mortgage payments. It is possible to refinance a loan to bring interest rates down, but it’s generally better to choose a fixed-rate mortgage where the interest rate remains the same throughout the duration of the loan.
Looking for a physician mortgage for a vacation home or an investment property?
With most lenders, that’s not an option. The majority of lenders will only issue a doctor loan if the home is going to be your primary residence. Some lenders also put restrictions on the type of property you can buy. For example, condos, HOA properties, and co-ops are sometimes prohibited.
Regardless of the loan amount, borrowers will need a good credit score to get approved for a mortgage. It is possible to get a mortgage with a lower credit score, but that usually means paying a higher interest rate.
Conclusion
In comparison to the conventional loan, the physician mortgage offers numerous benefits, but you have to be smart when purchasing real estate, as the housing market fluctuates over time.
Buying a home is an investment, and like any other investment, it pays to seek the advice of a professional before making any major decisions. For expert advice on physician mortgages, to compare loan terms, and to find the right lender for you, contact LeverageRx now.
