Doctor Home Loan Programs

Did you attend medical school and recently graduate? Then you are on your way to becoming a doctor. Doctors often find themselves in an unusual place when they leave medical school: They have high incomes but also a lot of student loan debt. Medical school is expensive, and many new doctors have $500,000 or more in student loans. Many doctors have high enough debt that they would usually be precluded from getting a standard mortgage. That is why there are home loans for doctors. Learn all about doctor home loans below, then talk to our loan experts at RefiGuide for more information.

What Are Doctor Home Loans?

A doctor home loan is a private mortgage with looser qualifying standards and generous terms than regular home loans.

These loans are designed for higher income doctors and other medical professionals who have high debt and low savings.

Also, many doctors are older when they enter the work force and they may not have the equity and down payment required to buy a home. But they have plenty of income.

How Do Home Loans For Doctors Work?

Most doctor home loans do not require a down payment, so they are often 100% financing loans. The typical home loan for a doctor also may be worth $1 million or more, depending on the lender. The doctor loan limit could be up to $1 million for a 100% financing loan and up to $2 million with 10% down.

Most doctor home loans let you have a higher DTI or debt to income ratio because they know that many doctors have hundreds of thousands in loan debt.

New medical school graduates and residents often work for small salaries and may have six figures of student loan debt, so getting a conventional mortgage is difficult. But with a doctor home loan, your student debt is not used against you.

Doctor Loans and PMI

A doctor home loan does not have mortgage insurance or PMI even though the loan may be 100% financing. Mortgage insurance is usually required for people who don’t have 20% down because of the higher lender risk. The lender assumes higher risk because the doctor has a high income in many cases so they should usually pay the loan.

DTI For Doctor Home Loans

The debt to income or DTI ratio for conventional mortgages is usually 36% to 45%. If you have debt that is too high compared to your income, there is a higher chance you will default. But with home loans for doctors, the borrower may qualify for a loan with a DTI of up to 50%.

Doctor Home Loan Eligibility

A doctor home loan is often given to people with the following types of medical degrees:

• MD
• DO
• DMD
• DDS
• DPM
• DVM

There are also loans available for PAs, NPs, DNPs, and RNs. Generally, medical doctors, doctors who are in fellowship and doctors in residency can get doctor home loans. Their status as doctors are verified by checking with their employer and requesting their medical school diplomas and transcripts.

Most lenders only give doctor home loans to people for their primary home. So, you cannot get a doctor home loan for a vacation home or investment property. Some lenders can have higher flexibility, such as letting you get a multi-family home if you live in part of it. Others may not allow you to buy a condo.

Considerations for Doctor Home Loans

Home loans for doctors may offer many benefits, but there are many things to consider before getting this type of loan. On the upside, you don’t need to have a down payment. This can be a big help when you are fresh out of medical school and don’t have a lot of money for a down payment. Also many new doctors have been in school for 10 years and may be well into their 30s without ever buying a home, so they don’t have equity available.

Next, you don’t have to pay mortgage insurance for a doctor loan. This can save you hundreds of dollars per month. There is a higher DTI ratio so you can have up to 50% DTI and still qualify.

You also have easier credit, income, and employment standards. You may be able to get a doctor home loan as soon as you get out of medical school, so you don’t need a long professional work history.

There also are downsides to consider. First, home loans for doctors usually have variable rates. So, you will have an adjustable rate that can go up or down. This can be a concern in 2024 because interest rates are still elevated.

You can only get a home loan for doctors if you are buying a primary residence. They are not available for vacation homes or investment properties. Also, there are risks to buying a home with 100% financing; if you buy a home for $500,000 and have no money down, you are in the hole if the home declines in value.

Townhouses and condos are often not available for home loans for doctors.

What Are Doctor Home Loan Alternatives?

There are other options to consider than home loans for doctors. If you can qualify, you can get one of the following reasonable loan options:

• Conventional loans: Conventional home loans can be obtained with a 3% or 5% down payment. You can get a fixed or variable rate, but you may not be able to borrow as much as a doctor home loan.
• FHA loan: These government insured loans are available with 3.5% down if you have at least a 580 credit score. However, you need to have mortgage insurance. That said, this can be a good option if you don’t have a lot of savings or a large down payment and a lower credit score. Once you have 20% equity and better credit, you can refinance into a conventional loan.
• VA loan: If you are a military veteran, you can get a VA loan with 100% financing and a low interest rate.

Summary of Doctor Home Loan Financing

Doctor home loans can be a fantastic choice for a doctor fresh out of medical school. You may have a lot of debt, a high income, but no equity. These loans can be a good option that will allow you to borrow $1 million or even more. Just remember that interest rates are variable and having no down payment means you could have negative equity if the home value drops. Contact us at RefiGuide.org today if you need help with a doctor loan. We also can help with home equity loans, HELOCs, and cash-out refinances.

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