Ransom Kelly at Assurance Financial enjoys working with many types of clients for fast and efficient home closings. This week, we want to share a unique program for physicians and their families. The program is referred to as a “doctor loan”. It can also be called a “Physician Mortgage Loan.” This is a mortgage product designed for early-career doctors.
Often times, doctors accrue a heavy amount of debt through medical school. However, as they pay the loans off, their credit-worthiness may go up as a result. Student debt payments may also demonstrate a strong ability to pay off a large mortgage. Lenders have created doctor loans with this in mind. When using this product, one may find a lender is willing to make a zero down payment loan with fewer stipulations. Therefore, a doctor may be able to obtain a home early in their career. Some physicians can even secure a mortgage while still budgeting for large student debt payments.
Obtaining a Doctor Loan
In order to qualify for a doctor loan, you need to be a physician, medical resident, or fellow with a signed contract for employment. In some cases, doctor loans can also be made to Veterinarians, Dentists, or other types of doctors. You will also need to find a bank that offers Physician Mortgage Loans. Many lenders will feature zero or low down payments, lower rates/fees, and zero or minimal requirements for Private Mortgage Insurance. Many doctors will be approved for mortgages based off review of certain financials and their signed employment contract. Some lenders will even be more generous in their consideration of student debt for the financing review.
Pros and Cons of Doctor Loans
Doctor loans come with appealing packages that take into the consideration the unique needs of an early-career homebuyer. However, it is important to weigh the pros and cons before deciding to use a doctor loan to finance a home.
Here are some of the pros of doctor loans:
- Lenders offer less stringent reviews and requirements;
- Lenders often lower fees to be more competitive;
- Buyers may shop around and negotiate incentives from lenders competing for their business;
- The program may be the only mortgage available to doctors in their early career that have little cash and a high amount of debt.
Here are some cons of doctor loans:
- Buyers may be approved for a mortgage with an adjustable-rate, which will go up in time, and they may need to refinance;
- Buyers may still qualify for other generous mortgage program, such as VA or FHA Loans, that may have better rates in the long-run;
- Buyers may be taking more risk by adding a mortgage to their already sizable student debt; and,
- Buyers will start with zero equity in the home if they do not offer a down payment.
Ransom Kelly of Assurance Financial is here to help you decide whether to use a doctor loan, contact our Birmingham, AL offices today for support!