If you’re a doctor who’s either getting ready to graduate from your medical residency or who has already graduated and started practicing medicine, then you may be interested in possibly getting a physician mortgage loan.
A physician mortgage loan, which is also sometimes called a doctor loan, is a type of loan that was specifically created to help address the distinctive challenges that physicians face when trying to borrow money for a home loan (due to their high debt-to-income ratios).
As you probably know, the student loans required to graduate from medical school are steep.
And even though doctors tend to make a lot of money once they graduate, this debt-to-income ratio can really do a number on their ability to be able to secure a conventional mortgage.
With these types of loans, you can usually get away with zero down payment and much higher loan amounts than you would usually qualify for. This is fantastic news for doctors who want to get a head-start on building some home equity.
With all that being said, there’s also a really important question to be asked.
How will you know if you’re eligible for a physician mortgage loan?
As you probably know, financial institutions don’t just walk around handing out money to anyone who claims they’re a doctor.
So there are some requirements that you’ll need to meet if you want to get a doctor’s loan to buy your own home and become a homeowner.
Let’s talk about it.
1. You Must Be A Physician
Now, there’s a little bit of leeway here.
Medical Doctors, Dentists, and even Veterinarians can qualify for physician mortgage loans.
In fact, even nurse practitioners can sometimes qualify.
However, you either need to be a medical resident, a fellow or attending physician, or meet some other very similar criteria in order to actually qualify for this type of loan.
You’ll also need a degree or proof of education, plus you’ll usually need a signed contract that indicates your future salary.
With that being said, not all physician mortgage loans require you to have a signed contract, especially those that allow medical students to take advantage of these financial products.
So it really depends on your situation.
2. You’ll Need To Have Good Credit
Even though physician mortgage loans can help you to sidestep some of the weird difficulties that can arise as a result of a skewed debt-to-income ratio, it’s still crucial for you to have a credit score of 700 or higher in order to qualify for most physician loans.
This is crucial because the bank still wants to know that you make your payments on time, and that you aren’t ‘careless’ with your borrowed money.
3. Your Debt Needs To Meet Certain Criteria
Another thing that’ll be required before you’ll be able to qualify for a physician mortgage loan is that your debt will need to be set up a certain way.
For example, most financial institutions that offer these types of loans will either require you to have deferred student loans or loans that are in good standing on an income-driven repayment plan.
Some financial institutions will also require a debt-to-income ratio of 45% or less, not including your full student loan amount.
With that being said, keep in mind that every lender is a little bit different.
It also pays to shop around, because some lenders will give you a little bit more leeway on some of these things than others.
For example—if you take a look at this tool and fill out your information, you’ll see that there are several different lenders to choose from if you’re concerned about getting the best interest rate possible.
This is the kind of research you want to be doing whenever you get a loan, because the truth of the matter is that interest rates really do matter in the long term—especially on a loan as big as a mortgage.
But as a general rule, these are the things you’re looking at when it comes to figuring out exactly what you’ll need to do to qualify for a physician mortgage loan.
Conclusion
There you have it.
Becoming a homeowner might be difficult if you’re fresh out of medical residency, but it’s such a crucial element to life success that it really pays to take advantage of these types of loans to help you cross that bridge earlier—and build that equity in your home sooner rather than later.