The Doctor Mortgage Program has many advantages for eligible borrowers. This article will outline the highlights and basic concepts that will help you as you are researching loan options.
Lower Down payment with NO Mortgage Insurance
One of the biggest advantages of the Doctor Mortgage Program is that you will be able to put down less than 20% of the purchase price and will not be required to pay mortgage insurance. The minimum down payment requirement will vary between lenders (usually 5% to 10% down).
Competitive Mortgage Interest Rates
With most conventional (non-Doctor loans), in addition to Mortgage insurance with less than 20% down, the interest rate is usually higher. With the Physician Mortgage loan, even though you are putting down less than 20%, you should be receiving the same rate from the lender if you were putting down 20%.
Flexible Underwriting Guidelines
Physician Mortgage guidelines will vary between Lenders; however, underwriting guidelines are typically more flexible. For example, many Lenders will allow the loan to be qualified based upon the income from your future employment contract (up to 6 months from your starting date). Additionally, gift funds will often times be allowed for your down payment and reserve requirements. The allowable debt to income ratio (monthly gross income vs. monthly expenses) will often times be higher than traditional mortgage. Some lenders allow up to a 50% debt to income ratio.
Fixed and Adjustable Rate Mortgage Options
Most lenders that offer the Physician Mortgage program offer Fixed Rate and Adjustable rate mortgages.
Ability to use the Physician Mortgage program multiple times
Although you likely won't be able to have two Physician mortgages at the same time (unless one is under your name and the other is under your spouses name, for example), you should be able to use the program over and over again, subject to any Lender specific restrictions. For example, some lenders have eligibility restrictions for how long you have been out of Residency in order to qualify.
The bottom line is that Lenders want this kind of business. Since Physicians are high-income earners, these loans are viewed as low risk, even with the low down payment. Additionally, if you are working with a Major National Bank, they are especially interested in earning your business as they see more opportunities to present other services to you, such as Wealth Management Services, Practice Finance, and other Banking services. The Physician Loan has many benefits and an important pillar in building your wealth.