Physician Loans

Physician Loans: A Good Option for Doctors

A doctor’s profession is highly respected and praised in society at large. However, the journey of a doctor from a medical student to a physician is full of hard work and studies. Throughout their studies, many aspirants have to fund their studies through various loans, which they repay for years to come. While the doctors settle down and start practicing, the need for funds to open or renovate their clinic or fulfil other personal expenses grows. Here, Physician Loans are helpful as they let them fund their different financial needs.

What is a physician loan?

A Physician Loan, also known as a Doctor’s Loan, is specifically available for medical professionals. It is a type of loan that can be secured without a down payment or private mortgage insurance (PMI) payments. 

New doctors are usually deprived of securing home loans as they might already have a considerable sum of loans for their medical schooling. This makes it impossible for them to get funds to help them buy a house early in their career. Best Physician Loans offer special allowances to medical professionals. 

In many cases, the lenders are hesitant to provide loans to professionals early in their careers, especially those who have already taken a loan, like an educational loan. However, considering the doctors' careers, Physician Loans are made available to them without hassles.

Who is eligible for a Physician Loan?

As the name suggests, Physician Loans are available to physicians or doctors by profession. Depending on the lender, the best physician mortgage loans are available to professionals, either with or without collateral. They are available to professionals who have degrees like:

  • MD
  • DO
  • DVM
  • DPM
  • DDS
  • DMD

Moneylenders do not limit the loans only to general physicians but also make them available to other healthcare professionals like dentists, veterinarians, and orthodontists. Despite a doctor earning less during their early professional life and having a high debt amount still prevalent, lenders provide them with such loans. This is because doctors usually have the potential to earn lump sums in the future, and hence the lenders make a few compromises while processing Physician Loans. 

Important notes about the Physician Loans:

  • Private Mortgage Insurance

Moneylenders usually require borrowers to pay PMI when they make a down payment for the loan at a value of less than 20%. However, the best Physician Loan lenders do not require a medical professional to pay this insurance amount even when they make zero down payment. 

PMIs are generally charged between 0.5–1% of the loan amount yearly. When these rates are waived off, doctors get the consideration of a higher value of due debt. Physician Loans facilitate doctors to concentrate and pay off their schooling debts and require no PMI payment from them. 

  • Debt-to-Income Ratio

The ratio between the income you earn versus the amount you spend on debts is called the debt-to-income (DTI) ratio. Other types of loans require the borrowers to have less than 50% of DTI to secure the repayment of the newly borrowed loans. 
People with a higher DTI ratio are not provided with other loans as they are considered risky in the lender's books. This factor is not considered for a doctor securing a loan. It is because the lenders are sure that doctors will earn more in the coming years in comparison to their early careers, thus ensuring the repayment of dues.

  • Primary Residence

Best Physician Loans are available to doctors who want them for their primary residence. A doctor can finance or refinance their primary residential property under this loan category. A professional cannot or is not eligible to avail of this loan if he is not living in that residence for a significant part of the year. In short, a doctor cannot misuse this loan to buy a second home or take it as an investment opportunity for himself. Notably, these loans are not available for securing a condo.

Why should you choose a Physician Loan?
A doctor in need of finance must choose a Physician Loan over other conventional loans for the following reasons:

  • They offer 100% financial assistance that does not require you to pay even a single penny as a down payment.
  • Even though you don't make a down payment, the lender waives off the private mortgage insurance payment when you are a doctor by profession. This helps save a considerable amount of money while repaying the debts.
  • To secure this loan, you do not need a very high credit score or a lower DTI ratio. Other conventional loans are available only if a person falls under both categories.
  • Physician Loans are specially designed and available for doctors with multiple benefits. Hence, it only becomes a wise choice to make the best use of this loan.

What are the drawbacks of Physician Loans?
There are several benefits to securing loans from the best Physician Loan lenders, but they also come with a few drawbacks.
Physician Loans have a low-interest rate during the beginning years, increasing over time. These higher interest rates may add up over the years, and one may pay more than conventional loan interests.


Conclusion
The best Physician Loans aim to reduce the burden of doctors who would otherwise have to spend most of their 20s and 30s repaying debts related to their medical studies. They are an excellent option to consider when in need of finance for buying a primary residence. Remember to analyze and validate your available options and choose loans that best suit your lifestyle choices.

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