In this day and age, we realize just how important our health professionals are. Unfortunately, many new doctors leave medical school, and residency, with more than $200,000 of debt – more than any other generation of new physicians.
In earlier generations, as well, doctors were paid quickly by insurance companies. However, in today’s complicated healthcare system, physicians must jump through numerous hoops to even hope for a partial payment for their services. Complicating this is the immense overhead required to run a successful medical practice.
The sheer cost to even become a doctor becomes overwhelming for most new practitioners. If payments for these loans are delayed, the cost rises even more. A full 80 percent of physicians graduate with student loan debt, and interest rates alone can add upwards of $60,000 to the original loan amount.
Why Mortgage Loans for Doctors?
Because physician’s often incur massive student debt, there are mortgage loans for doctors to help reduce their debt load and minimize financial stress. These mortgage loans for doctors offer low down payment options, generally without the extra expense of private mortgage insurance (PMI). Options for mortgage loans for doctors also include jumbo loan amounts, and more flexible income-to-debt ratios. Because of this, doctors who might not otherwise qualify for a standard or conventional mortgage can, and do qualify.
Who Qualifies for Mortgage Loans for Doctors
Several medical fields and specialties incur the title of doctor, but not all doctors will qualify. Depending on the bank or lender, different physician types qualify, or qualify for different mortgage loans for doctors. For example, KeyBank’s mortgage loan for doctors program includes options for physicians who are:
- medical doctors (MD),
- doctors of dental surgery (DDS),
- doctors of dental medicine (DMD),
- an osteopathic physician (OD), or
- a doctor of podiatric medicine (DPM).
First National Bank, on the other hand, includes doctors of veterinary medicine (DVM), but not a podiatrist.
Most lenders look for a credit score of at least 700, and offer a variety of types of loans including fixed-rate, adjustable rate mortgages (ARMS), and mortgage loans for doctors for primary residence and second home purchases (more on that, soon). In general, if a physician has a good credit rating, they’ll be able to qualify for a mortgage loan for doctors that meets their needs and financial standing.
Mortgage Loans for Doctors – Purchasing a Home
The most common mortgage loans for doctors are for the purchase of a home – either a first or primary residence, or for a second or vacation home. The key factor here is the maximum loan-to-value; in other words, how much the loan is, based on the value of the home. Mortgage loans for doctors offer more flexibility than a standard or conventional mortgage loan. For example, several banks offer 100% loan to value for a primary residence under $750,000. For properties worth more, loans can be awarded for 89-95% of the property value. This is much different from conventional loans which are often limited to no more than 80% loan-to-value.
Advantages of Mortgage Loans for Doctors
Mortgage loans for doctors are designed to make the mortgage approval faster and easier for medical professionals. This is done with relaxed qualifying criteria, flexible loan-to-value ratios, and without expensive private mortgage insurance. Not all physicians qualify, but there are more than 40 lenders who have mortgage loans for doctors.
Mortgage loans for doctors are also available for refinancing an original mortgage, or drawing a home equity line of credit. With this type of loan, a physician can make home improvements, or draw on their equity to pay off debt, including their medical school loans.
With the flexibility that mortgage loans for doctors offer, our medical professionals can rest assured that they can live the American dream of owning a home, or even a second home, without stressing even more about their finances.