Medical Professional Mortgages
We all know Medical school can be financially draining- How does a young medical intern afford to buy a home? Here a few facts about "Physician Loans" according to Wrenne Financial Planning LLC (“WFP”)
What’s So Special?
So how is the physician mortgage loan different than a typical mortgage? Here are some of its common features:
- Zero (or very low) down payment required
- No private mortgage insurance “PMI”
- No rate increases on jumbo loans (typically, loans larger than $417K)
- Lending based on a physician’s signed employment contract
- Less critical of student loan debt
Who Counts as a Qualified Borrower?
A “qualified borrower” is normally a medical resident, fellow or attending physician with a signed contract for employment. Some lenders also include dentists, veterinarians, and other doctors.
Who Offers Physician Mortgage Loans?
There’s a growing list of lenders offering physician mortgage loans, including:
- Fifth Third Bank
- Bank of America
- BB&T Bank
- Huntington Bank
- Republic Bank
- Regions Bank
- Citizens Bank
- SunTrust Bank
- Bank of Nashville
- US Bank
- Central Bank
- Citizens Bank
- Physician Loans
Also, please note that we do not have a financial relationship with any of these lenders. If you’re a lender and would like to be added to our list, please let us know.
So, now that I’ve explained why physician mortgages are different and why they appeal to many young physicians, it’s time to take a look at mortgage expenses. Many people focus on the monthly payments when considering buying a home, but there are several costs that make up your total mortgage expenses:
- Interest – The cost of interest is based on the interest rate, loan balance and loan repayment term
- Closing costs – A one-time, out-of-pocket expense paid at closing, wrapped into the loan balance or wrapped into the loan in the form of a higher interest rate
- PMI – The monthly fee typically paid until reaching 20% equity
First thing you need to know about physician mortgage loans is that many lenders are willing to lower their fees especially when they know it’s competitive. On many occasion, our clients get offered discounts once the lenders realize they’re talking to multiple lenders. If you want to get the best deal, make sure it’s clear to the lender that you’re talking with multiple competitors and it’s not a sure shot for them.
Closing costs and interest rates are kind of like a teeter totter: reducing closing costs on a mortgage increases the interest rate. Or if you want the lowest rate possible, you’ll have higher closing costs. You can see how this works in this breakdown from the Mortgage Professor website.