Your occupation can play a role in the type of mortgage loans you have access to. If you have just completed your residency as a doctor, you may be able to qualify for a physician mortgage loan. Physician mortgage loans are specific loans designed to help medical professionals who are just getting started and have different qualifying criteria and terms than conventional mortgage loans.
Low Down Payment
The traditional down payment goal for a home is 20%, although they are lots of programs nowadays that allow individual to only put down 3-5% for a down payment. A physicians loan is a great deal though, because most physician loan programs do not require any down payment at all.
Physicians are offered zero-percent down payments because many banks realize that although doctors have high student loan debts and low incomes when they first start working, their salaries will continue to increase greatly over time. Banks acknowledge the future earning potential of physicians by offering special loans that don't require a down payment.
No Private Mortgage Insurance
Many individuals aim to put down 20% on a home, even if they qualify for less because 20% is the magic number at which you no longer have to pay for private mortgage insurance, also known as PMI. Private mortgage insurance can drive up the cost of your monthly payments and the long-term cost of your loan.
With a physician's mortgage, you are able to side-step having to carry private mortgage insurance, even though you are not putting a down payment on a home. Once again, you are able to avoid paying private mortgage insurance because of your future earning potential.
Job Offer Is All You Need
Traditional mortgage lenders will look at your last two years of employment history to determine if you are bringing in a steady income that will allow you to pay your mortgage on time. Your current and projected income will also impact the loan amount you qualify for.
Physicians loans are different. With a physician's loan, you can qualify for a mortgage loan with only a signed contract stating that you start work within three months time. You can also get a physician's loan with less than two years of employment under your belt.
If you just completed your residency, and have accepted your first full-time position as a doctor, you can qualify for a special physician's loan. A physician's loan will allow you to purchase a home with no money down and no private mortgage insurance as long as you have a written job offer. This unique loan arrangement is based on your future earning potential.
To learn more about mortgage financing for physicians, reach out to lenders in your area.