Whether you are looking at a physician loan or another type of program your credit score is going to determine what your options are. Let’s specifically address physician loans. Since the benefit of this program is having the ability to do 95% financing with no Private Mortgage Insurance there WILL be credit score requirements. Many lenders will require a minimum credit score of 720 and I have seen up to 740, without exception. When there is a minimum credit score requirement and your score isn’t high enough you may miss out on the ability to do 95% financing and in some cases a more favorable interest rate. In order to avoid not being able to take advantage of these great types of programs I would recommend the following:
- At least 12 months in advance of considering the purchase of a new home review your credit report
- If you have any collections make sure you pay them immediately and retain a paper trail that evidences the account being paid. Judgments, tax liens etc. will have to be paid
- Make sure ALL payments are made on time from this point forward – if you have had any late payments make a note of what accounts they were and why it took place. Your lender may need you to address what transpired
- If you have any “disputes” on your credit report they may need to be removed, which in some cases can effect your credit score, however addressing this as far in advance as possible will help
It is always recommended to have a pre-qualification done prior to starting your home search, these are usually good for 90 days. Prior to having a lender start a pre-qualification and review credit, narrow down you search to the lender you feel is the best fit for you. It is not typically necessary to have several lenders reviewing your credit. You will need to address any recent inquiries on your credit report with the lender you decide to go with.
There is a lot to the process these days but this is one area that you can definitely help yourself with. In most cases derogatory credit situations rarely are the fault of someone other than ourselves. Be aware, be prudent, and you will be prepared!