It’s important that you understand the home loan programs designed for physicians so you can secure favorable terms; physician mortgage loans, conventional and jumbo loans, FHA or VA options (if eligible) each have different down payment, credit and employment-history requirements. You should evaluate student-debt impact, debt-to-income ratios, residency or fellowship status, lender overlays and specialty-specific underwriting to choose the best program and maximize your purchasing power.
Understanding Home Loan Programs
When narrowing options you should weigh down payment, PMI, debt-to-income (DTI) treatment and student loan policy. Many physician loans allow 0-5% down and waive PMI, while FHA requires 3.5% down with mortgage insurance. If you earn $200,000 and carry $150,000 in student loans, specialized programs may use income-based repayment or interest-only calculations to keep your qualifying DTI lower than conventional overlays.
Overview of Loan Types
You’ll want to separate loans by underwriting quirks: conventional physician products, FHA, VA, jumbo, and portfolio/relationship loans each behave differently on down payment, PMI, and student debt. Conventional physician loans often accept low down payments and waive PMI; FHA is credit- and down-payment-friendly; VA can be zero-down for eligible veterans; jumbo covers high-value purchases. Below are rapid summaries:
- Conventional physician loans – 0-5% down, often no PMI, flexible DTI for recent grads.
- FHA – 3.5% down, mortgage insurance required, good for lower credit scores.
- VA – no down payment for qualifying veterans, competitive rates, limited to eligible service members.
- Jumbo – higher loan limits (>$726,200 in many markets), stricter reserves and credit needs.
- This portfolio/relationship option – customized underwriting, may consider future earnings and allow unique debt treatment.
| Conventional (Physician) | 0-5% down, PMI often waived, flexible DTI |
| FHA | 3.5% down, mortgage insurance, lenient credit requirements |
| VA | No down payment for eligible vets, strong rate competitiveness |
| Jumbo | Higher limits for expensive markets, stricter reserves/credit |
| Portfolio / Bank | Custom terms, considers future income and student loan programs |
Benefits for Doctors
You can often buy sooner with low or no down payment, avoid PMI, and get DTI calculations that treat student loans favorably; some lenders accept residency income or cap student loan payments at 0.5% of balance, which lets a resident earning $60,000 qualify for larger loans than standard models would allow.
Many physicians secure a $750,000+ purchase with 5% down instead of waiting to save 20%, because lender overlays are relaxed and reserves required are often just 2-6 months. If you refinance later, improved pay and reduced student balances can lower your rate or move you into a conventional product with better terms.
Conventional Loans
Eligibility Criteria
If you pursue a conventional loan, expect typical credit score minimums around 620-680, while scores above 740 get the best pricing; loan-to-value policies let you put down as little as 3% with programs like HomeReady/HomePossible, but most lenders prefer 5%-20%. Debt-to-income usually must be ≤45% (some lenders stretch to 50% with strong compensating factors). You’ll need standard income documentation or, as a new physician, a signed employment contract and residency records can often substitute for two years’ tax history.
Advantages and Disadvantages
You’ll benefit from typically lower long‑term mortgage costs and the ability to cancel PMI once you reach 20% equity, with conforming loan limits at $726,200 for 2024 in most counties. Downsides include stricter credit and DTI requirements than FHA, PMI adding roughly 0.3%-1.5% of loan annually if your down payment is under 20%, and tighter underwriting for investment properties or jumbo balances above conforming limits.
For example, putting 5% down on a $600,000 purchase usually triggers PMI of about $150-$750 monthly depending on credit and loan terms; alternatively, a 20% down payment often lowers your rate by 0.25%-0.50% and eliminates PMI. You should weigh faster PMI removal via principal paydown or refinancing versus the cash cost of a larger down payment, and note that lenders may allow physician employment contracts to offset tight DTI or short job history during underwriting.
FHA Loans
If you need a low-down-payment route during residency or early practice, FHA lets you purchase with just 3.5% down (with a 580+ FICO) or 10% down for 500-579 scores, and accepts shorter credit histories. You’ll face upfront and ongoing mortgage insurance premiums that can raise total housing costs, so weigh FHA against physician or conventional options once your income and credit improve.
Key Features
FHA features include a 1.75% upfront mortgage insurance premium (UFMIP) that can be financed, annual MIP that varies by term and LTV (roughly 0.45%-1.05%), county-based loan limits, allowance for non-occupant co-borrowers on purchase loans, and seller contributions up to 6% toward closing costs.
- Minimum down payment: 3.5% with FICO ≥580; 10% for 500-579
- Upfront mortgage insurance premium (UFMIP): 1.75% of loan amount (can be financed)
- Annual MIP: typically ~0.45%-1.05% depending on LTV and term
- Non-occupant co-borrowers allowed on purchase transactions to help qualify
- Seller concessions allowed up to 6% of purchase price
- Loan limits vary by county (commonly in the $400k-$1.2M range in high-cost areas)
- The annual MIP often remains for the life of the loan on many FHA mortgages, increasing long‑term cost compared with conventional loans
Suitability for Doctors
If you’re a resident, fellow, or early-career physician with limited savings or a thin credit history, FHA can get you into a home sooner-3.5% down and flexible underwriting help when you have high student debt. You should compare total monthly cost including MIP to physician loans that may offer no PMI and rate/term perks once you qualify.
For example, buying a $400,000 home with 3.5% down means ~$14,000 down, a UFMIP of about $7,000 rolled into the loan, and annual MIP (at ~0.85%) around $3,400/year (~$283/month). If you expect to transition to attending pay quickly and can refinance later, FHA can serve as a bridge; otherwise, putting more down or choosing a physician/conventional product often lowers lifetime cost.
VA Loans
For veterans, active-duty service members, certain reservists and eligible surviving spouses, VA loans let you buy with little to no down payment and competitive interest rates. You’ll need a Certificate of Eligibility (COE) and meet VA occupancy and property standards; lenders also apply residual income and credit checks (many accept scores around 620-640). VA loans avoid private mortgage insurance and are assumable, which can be a strong resale advantage in low-rate environments.
Benefits for Veterans
You can finance 100% of the purchase price, avoid PMI, and often secure lower rates than conventional loans; the VA funding fee-typically in the 1.4%-3.6% range depending on service and down-payment-may be rolled into the loan. Additionally, IRRRL refinance options lower rates with minimal underwriting, and loan assumability makes your mortgage attractive to buyers if you sell while rates are low.
How to Apply
Start by obtaining your COE via eBenefits, My VA, or through a VA-approved lender, then get preapproved to understand your borrowing power. You’ll submit service records (DD214, NGB-22), income documentation, and go through VA appraisal and underwriting; expect lenders to verify residual income and occupancy plans. Typical timelines: COE immediate online, preapproval a few days, and appraisal 7-21 days.
When applying, choose a lender experienced with VA rules-many lenders can pull your COE instantly and explain funding-fee options (pay up front or finance it). Prepare for the VA appraisal to enforce Minimum Property Requirements; if repairs are needed, negotiate seller concessions or escrow. Also ask about assumability, IRRRL eligibility, and how residual income calculations (based on family size and region) affect your approval.
Physician Loan Programs
Physician loan programs let you leverage your future earning power-typical offerings include 0-10% down options, PMI waivers, and underwriting that weighs a signed employment contract over current residency pay; loan sizes commonly range from $500,000 to $2,000,000, and lenders often factor deferred student loans or income-based repayment into DTI calculations.
Unique Features
You’ll encounter features tailored to medical careers: acceptance of employment contracts in place of pay history, higher allowable DTI (often up to ~50% during training), interest-only or adjustable-options for the first 1-3 years, and jumbo limits for high-cost markets-these can enable a new attending earning $200k-$300k to qualify for substantially larger loans than conventional underwriting would permit.
Lenders Offering Programs
You’ll find physician products at national banks, regional banks, credit unions, and specialty lenders; examples include large institutions and niche firms (e.g., Bank of America, Fifth Third, Physicians Mortgage), with underwriting variance-many prefer credit scores near 700+, while specialty lenders will underwrite residents using contracts and flexible documentation.
Compare specifics closely: some national banks advertise high loan limits and PMI waivers, specialty lenders often close in 2-3 weeks and can approve residents based on contract income, while regional banks may offer competitive rates but stricter DTI rules-ask each lender for sample timelines, required documents (employment contract, residency verification, student loan statements), and a net-cost example for your situation.
Tips for Securing the Best Rates
Act quickly when market rates dip: use a rate lock and evaluate buying points (one point ≈ 1% of loan to shave ~0.25% off the rate). You should compare APR, not just nominal rate, because fees can wipe out a lower rate’s savings. Shop multiple offers and time your lock to avoid rate spikes. After you model total costs over your expected 5-10 year hold, select the lender and product that deliver the lowest net cost.
- Lock a favorable rate when you have a firm contract.
- Buy points if you plan to keep the home long enough to recoup the cost.
- Compare APR and lender fees, not just the headline rate.
- Negotiate lender credits or ask for closing-cost reductions.
Rate-Saving Tactics
| Tactic | Impact / Notes |
|---|---|
| Rate lock | Protects rate for 30-60 days; avoids market volatility |
| Buy points | One point (~1% of loan) often reduces rate ~0.25%; break-even usually 5-10 years |
| Lower fees | Reduces APR; ask for lender credits or waived origination fees |
| Shorter term | 15‑year vs 30‑year cuts rate and total interest significantly |
Improving Credit Scores
You can lift your score by reducing revolving utilization below 10-30% and paying down high-balance cards first; dropping utilization from 60% to 20% can raise FICO by 20-80 points. Dispute inaccuracies on your report and avoid new hard inquiries 60 days before applying. Automate on-time payments and keep older accounts open to preserve length of history, since moving from 680 toward 740 often unlocks materially better mortgage pricing.
Comparing Lenders
You should solicit at least three Loan Estimates-include a bank, credit union, and a physician-specialty lender-to compare APR, total closing costs, and underwriting overlays. A 0.25% rate difference on a $500,000 loan saves roughly $160/month; factor that into your net cost analysis. Verify lock terms, float-down options, and seller concessions before committing.
Dig deeper into lender differences by checking underwriting flex (residency start dates, student loan treatment), typical closing timelines (15-45 days), and whether they offer physician mortgage products with no PMI or down payment options. Ask for sample scenarios showing payments and total interest for 3, 5, and 7 years to see which offer truly minimizes your out-of-pocket over your planned hold period.
Lender Comparison Checklist
| What to Ask | Why It Matters |
|---|---|
| APR vs interest rate | Shows true cost including fees |
| Underwriting overlays | Affects approval odds for new attendings or residents |
| Physician programs | May offer no PMI, lower down payments, or student loan treatment |
| Typical closing time | Impacts your negotiating leverage and moving timeline |
| Rate lock terms | Protects you from market swings; float-down options add flexibility |
Final Words
With these considerations, you can confidently evaluate mortgage options tailored to physicians – from physician loans and bank programs to FHA or VA alternatives – balancing down payment, interest, and repayment flexibility against your career and relocation plans, and leveraging lender benefits tied to residency status or high income to secure the best terms for your practice and personal goals.
