Loan programs tailored to physicians accelerate your path to homeownership by offering low down payments, flexible underwriting that considers residency income and future earning potential, and competitive rates. Specialist lenders waive PMI sometimes, accommodate student loan balances, and expedite approvals so you can buy sooner without draining savings.
Understanding Physician Loans
What Are Physician Loans?
Designed for medical professionals, physician loans let you buy earlier by using future income, offering low or no down payment (commonly 0-10%), and often waiving private mortgage insurance. Lenders accept residents, fellows and attendings across MD/DO and dental specialties, qualifying you with a signed employment contract or residency completion. Typical terms include 30‑year fixed or ARMs, and loan amounts frequently range from $1.5M to $3M depending on the lender.
Unique Features of Physician Loans
They typically include flexible underwriting: lenders may use your future attending salary to qualify and treat student loans by using the actual payment, a deferred payment, or a percentage of the balance (commonly 0.5-1%). You’ll see higher allowable debt-to-income ratios, reduced reserve requirements (sometimes as low as 1-3 months), and portfolio lenders willing to hold exceptions. In exchange you may encounter slightly higher rates or modest lender fees compared with vanilla conforming products.
For instance, if you’re finishing residency with $200,000 in student loans and an attending offer at $300,000, a physician lender might qualify you on that $300k salary and count student debt as 0.5% of the balance-about $1,000/month-rather than an income-driven payment of $200/month, materially improving your qualifying ratios. That approach can enable a $600k mortgage with little or no down payment and no PMI, whereas traditional underwriting might require a larger down payment or deny the file.
Benefits of Physician Loans for Doctors
Physician loans shorten the path to ownership by lowering upfront cash needs and treating your future earning power as a core qualification. You can see down payments as low as 0-5%, loan limits often exceeding $1,000,000, and mortgage rates comparable to conventional loans. Lenders typically accept signed employment contracts, factor in upcoming attending salaries, and may waive private mortgage insurance-helping you move from residency to homeownership 1-3 years earlier than with standard underwriting.
Lower Down Payment Requirements
Many physician loan programs require only 0-5% down, and some attending-focused products allow zero down for eligible borrowers. For example, on a $500,000 purchase a 5% down payment is $25,000 versus the conventional 20% of $100,000, freeing capital for relocation, loan payments, or setting up a practice. Several lenders also offer options to avoid PMI at lower down payments, reducing monthly costs during your early career.
Flexible Debt-to-Income Ratios
Underwriting often factors in your signed employment contract and projected attending salary, allowing DTIs in the 43-50% range or higher in justified cases. Student loan balances receive special treatment: lenders may use income-driven plan payments, a 0.5-1.0% of balance proxy, or even deferment assumptions, so high student debt doesn’t automatically disqualify you. That flexibility lets you qualify for a mortgage while still carrying typical residency debt.
For instance, a lender using a 0.5% balance assumption treats $200,000 in student loans as a $1,000 monthly payment instead of a higher standard amortization amount; combined with a projected $220,000 attending salary and a $2,500 mortgage payment, your DTI can fall within acceptable limits. Many programs also accept sign-on bonuses, guaranteed stipends, and residency stipends as qualifying income, giving you firm underwriting footing before your first attending paycheck.
Comparing Physician Loans to Traditional Mortgages
Feature-by-Feature Comparison
| Traditional Mortgage | Physician Loan |
|---|---|
| Down payment: Typically 3-20% depending on product; conventional buyers often pay 5%-20% to avoid PMI. | Down payment: Often 0-10% with many lenders offering 0%-5% for early-career physicians, reducing upfront cash needs. |
| PMI: Required if LTV >80%; adds ~0.5%-1% of loan annually until 20% equity. | PMI: Frequently waived up to 80%-85% LTV, lowering monthly cost even with low down payments. |
| Underwriting/DTI: Standard DTI caps around 43% for conforming loans; strict employment history required. | Underwriting/DTI: Lenders may allow DTI in the 45%-50% range and accept residency/fellowship income or future contract income. |
| Employment: Usually need 2 years of stable employment or W-2 history; self-employment requires tax docs. | Employment: Accepts signed employment/attending contracts, residency stipends, and often limited documentation for trainees. |
| Rates & costs: Often lower rates for top-tier credit; PMI and higher down payments affect total cost. | Rates & costs: Rates generally competitive, sometimes +0.125%-0.50% vs conventional, but savings from waived PMI and low down payment offset that. |
| Loan limits: Conforming limits apply (county-dependent), jumbo required above those limits. | Loan limits: Many lenders offer jumbo options tailored to physicians for higher-priced markets with flexible underwriting. |
Key Differences
You’ll notice physician loans shift the balance from cash-on-hand to future earnings: down payments can be 0-10% versus the conventional 3-20%, PMI is often waived up to 80%-85% LTV, and underwriters accept residency contracts and higher DTI (45%-50%) while traditional loans typically require two years of stable employment and stick closer to a 43% DTI cap.
Advantages of Choosing Physician Loans
You get faster access to homeownership by using future earning potential: with a 0%-5% down option and no PMI, your monthly outlay can be hundreds less than a conventional loan, letting you lock in housing earlier-useful if your attending contract rises from $200k to $350k in two years, for example.
Beyond lower upfront cash, physician programs often include borrower-friendly features: repayment flexibility for student loans, waived prepayment penalties, and lender familiarity with relocation timelines. In practice, a young oncologist buying a $600,000 home with 5% down and no PMI can free up ~$300-$400 monthly versus a conventional loan that requires PMI and 10% down, accelerating savings and reducing time to build equity.
The Application Process
During the application process you’ll move from prequalification to closing; many physician loan lenders deliver preapproval within 24-48 hours, accept 0-5% down, and apply favorable debt-to-income treatments for deferred student loans. Expect underwriters to verify your employment/residency contract, credit, bank statements, and any deferment letters-providing complete, organized documentation up front often reduces underwriting back-and-forth and shaves weeks off the timeline.
Necessary Documentation
You’ll need a signed employment or residency contract, state medical license or diploma proof, two months of bank statements, recent pay stubs or offer letter, and W-2s/1099s if applicable; include student loan statements showing current repayment or deferment terms. Some lenders also request letters explaining gaps in income or residency transitions-having these 8-10 documents ready speeds verification and improves approval odds.
Timeline for Approval
Preapproval often arrives in 24-48 hours, while full underwriting commonly requires 7-21 days; appraisal and title searches typically add another 7-14 days, so total time to close usually ranges from 15-45 days. Faster closes-15-21 days-are achievable when you provide digital docs, use a responsive appraiser, and the lender has physician-loan experience.
Common delays stem from verifying deferred or income‑based student loans-servicers can take 7-14 days to supply payoff or repayment statements-and from late licensing or board documentation, which may add 1-3 weeks. Appraisal disputes or title issues usually add 7-10 days. To accelerate your approval, supply the contract, direct loan‑servicer letters, and clear bank statements up front; experienced physician lenders often flag and resolve problems early, enabling 10-15 day closings in ideal cases.
Common Misconceptions
Myths About Physician Loans
You might hear that physician loans demand massive down payments or are only for established attendings; many programs actually allow 0-10% down, often waive private mortgage insurance, and accept signed employment contracts or residency letters as qualifying income. Some lenders offer loan limits commonly between $1-3 million and treat deferred student loans differently, so you can often purchase earlier in training than with a conventional mortgage.
Reality Check
In practice, lenders focus on your future earning power and documented contracts rather than just current pay; underwriting typically uses employment agreements, fellowship offers, or residency placements, provides competitive rates similar to conventional loans, and applies flexible debt-to-income calculations that reflect medical career timelines.
For example, many lenders calculate student loan impact by using your actual monthly payment or an alternative like 0.5% of the outstanding balance to determine DTI, which can reduce the payment amount counted against you. They also accept provisional credentials-such as signed attending contracts, board eligibility, or visa sponsorship-and in one instance a surgical fellow with $240,000 of debt secured a $700,000 mortgage with 5% down because the lender used the attending contract and the 0.5% balance rule to keep DTI acceptable.
Tips for Selecting the Right Lender
When evaluating lenders, prioritize firms that specialize in physician loans and can show documented case examples-such as funding residents with 0-5% down or closing a $1.2M purchase in under 30 days. Compare APR, pre-approval timelines, and whether they waive PMI for your profile; some lenders offer loan limits up to $2M with no PMI. Any lender you pick should be transparent about fees, underwriting exceptions for deferred student loans, and a clear timeline to closing.
- Physician-specific programs and track record
- Down payment, PMI, and loan limits
- APR, rate-lock length, and fee transparency
- Underwriting treatment of student loans and residency income
- Speed of pre-approval and typical days-to-close
Factors to Consider
Compare APR rather than headline rate-on a $500,000, 30-year loan a 0.25% rate gap can change your monthly payment by roughly $100. Check whether the lender counts deferred student loans against DTI or uses payment substitution (e.g., 0.5% of balance), confirm maximum loan amounts (some go to $1-2M), and verify whether the loan is recourse. After weighing rate, fees, documentation ease, and underwriting flexibility, choose the lender that lowers your total cost and closing time.
- APR vs nominal rate
- Student loan DTI treatment (deferred vs payment substitution)
- Loan limits and PMI policies
- Recourse vs non‑recourse and co-signer rules
- Pre-approval speed and required docs
Questions to Ask Lenders
Ask which physician programs they offer (resident, fellow, attending), exact down-payment and PMI rules, how they treat student loans for DTI, typical rate-lock windows (30-60 days), and typical days-to-close-request three recent physician borrower references or case studies showing timelines and rates. Also confirm maximum loan amounts and whether they permit out-of-state licensure at closing.
Probe further into underwriting: ask for sample underwriting scenarios (e.g., a 3rd-year resident with $250k in medical school debt and $60k salary), and request an APR breakdown including fees. If the lender explains how they substitute student-loan payments or handle deferred income, you’ll see whether they have repeat experience approving physician files quickly; a lender that provides specific timelines and sample disclosures reduces risk of surprises at closing.
Summing up
Taking this into account, physician loan lenders accelerate your path to homeownership by offering low or no down payment options, flexible debt-to-income considerations for residency and fellowship income, favorable interest rates, and tailored underwriting that values your future earnings; with their specialized programs you can secure a mortgage sooner, minimize upfront costs, and focus on settling into your medical career.
