Many physician lenders offer some unique ways of looking at your income. Often the guidelines for determining your employment are more flexible than your typical Conventional Loan. When researching a mortgage for doctors consider your options.
Qualifying for a Doctor Loan:
Types of Doctor Employment
Physician lenders often consider the following categories of employment acceptable:
–W2 Employee: Physician is a W2 employee of the company with a guaranteed salary.
–Member of a Partnership: As long as your membership is 25% or less, banks usually treat you the same as a W2 employee.
–Self Employed Sole Proprietor or Owner of LLC with less than 1 year of self employment: Often permitted as long as you have a contract with a hospital clearly outlining a guaranteed pay. For example a guaranteed hourly rate with a guaranteed minimum hours per week.
–Self Employed Sole Proprietor or Owner of LLC with 1 year of self employment: There are a few doctor lenders who will consider a self employed physician with less than 2 years of self employment. You must have filed at least 1 year worth of self employed tax returns. The bank will calculate your income using the previous year’s tax returns along with your current YTD Profit & Loss statement and Balance sheet.
–Self Employed Sole Proprietor or Owner of LLC with at least 2 years of self employment: This is the common standard for self employed borrowers accepted by most banks. The lender will want your last 2 year personal and business returns, your current YTD Profit & Loss and Balance Sheet.
- If starting new employment within the last 12 months or are soon to be employed in the future: Provide fully executed employment contract showing start date and guaranteed salary.
- Provide your last 2 years 1040 Personal Tax Returns with all pages and schedules
- Provide your last 2 years W2 form
- Provide your last 30 day pay stubs (if applicable)
- If just coming out of medical school with no prior work history, provide a copy of your school transcripts.
*If you are self employed, a member of a partnership or a 1099 contractor you will need to supply additional documentation. Including but not limited to:
- Your last 2 years business tax returns (if applicable)
- Your last 2 years K1 statements showing income and percentage of ownership (if applicable)
- A YTD Profit & Loss statement and Balance sheet
Discussion: Have any of you encountered a lender who has a special take on calculating your income other than what is shown above? Was the program especially useful?