Many physician borrowers feel overwhelmed by conventional mortgages, so this guide explains how you can use physician loans to secure favorable terms; you’ll learn eligibility requirements, how rates are set, typical benefits like low or no down payment and relaxed debt-to-income rules, and practical tips for comparing lenders and preparing documentation to maximize approval odds as you transition from residency to practice.
Types of Physician Loans
Physician loan options include conventional, FHA, VA, jumbo and portfolio products that target your residency status, employment contract and student debt profile; lenders often offer higher loan amounts and flexible DTI treatment for physicians. You can encounter 0-5% down programs, lender-paid PMI waivers, or jumbo limits exceeding $1M depending on the bank. Assume that you compare underwriting on credit, bonuses, and employer agreements.
- Conventional
- FHA
- VA
- Jumbo
- Portfolio
| Conventional | Standard underwriting; PMI if <20% down; some physician programs allow low/no down |
| FHA | 3.5% down, upfront/annual MIP; forgiving credit and flexible DTI calculations |
| VA | 0% down for eligible veterans, no PMI, funding fee applies |
| Jumbo | For loans above conforming limits; may offer tailored physician terms up to and over $1M |
| Portfolio | Lender-held loans with bespoke underwriting for residency, contracts, and bonus structures |
Conventional Loans
Many conventional physician programs let you access conforming or jumbo financing with down payments typically 3-20%, and PMI applies if you put under 20%. Lenders frequently waive standard overlays for employed physicians with signed contracts, and some accept DTIs up to about 50% for high-earning applicants. For example, putting 5% down on a $600,000 purchase equals a $30,000 down payment while PMI will be factored into your monthly payment.
FHA Loans
FHA offers a 3.5% down option for borrowers with credit scores of 580+ and requires an upfront MIP (about 1.75% of loan) plus annual MIP (roughly 0.45-1.05%). You’ll find FHA more forgiving if your credit score or recent financial history is blemished, and it often helps when your documented income is irregular during residency.
When you have student loans, FHA underwriting lets you use the actual documented payment or, if on an income-driven plan without a contractual payment, use 0.5% of the outstanding balance to calculate DTI-so a $200,000 balance could count as a $1,000/month obligation. Additionally, FHA county loan limits vary, and MIP duration depends on original LTV (if LTV ≤90% MIP may end after 11 years; if >90% it can last the life of the loan).
VA Loans
VA loans give eligible veterans and active-duty personnel 0% down financing with no PMI, though a funding fee (typically between about 1.4%-3.6% of the loan) usually applies and can be rolled into the loan. You must obtain a Certificate of Eligibility and meet residual income guidelines; occupancy is generally required within 60 days of closing. For a $400,000 purchase, a 2.3% funding fee equals $9,200 that you can often finance into the loan.
Entitlement and residual income are key: if you have full entitlement you can often buy without a down payment within conforming limits, and lenders commonly require a credit score (often 620+). VA benefits are reusable; you can assume a VA loan or use the IRRRL streamline refinance, and the funding fee is waived for some disabled veterans or under specific conditions.
Requirements for Physician Loans
You’ll typically need a signed employment contract or proof of upcoming employment, acceptable credit (commonly 680-740+ for best rates), and documentation of student loan status; down payments often range from 0-10% for physicians, with some lenders allowing no PMI. Lenders also assess debt-to-income (many accept up to 45-50%, sometimes higher for high-earning specialties) and may require state licensure or board certification within a set timeframe.
Financial Documentation
You must provide pay stubs, W-2s or a residency/fellowship contract, recent bank statements, and student loan statements. Some lenders calculate deferred student loan obligations as 0.5% of the outstanding balance while others use your actual income-driven repayment amount (for example, $300/month documented IDR). Self-employed physicians will need two years of tax returns or a year-to-date profit-and-loss statement.
Borrower Eligibility
Physician loans are available to residents, fellows, attendings, and many dentists/veterinarians if you have a qualifying degree and employment contract; IMGs and visa holders may qualify but face additional underwriting steps. Lenders prefer lower debt-to-income and stable specialty income-surgeons and anesthesiologists often secure larger loan amounts due to higher expected earnings-while credit score and down payment directly affect rate tiers and loan limits.
If you’re self-employed or buying a practice, expect stricter documentation: most lenders want two years of tax returns unless you’re purchasing a practice with a signed employment or buy-in agreement. International graduates typically need ECFMG/visa documentation and an employer willing to verify future income; some lenders require state medical licensure within 6-24 months to convert introductory terms to standard permanent financing.
Step-by-Step Application Process
Step-by-Step Overview
| Step | What you do / what to expect |
| Preparation | Assemble employment/contract letter, photo ID, 2 months bank statements, student loan statements, and credit score ~700+ recommended. |
| Submission | Apply online or via broker, authorize credit pull, upload documents; expect pre-approval in 24-72 hours from many lenders. |
| Underwriting | Lender verifies income, checks DTI (often allowed up to ~50% for physicians), orders appraisal and title search. |
| Approval & Closing | Receive clear-to-close, lock rate if needed, sign closing docs; funding typically occurs 1-3 business days after closing. |
Preparation
Gather your employment or residency/fellowship letter on official letterhead, government ID, two months of bank statements, student loan statements (showing repayment status), and latest 1-2 pay stubs if any; aim for a credit score above 700 to access the best physician-loan terms and prepare to explain deferred student loan income-treatment to underwriters.
Submission
Start the application online or with a loan officer, upload your contract, ID, and asset documentation, and authorize a credit pull; many physician lenders return pre-approvals within 24-72 hours, letting you make competitive offers faster.
Expect conditional approvals initially-underwriters commonly request an appraisal (7-14 business days to schedule), title report, and final verification of employment; if your contract start date is months away, the lender may require a signed start-date addendum or proof of residency stipend to convert a pre-approval into a clear-to-close.
Approval
Underwriting typically takes 7-21 days from submission depending on appraisal and documentation completeness; once conditions (appraisal, title, insurance) are satisfied you get a clear-to-close, at which point you can lock a rate and schedule signing-funding usually follows within 1-3 business days.
If the appraisal comes in below your purchase price, you may need to cover the gap, renegotiate with the seller, or provide additional earnest money; also note that a rate lock protects against market moves but can require a fee if you later extend the lock period.
Factors Influencing Loan Rates
- Credit score and recent credit behavior
- Loan amount and whether it’s a conforming or jumbo loan
- Down payment size and resulting loan-to-value (LTV)
- Employment status, specialty, and income documentation
- Current interest rate environment and lender pricing models
- The property location and type, which can affect lender overlays
Credit Score
Your credit score is one of the fastest levers to affect pricing: scores of 740+ typically secure the most competitive physician-loan rates, 700-739 often pay about 0.25-0.5% more, and 680-699 can add 0.5-1.0% depending on lender overlays. Lenders also weigh recent delinquencies, utilization, and inquiries; if you have a limited credit history as a new physician, strong savings and a signed employment contract can mitigate rate hits.
Loan Amount
When you request larger loan amounts-commonly between $200,000 and $2,000,000-lender pricing shifts: loans above typical jumbo thresholds (often $1-1.5M) usually carry higher rates and stricter documentation. If you’re borrowing $1.2M, expect underwriters to scrutinize income, reserves, and specialty; smaller loans under $500k generally qualify for the lowest pricing tiers.
If you reduce the LTV on a large loan you can materially improve pricing: moving from 95% to 80% LTV may cut your rate by roughly 0.25-0.75% depending on the lender. Also weigh term choices-15-year fixed rates often beat 30-year fixed by 0.25-0.75%, while ARMs can start 0.5-1.0% lower initially but carry repricing risk.
Down Payment
Your down payment size directly influences rate and program availability: many physician loans offer low- or zero-down options with no PMI for eligible buyers, while jumbo purchases often require 10-20% down. By increasing your down payment you lower the lender’s risk profile, which commonly translates into a lower interest rate and monthly payment.
Consider the math: putting 10% down on an $800,000 purchase reduces the loan by $80,000 and can shave 0.25-0.5% off your rate versus a 0% down product at the same lender. You should compare the opportunity cost of using cash versus the monthly interest savings and any PMI or lender fee trade-offs before deciding.
Tips for Securing the Best Rates
- Boost your credit score above 740; many lenders reserve their lowest tiers for 740+ and each 20-point drop can push your rate up ~0.125%.
- Lower your debt-to-income by paying down revolving balances-dropping DTI from 45% to 35% often qualifies you for better pricing tiers.
- Present a signed employment contract, proof of residency or fellowship, and 3-12 months of reserves to remove common physician-loan markups.
- Shop 3-5 lenders and compare Loan Estimates side-by-side; a 0.25% rate gap on a $500,000, 30-year loan costs roughly $70-80 per month.
- Thou lock rates when volatility spikes or negotiate a float-down clause to protect against falling markets.
Comparison Shopping
Compare Loan Estimates from at least three lenders, checking APR, origination fees, and points; lenders must deliver a Loan Estimate within three business days. Use one request scenario (same down payment, term, and credit profile) to isolate rate differences-an origination fee of 1% on a $400,000 loan equals $4,000, which can outweigh a minor rate savings.
Comparison Matrix
| Lender Type | What to Expect |
|---|---|
| National bank | Consistent pricing, stricter overlays, limited physician flexibility |
| Mortgage broker | Access to multiple programs, potential to negotiate lower net rate |
| Credit union | Competitive rates for members, may require local membership |
| Portfolio/physician lender | 0%-5% down options, PMI waivers, flexible DTI and reserve requirements |
Working with Lenders
Ask lenders if they offer physician-specific products with PMI waiver or 0% down up to certain limits-some programs advertise up to $1M without PMI. Request a clear Loan Estimate and compare APR plus total closing costs; also confirm required reserves (commonly 3-12 months) and whether student loan income-based payments are counted as full debt.
Negotiate by showing competing written offers and highlight strengths like a 760+ score or six months’ liquid reserves; lenders often reduce rate by 0.125%-0.25% for demonstrable borrower credit. Confirm lock terms, float-down policies, and servicing practices in writing so you know how rate changes and post-closing servicing will affect your loan.
Pros and Cons of Physician Loans
| Pros | Cons |
|---|---|
| Low or no down payment (often 0-10%) | Interest rates can be 0.125-0.50% higher than conventional |
| No private mortgage insurance (PMI) on many programs | Fewer lenders and less competition on product features |
| Underwriting often considers future physician income | Eligibility restricted to physicians, dentists, residents, fellows |
| Higher allowable debt-to-income ratios (often up to ~50%) | Requires employment/contract or imminent start date to qualify |
| Can finance higher loan amounts or jumbo options | Potentially higher closing costs or lender-specific fees |
| Good for buying early in residency/fellowship with limited savings | If you leave medicine, you may lose access to similar programs |
| Often simpler documentation for student loan treatment | Less standardized terms; benefits vary widely by lender |
| Enables quicker homeownership vs saving for a large down payment | Long-term interest premium can add significant cost over decades |
Advantages
You can buy sooner with 0-10% down and avoid PMI on many physician programs, and lenders commonly factor your signed residency or employment contract into underwriting so that $200k-$400k in student loans won’t automatically disqualify you. Many programs permit DTIs near 50% and offer jumbo limits, which helps if you’re moving to a high-cost area and need a larger loan.
Disadvantages
You may pay a small rate premium-typically around 0.125-0.50 percentage points-compared with the best conventional offers, and only a limited number of banks offer physician products, so you’ll face less competition on fees and terms. Lenders also often require a contract start date or proof of practice, which can complicate timing between residency and employment.
In practice, that rate premium matters: a 0.25% higher rate on a $500,000, 30-year mortgage increases your payment by roughly $70 per month, adding about $25,000 in interest over the loan life. If you change careers, fail to secure a contract, or move out of scope (for example, switch to a non-eligible profession), you may lose access to physician-specific underwriting and must refinance into standard products-possibly at higher cost or with different qualification hurdles.
Summing up
The guide shows how physician loans align with your career stage, detailing typical requirements, competitive rates, and benefits like low or no down payment and flexible underwriting; use it to compare lenders, estimate long-term costs, and leverage your future earnings so you can buy a home sooner and protect your financial trajectory.
