Welcome to Match Week! On Thursday, graduating medical students get to find out where they’re going to be spending the next 1-5 years of their lives. Thousands of them will choose to buy a home, either with or without a physician mortgage, although many of them probably shouldn’t. In honor of Match Week, we’re going to talk all about these physician mortgage loans.  Today’s post is a survey of what is currently available out there in terms of these mortgages. Wednesday and Thursday are a two part guest post by Josh Mettle about “The Flawless Home Purchase.” Friday will be a very interesting Friday Q&A post from an incoming resident who wants to buy a house, but can’t find anyone willing to lend sufficient money to do so.

I don’t write about physician mortgage loans very often. However, my doctor mortgage loan page, first written at the very beginning of the blog, continues to be one of the most heavily visited pages on this website. I’ve never actually had a physician mortgage.  I used an FHA loan for my first home, and saved up a 20% down payment for a conventional loan for the second and third. I think that’s a great way to go. However, it is tough to argue that someone with $200,000 in student loans at 8% should use their cash for a down payment instead of paying off those loans, even if it means using a mortgage with higher fees and interest rates and not having the safety of a lower loan to value ratio. Even docs without high-interest student loans may find themselves in situations where a physician mortgage loan makes sense.  Just remember that just because someone is willing to loan you money doesn’t mean it is actually a good idea to borrow that money under the terms offered.


A typical doctor’s mortgage has the following features:

  • Less than 20% down payment required (generally 0-11%)
  • No Private Mortgage Insurance (PMI)
  • Student loans sometimes not taken into account in calculating debt to income ratios
  • A contract adequate for documenting income (no pay stubs required)

Bear in mind that loan terms and requirements are highly variable among the various lenders offering special doctor programs. Also keep in mind that not all of these programs are offered to dentists.

I thought it would be interesting to include a post where I did a brief overview of what is out there right now as far as physician mortgages. So I have emailed a representative at each bank or lender that offers these loans and asked for what is available in each of four different scenarios:

Scenario 1: The Graduating Medical Student

  • Income: None currently, but a contract to make $50,000 per year starting July 1.
  • Downpayment: As little as possible.
  • House Value $150,000
  • Loan Desired: Fixed, 30 year or 5/1 ARM
  • Student Loans: $200,000 at 7%

Scenario 2: The Graduating Resident

  • Income: Currently $50,000, but a contract to make $200,000 per year starting July 1
  • Down payment: As little as possible
  • House Value: $400,000
  • Loan Desired: Fixed, 30 year
  • Student Loans: $200,000 at 7%

Scenario 3: The Jumbo Loan

  • Income: Currently $50,000, but a contract to make $400,000 per year starting July 1
  • Down payment: As little as possible
  • House Value: $800,000 (Assume a state where this amount is a jumbo loan
  • Loan Desired: Fixed, 30 year
  • Student Loans: $200,000 at 7%

Scenario 4: Conventional Loan (the doc who lived a resident until loans were gone)

  • Income: Currently $200,000, well documented with 2 years of W-2s
  • Downpayment: $100,000
  • House Value: $500,000
  • Loan Desired: Fixed, 15 year
  • Student Loans: None

I also assumed that each of these docs had top tier credit scores.

The Big Fat Disclaimer and Disclosure


Remember that every lender quoted in this article has paid me money to advertise on this site.  I have a massive financial conflict of interest in listing them here. Although I received no EXTRA money to do this post, you need to be aware that I have financial relationships with all these guys.

Also, keep in mind that the rates and fees in this article are now hypothetical.  I asked them to give me quotes for what was available on March 3, 2014. By the time you read this, all of these quotes are out of date.  In fact, many lenders were very hesitant to provide rate and fee information at all (thus the gaps you’ll notice in the information below), and I wouldn’t be surprised if I’m later asked to remove some of this data from the internet.  However, I thought having some “ballpark” information, even if it isn’t currently available, would be useful to those considering getting one of these loans. Rates and fees are subject to change without notice and you should contact the lenders individually to get current information. Remember also that just because one lender’s rates are lower than another lender’s on any given day, doesn’t mean they’re lower the next day. Mortgage rates change once or twice a day and stale data is exactly that. Also keep in mind that not all programs are available in all states or to all buyers. This post is an exercise showing how you might shop for a loan, not a substitute for you actually shopping for a loan and choosing a lender.

For more information on physician loans, including state availability for lenders, see my physician mortgage loan page.

The Graduating Medical Student

Physician Home Loans @ Fairway: A little unique as they use multiple banks and thus have multiple options. Option 1: No down payment, contract acceptable, PMI due but first year and a half or so paid by National Home Buyers Fund, student loans considered. 30 year fixed available on 3/3/14 at 4.25% without points or fees.  Option 2: No down payment, contract acceptable, no PMI, student loans considered.  30 year fixed available on 3/3/14 at 5.375%. Option 3: 5% down payment, contract acceptable, no PMI, student loans considered. 30 year fixed available on 3/3/14 at 5% with $3563 in lender fees. 5/1 ARM available on 3/3/14 at 3.875% with $3563 in lender fees.

Huntington Bank: No down payment, contract acceptable, no PMI, caps student loan payments at 15% of gross income. 30 year fixed not available, but a 5/1 (or even 15/1) ARM is. A 7/1 ARM on 3/3/14 with no points was 3.75%. Obviously the shorter the fixed period, the lower the rate on these ARMs. No fee information available for this post.

Suntrust Bank: No down payment (in many areas), contract acceptable, no PMI, student loans ignored only if deferred for at least 12 months. A 30 year fixed at 4.3% had a $625 application fee on 3/3/2014. A 5/1 ARM at 3.1% had a $625 application fee on 3/3/2014.

Physicianloans.com: No down payment, letter of hire acceptable, no PMI, use estimated IBR payment when running debt to income ratios. Rates are in the “3s and 4s.”

BB&T: No down payment, contract acceptable, no PMI, student loans considered. A 30 year fixed was available on 3/3/2014 at 4.875% with a credit covering about half of the $300 online application fee. A 5/1 ARM was available on 3/3/2014 at 3.375% with a credit covering about half of the $300 online application fee.

Citizens/Charter One: 11% down payment, contract acceptable, no PMI, student loans considered.  A 30 year fixed was available on 3/3/2014 at 4.5% with an $800 fee. A 5/1 ARM was available on 3/3/2014 at 3.5% with an $800 fee.

Bank of America: 5% down payment, contract acceptable, no PMI, student loans ignored. A 30 year fixed was available on 3/3/2014 at 4.5% with a $750 fee. A 5/1 ARM was available at 2.875% with a $750 fee.

The Graduating Resident

Physician Home Loans @ Fairway: 5% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 for 4.625% with lender fee of ~$5700.

Huntington Bank: No down payment, contract acceptable, no PMI, student loans considered but shouldn’t be an issue. No 30 year fixed available, but a 7/1 ARM was available on 3/3/2014 at 3.75%. No fee information available for this post.

Suntrust Bank: No down payment, contract acceptable, no PMI, student loans ignored only if deferred for at least 12 months. 30 year fixed available at 4.3% with fee of $625 on 3/3/2014.

Physicianloans.com: No down payment, contract acceptable, no PMI, student loans considered but should not be an issue. Rates in “3s and 4s.”

BB&T: No down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 at 4.875% with a credit covering the $300 online application fee.

Citizens/Charter One: 11% down payment, contract acceptable, no PMI, student loans considered.  A 30 year fixed was available on 3/3/2014 at 4.5% with an $800 fee.

Bank of America: 5% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 at 4.5% with a $750 fee.

The Jumbo Loan

Physician Home Loans @ Fairway: 10% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 5/1 ARM was available on 3/3/2014 at 3.5% without any significant fees. No competitive 30 year fixed product.

Huntington Bank: 10% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 7/1 ARM was available on 3/3/2014 at 3.75%. No 30 year fixed product available.

Suntrust Bank: 5% down payment, contract acceptable, no PMI, student loans ignored only if deferred for at least 12 months. 30 year fixed available at 4.375% with fee of $625 on 3/3/2014.

Physicianloans.com: 10% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. Rates in “3s and 4s” (reportedly lower for jumbo loans than smaller ones)

BB&T: 5% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 at 4.625% with a credit more than covering the $300 online application fee.

Citizens/Charter One: 11% down payment, contract acceptable, no PMI, student loans considered.  A 30 year fixed was available on 3/3/2014 at 4.375% with an $800 fee.

Bank of America: 5% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 at 4.5% with a $750 fee.


The Conventional Loan

Physician Home Loans @ Fairway: 20% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 15 year fixed was available on 3/3/2014 at 3.5% without any significant fees.

Huntington Bank: 20% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 15 year fixed was available on 3/3/2014 at “standard Fannie Mae pricing.”

Suntrust Bank: 20% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 15 year fixed was available on 3/3/2014 at 2.99% with $625 fee.

Physicianloans.com: 20% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 15 year fixed was available on 3/3/2014 at “standard Fannie Mae pricing.”

BB&T: 20% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 at 3.25% with a $300 online application fee.

Citizens/Charter One: 20% down payment, contract acceptable, no PMI, student loans considered.  A 30 year fixed was available on 3/3/2014 at 3.125% with an $800 fee.

Bank of America: 20% down payment, contract acceptable, no PMI, student loans considered but should not be an issue. A 30 year fixed was available on 3/3/2014 at 3.25% with a $750 fee.

Some Observations

In doing this exercise, I found a few very interesting things.

First, if you are looking for a physician mortgage loan there is a huge amount of variability between the various loan products.  Fees, rates, willingness to ignore student loans, available states, and even availability of a 30 year fixed loan is highly variable. The more flexible  you can be, the more choices you’re going to have.

Second, for those lenders who would actually give me a rate quote, the difference in interest rate on a 30 year fixed physician loan and 15 year conventional loan was about 1-1.5%.  On a $400,000 loan, that’s $333-500 less in interest paid per MONTH. This is the reason I recommend living like a resident until you can get a down payment saved up (not to mention pay off your student loans, which may be 4% higher than your mortgage).

Third, for a loan product as standardized as a 15 year fixed conventional loan, there was still a 0.5% variation between available rates on the day I checked.  This emphasizes the importance of checking with at least 2 lenders, and “playing them off against one another” to get the actual market price. Many times a lender will “match” the rate/fees offered by another lender (assuming they can still make an acceptable profit at the lower rate/fees), but only when you’re comparing apples to apples. Just calling up one lender and never checking with any other is probably a mistake that may cost you thousands of dollars in extra interest or fees. If you want to learn more about physician mortgages, I suggest either Josh Mettle’s soon to be published book or Tal Frank’s free webinar (next one March 19th or 23rd).

I would like to thank the following people for information used in this post: Josh Mettle, Sandra Frith, Stephanie Arcelay, Tal Frank, Holly Walsh, and Anne Swane.

Did you get a physician mortgage loan instead of a conventional?  Why or why not? What bank/lender did you use?  Were you happy with the experience? Comment below!