Debunking 10 Common Myths About Physician Mortgages

Physician mortgages are one of the first truly valuable financial  tools you will unlock after graduation from medical school. However, misconceptions about these specialized loans can lead to hesitation or misinformed decisions. In this guide, we debunk ten common myths about physician mortgage.  Your financial strategies and tools are not the same as those who did not pursue an advanced degree.  Leverage your hard work.

Myth 1: Physician Mortgages Have Higher Interest Rates

Fact: Many believe that physician mortgages come with higher interest rates compared to conventional loans. However, this isn’t necessarily true. While rates can vary depending on the lender and market conditions, physician mortgages often offer competitive rates that reflect the lower risk associated with high-earning professionals like doctors. Oftentimes you can get a similar rate to those putting 20% down, WITHOUT putting money down. 

Myth 2: Physician Mortgages Are Only for New Doctors

Fact: Physician mortgages are not just for new doctors, residents, or fellows. Established physicians can also benefit from these loans, especially when looking to upgrade and view real estate as a wealth building tool. The loan terms are designed to cater to various stages of a medical career. While this is a great question to ask your professional as you review programs.  If you are more than 10 years outside of residency, you may want to verify they don’t have a guideline restricting the terms. 

Myth 3: All Lenders Offer the Same Physician Mortgage Programs

Fact: Not all lenders are the same, and physician mortgage programs can vary significantly.  Variations can be (but not limited to) credit score, fixed vs. ARMs, loan amounts and foot print to name a few.  It’s important to shop around and consult with lenders who specialize in these types of loans to find the best terms and benefits for your situation.

Myth 4: Physician Mortgages Are Only for MDs

Fact: Physician mortgages typically cater to a wide range of medical professionals, not just MDs. This can include doctors of osteopathic medicine (DOs), dentists, veterinarians, and even pharmacists and optometrists, depending on the lender. 

Myth 5: You Need to Have a Down Payment

Fact: One of the significant advantages of physician mortgages is the low or zero down payment requirement. Unlike conventional loans that often demand 20% down to avoid PMI, physician mortgages can offer up to 100% financing, freeing up your cash flow for other investments or savings, or dare we say… pay off student loan debt!

Myth 6: High Student Debt Disqualifies You

Fact: Medical school debt is one of the most significant financial burdens for doctors. Physician mortgages take this into account and offer more lenient debt-to-income ratio requirements, allowing you to qualify even with substantial student loans. Consult your physician mortgage provider before establishing any long term payment plans if you are looking to buy a home.   This could dramatically impact how much home you can afford.   This applies to those established physicians.

Myth 7: Physician Mortgages Require PMI

Fact: Private Mortgage Insurance (PMI) is usually required for loans with less than 20% down, but physician mortgages often waive this requirement, saving you hundreds of dollars each month on your mortgage payment.

Myth 8: Physician Mortgages Are Only for Primary Residences

Fact: While most physician mortgages are designed for primary residences, some programs also offer options for second homes.  It is important to note that they are NOT designed for an investment property. It’s essential to discuss your needs with a lender who understands these specialized loans.

Myth 9: You Must Have Started Your Job

Fact: Physician mortgages often allow for qualification based on an employment contract rather than pay stubs or W-2s, which is especially beneficial for new doctors who haven’t started earning yet but have secured a future position. This is a great leverage point when relocating family and decreasing stress on the important transitional time for you and your family. 

Myth 10: It’s Harder to Get Approved for a Physician Mortgage

Fact: On the contrary, physician mortgages are often easier to qualify for than conventional loans for medical professionals due to the fact it is a portfolio loan.  This means the bank doesn’t have to answer to anyone else when it comes to guidelines like conforming loans.  They are eager to develop this relationship with a high income earner, it is in their best interest to keep things simple for you. 

Cliff Notes

Physician mortgages are specifically designed to accommodate the financial needs of medical professionals. This Blog post is designed to debunking these common myths, it’s clear that these loans offer numerous advantages, from lower down payments and no PMI to flexible debt-to-income ratios and competitive interest rates. Whether you’re just starting your career or are an established doctor, a physician mortgage could be the perfect fit for your home buying needs.  It is essential that you take advantage of the financial tools that are tailored specifically for your needs. 

Start creating your customized financial strategy.  Download our free physician mortgage guide at:
https://www.drhomefinance.com/mortgage-loan-guides/