Is a physician mortgage right for you?

doctor mortgageThis is one of the most common mortgage questions we field. The answer is, it depends. It’s dependent on your personal financial situation and where you are in your career.

The loan that is right for you is the cheapest cost option that will accommodate your specific current situation.

So what exactly is a physician home loan and how can it help you?

In the simplest terms, a physician home loan has more liberal underwriting guidelines and take a more common sense approach, whereas a conventional loan is underwritten to more rigid and inflexible underwriting guidelines.

To read the complete article, please click here.

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Look at the Difference Your Interest Rate Makes!

Did know that today’s historically low interest rates mean that you can buy more than DOUBLE the home you could have purchased in 1985 at the SAME monthly payment?

Our friends at KCM Blog helped us create this infographic showing that RIGHT NOW every $1k in mortgage payment equals $212k in mortgage loan amount.

This ratio is near historic lows – low payment as compared to amount financed. Basically the cost to finance your home is on clearance SALE, 50% to 75% off right now.

Time to stock up!

Please contact one of the loan officers listed here in the state you are buying in to see how much house these historically low rates will allow you buy. But get moving, these rates won’t last forever!

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Do physician mortgages have higher closing costs and interest rates?

calculator money

Physician mortgages can typically carry a slightly higher interest rate than a conventional loan.  This will vary greatly based on your situation (credit, amount down, specific bank rates and programs). However, physician loans don’t typically carry mortgage insurance, so even though your rate might be slightly higher, the overall cost of the loan is actually almost always less, than compared to a conventional loan with mortgage insurance.

If the lender is using more liberal guidelines to qualify you, there are usually a bit higher rate, about 1/8 to 1/4 percent more for a physician home mortgage loan that has more accommodating underwriting guidelines that are more liberal for unique physician situations.

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Do medical students qualify for physician mortgages?

universityThe answer is generally no. When you’re going through medical school, most investors or lenders are not going to consider you yet a doctor and training to be a doctor. Once you are into your residency program, then they are going to consider you a physician, and they’re going to allow you to qualify for these physician loans.

Ask any of the providers for the state you are buying in on this site if they have other programs that you would qualify for as a med student.

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Why do I need to provide so much documentation to get my doctor mortgage?

income-taxAfter the mortgage meltdown, the mortgage industry has needed to be more careful so that the least number of defaults happen, thereby avoiding another mortgage meltdown. Although that means more documents and more paperwork for clients, it also means that the least number of defect mortgages are being delivered. That corresponds to less defaults on mortgages, and a more stable real estate market, good news for your investment in your new home.

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NHF 5% down payment grant available in 26 states, perfect for resident physicians

5% down payment grantThe NHF Platinum homebuyer assistance program currently gives eligible families and individuals a grant that does not have to be repaid.

The grant (up to 5% of the loan amount*) can be used towards down payment or closing costs.

Highlights of the program:

  • Down payment assistance grant, up to 5% of loan*
  • No first-time homebuyer requirement
  • Physician, FHA, VA and USDA Mortgages
  • For the purchase of primary residence

One of the most attractive features of the program is that you don’t have to be a first-time homebuyer. Even if you owned a home in the past, you may qualify. The grant is available for the purchase of an owner-occupied principal residence, including condominiums and planned unit developments, and offered in AL, AK, CA, CO, CT, GA, HI, ID, IA, KS, KY, LA, MS, MO, MT, NM, NC, ND, OR, PA, SD, UT, WA, WV, WI and WY.

Please contact one of our participating physician focused lenders in any of the above states to see if you qualify for this down payment assistance that you never have to pay back!

* This is not an offer for extension of credit or a commitment to lend and is subject to change without notice. Certain restrictions apply on all programs. Complete guidelines, loan applications, interest rates and annual percentage rates (APRs) are available through NHF Platinum Participating Lenders. Contact us for a referral.
NHF is an instrumentality of government under Internal Revenue Service code section 115.
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Do young physicians face challenges when refinancing a home mortgage?

USAStudent loans are always going to present specific underwriting challenges or problems, depending on how they’re reporting, if they’re in deferment or some sort of forbearance or pay-as-you-earn or income-based repayment.

Work with a firm that is in your area that is experienced with working with physicians. They will have more liberal underwriting guidelines as to how they calculate student loan payments and figure that into your debt to income ratio. They’re going to be well versed in every potential solution that there is, but the short answer to your question is yes, if there are student loans hanging out there especially in deferment, it can cause a challenge. If you’re working with someone who is an expert in that space, then they’re going to have solutions. Please click on the map on this site to see the physician loan experts in your state.


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What are points and origination fees?

calculator money In IRS Publication 936, both are considered “pre-paid interest” paid at closing one-time to get the benefit of a lower interest rate.

Some lenders use the term “total points” to include origination fees and discount points, but not all lenders use the term to mean the same thing, so be sure you understand what they are referring to so that you know what your costs will be. Ask for a lender worksheet to get a breakdown of the fees you will be charged.

Whether to pay origination fees or points to get a better rate depends on your situation, but you should base that decision on the time you plan to keep the home and the rate of the mortgage you are getting. Ask any of the mortgage providers on this site for advice on this issue. They should be able to advise you about your particular situation.

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I didn’t know that doctor mortgages did not consider student loan debt; is this true?

handshake docs smPhysician home loans ignore student loan debt, which is what makes it possible for you to qualify for a relatively large purchase given an otherwise cumbersome income/debt ratio. This is possible in part as a resident because they know you are able to forbear you loans if you choose.  With a physician loan or doctor home loan, so long as you close prior to the start date of those repayments, those loans are not counted against you at all. So, it’s definitely an avenue you should look at if you are being told student loans could cause you a problem qualifying for your next home mortgage

If you have student loans that are coming out of deferment or coming into repayment within the next twelve months, then your conventional and your FHA loans have to count those against you. If they’re deferred out greater than 12 months from the date you close then we don’t have to worry about it in conventional mortgage world.

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Physician loans in NY Times

stetho house smallHere is a great article about doctor mortgages from the NY Times:

Heavy student loan debt is often cited as a barrier to homeownership for 25- to 34-year-olds. But many mortgage lenders are eager to extend credit to one category of debt-burdened graduates: those coming out of medical school.

Special mortgage products for physicians are designed to meet the needs of doctors just starting out. New doctors typically have heavy student loan debt and very little money saved, given the modest salaries typically paid to residents, said Josh Mettle, who runs the physician home loan division of Citywide Home Loans, which is based in Salt Lake City. “They almost always have a negative net worth when they begin attending,” he said.

Eighty-four percent of graduates from medical school this year reported having student loan debt, and the median amount was $180,000, according to the Association of American Medical Colleges.

But at the same time, Mr. Mettle said, after long periods of “delayed gratification,” these young doctors are also eager to buy their first home.

Physician home loans make it easier for them to qualify. The down payment is typically 10 percent or less, with no private mortgage insurance required. Citywide Home Loans offers 100 percent financing on loans up to $850,000, Mr. Mettle said.

Lenders make adjustments to their debt calculations to account for the doctor’s future earning potential. “We would not count the student loan debt if they’re in a residency,” said David Gunn, the retail mortgage sales director for Fifth Third Bank, which is based in Ohio and has had a physician loan program for the last five years. “We know their income’s going to jump dramatically when they get out.”

Click here to read the whole article.

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