Getting a mortgage

You have to prove income and student loans are not considered a source of income. If you find a lender willing to make an exception you'll probably get stuck with a sub-prime rate.

If you are a member of AMSA, check here:
http://www.amsa.org/member/benefits.cfm#mortgage

(I have absolutely no experience with AMSA or Merril Lynch, I just saw the link when poking around the website)

indo said:

You have to prove income and student loans are not considered a source of income. If you find a lender willing to make an exception you'll probably get stuck with a sub-prime rate.

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I have heard the reverse is true. I have a classmate who just purchased a house with a ridiculously low IR, and all he has is student loans and a wife who doesn't work. There has to be some way around it. The buzz I have heard is that lenders like professional students, they see good income in the not so distant future.

I am by no means an expert on anything having to do with money, but my wife and I just bought our first house. The only way we were able to pull it off is that we had saved a pretty substantial down payment (20%) and my wife is working full time. Even though my student loan pays for half our mortgage payment, our lender doesn't consider this income; in fact, our loan counselour recommened that I not mention the student loan, as it would just add to our total debt. Lenders in the mortgage business like Countrywide or Caldwell banker are much more flexible when it comes to loans than banks, so you might try contacting one of them.

holy smokes - a mortgage from merrill? i remember they had a program where instead of giving them a down payment, you would pledge securities instead - kinda like a huge margin loan. they would keep your stock in a special account, and you would benefit from appreciation/income etc and not have to liquidate your investment to come up with a down payment. i guess you'd have to be pretty rich/have a healthy appetite for risk to do that, though...

etf said:

holy smokes - a mortgage from merrill? i remember they had a program where instead of giving them a down payment, you would pledge securities instead - kinda like a huge margin loan. they would keep your stock in a special account, and you would benefit from appreciation/income etc and not have to liquidate your investment to come up with a down payment. i guess you'd have to be pretty rich/have a healthy appetite for risk to do that, though...

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They still do that. As a matter of fact, I used to work for the company that handles ML mortgages

To the OP - I have a long winded response but my advice would be to search the word "mortgage" and read through some of the threads. Espeically in the residency forum for starters. I've posted a few times on the topics of mortgages myself.

I'd write more but i'm studying and I'm sick at the moment and I think the studying is going to have to give. But there is a lot of information on mortgages and buying a home. Just do a quick search and read through some of the threads and if you still have any questions I'll do my best to answer. As a matter of fact I believe that we mentioned this topic here in this forum.

Your an intern and your wife is an attending? WTF!!! You lucky bastard.

Seriously, some guys...all the luck...AND you want a phat house in training too?! Dont get greedy.

You might find this thread helpful. It used to be very informative until some people got their panties in a bunch and locked the thread.

http://forums.studentdoctor.net/showthread.php?t=176866

Oh and if your wife is an attending (I missed that) she has a job and you won't have an issue finding a mortgage. For best advice, I'd direct you to the mortgage thread that is now sticked at the top of this forum.

The OP has said that he is an MS1 and his wife is also in medical school. They are not interns and attendings.

Did mortgage banking 9 yrs (RBC and Countrywide); worked with many medical students buying houses as they start internship

If you are both med students, and no income, then there is a great program where parents can be on the mortgage to qualify.

Send me a private e-mail; we'll talk more.

iowatheodore said:

Hello. I was just wondering if anyone knows of any good tips or programs designed for medical students getting a mortgage from living allowance, etc. I'm a married 1st year if that helps, and my wife is also attending. Any personal experiences would be great.

Thank you in advance.

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There are loans such as 80-15-5 loans available for first time buyers (80% 1st mortgage, 15% 2nd mortgage, 5% down payment) so that they can avoid paying PMI. One also has the option of going Stated as opposed to Full Doc, which allows one to 'state' their income and qualify but in exchange receive a slightly higher interest rate as you are considered more of a risk to a lender. When it comes down to ratios for mortgage payment vs monthly income, a ratio of 1/4 to 1/3 is generally accepted as a feasible monthly outgo.

Maybe a bit of a thread hijack, but do you guys think the recent mortgage fallout will have any effect on our ability to get mortgages? I'm started to get worried that my huge medical school debt will make me essentially never able to qualify for a home loan in spite of good credit and an eventual high income.

At this point in my life I'm really sick of renting and want to buy a house when I start my internship. Of course I won't have a down payment at that time, so yeah, am I screwed?

I think you are going to see some either waiting until residency to qualify with income or a select few of lenders who will offer a product to those with a contract. Just my opinion. With the drop right before we purchased, I was worried but I think some with the good products will succeed since physicians are usually pretty stable in their income.

koercive said:

There are loans such as 80-15-5 loans available for first time buyers (80% 1st mortgage, 15% 2nd mortgage, 5% down payment) so that they can avoid paying PMI. One also has the option of going Stated as opposed to Full Doc, which allows one to 'state' their income and qualify but in exchange receive a slightly higher interest rate as you are considered more of a risk to a lender. When it comes down to ratios for mortgage payment vs monthly income, a ratio of 1/4 to 1/3 is generally accepted as a feasible monthly outgo.

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Piggyback loans like the 80/15/5 aren't just for first time buyers -- in fact, that is my favorite loan, and I have used it for my past few houses.

For most "conforming" loans (fully documented, excellent credit) a debt:income ratio of 1:2 is what most lenders need, at least in my experience.

Doctor Bagel said:

Maybe a bit of a thread hijack, but do you guys think the recent mortgage fallout will have any effect on our ability to get mortgages? I'm started to get worried that my huge medical school debt will make me essentially never able to qualify for a home loan in spite of good credit and an eventual high income.

At this point in my life I'm really sick of renting and want to buy a house when I start my internship. Of course I won't have a down payment at that time, so yeah, am I screwed?

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I think that many of the sub-prime loans (including 100% loans) are going to be much harder to get.

Unless you are borrowing a LOT of money in Med. school and plan on making very little, I don't think you will have a problem obtaining a conforming loan ever. To my knowledge, there haven't really been any significant changes to that market since piggyback loans and ARMs. The loan qual. requirements loosened a bit (I seem to remember for my first house, I needed a debt:income ratio of no more than 36%, but now it is up to 50%) but I don't see a big shakeup in that market. Buying the house in residency with no down payment might be a problem though, as, like I said before, I would expect 100% loans to be harder to get and/or more expensive.

jota_jota said:

Piggyback loans like the 80/15/5 aren't just for first time buyers -- in fact, that is my favorite loan, and I have used it for my past few houses.

For most "conforming" loans (fully documented, excellent credit) a debt:income ratio of 1:2 is what most lenders need, at least in my experience.



I think that many of the sub-prime loans (including 100% loans) are going to be much harder to get.

Unless you are borrowing a LOT of money in Med. school and plan on making very little, I don't think you will have a problem obtaining a conforming loan ever. To my knowledge, there haven't really been any significant changes to that market since piggyback loans and ARMs. The loan qual. requirements loosened a bit (I seem to remember for my first house, I needed a debt:income ratio of no more than 36%, but now it is up to 50%) but I don't see a big shakeup in that market. Buying the house in residency with no down payment might be a problem though, as, like I said before, I would expect 100% loans to be harder to get and/or more expensive.

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Eh, conforming loans are alot easier to "score" than non-conforming. Actually its not all about your ratios, its about how much you put down, ratios, assets, credit, job stability. There are programs out there that now do this and most conforming and even non-conforming underwriting is now all automated (my department that did non-conforming has been reduced greatly due to this). So while some can get ratios of 50%, others will be stuck at the max of 36%. Also it depends on the type of product/credit risk for each ratio.

And I do agree that 100% might be harder to find but I think you won't have an issue with some of the physician lenders although I think the credit requirements might increase. While working during the mortgage boom, you would have been surprised (well maybe not) at how lax some of the credit underwriting got. I know I was. I think were going to see the ratios lower, credit score requirements increase, and downpayments increase in the conventional market. Since the 100% product isn't being TOUCHED by most 2ndary lenders now you will see it decrease but I think some of the major players will try to keep that in the market if they can keep their 2ndary lenders on board. Certain markets call for 100% and residents is one of them. Hardly any resident (unless previously employed before med school) will have the necessary downpayment as a single and might have a partial downpayment with a spouse. I'd hope they would work with that.

Its sad that the foreclosure market is out there and what boils my blood is more of how some lenders have forced their loans into foreclosures. Apparently it happened to a neighbor who is in Iraq and its been a nightmare. Many people really don't understand the financial world and get caught. It seems that there are quite a few people like that when all of the sudden their payment doubles or triples. Sometimes for no good reason (which is why you'll hear lawyers are seeking out these foreclosures). /rant on foreclosures

Yeah, I've read that in spite of the pr about all the loan help, lots of lenders have really been playing hardball, which surprises me. What's the incentive for pushing a foreclosure in a relatively bad real estate market?

As for my debt level, it's not great. Honestly in the end I'll be pushing $300k, and I'm not interested in any of the high paying fields. In fact, all the fields I like are in the less than $200k/year salary range on average. The more I think about it, the more I think it's starting to look like a bleak picture.

Heck, even if I can't get a loan in residency, I'm starting to worry about whether I can get one when I finish residency just based on the above debt. I'll be curious to see how other people fare in the future.