Anyone familiar or used these "doctor loans" for a home mortgage? How does it work and where do you apply for these? My understanding is that you can put less $ down for a home loan and they look less at income history.
"Doctor Loans" mortgages
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T00thDr
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Varies by state but some big name banks (like BOA) offer them in all states. Individual credit unions will also offer them in some states.
They are pretty good if that is the only option you have... But the interest rates are a little higher than most. If you are a first-time home buyer and are not planning on a jumbo loan (staying @ less than the 500k range) then there are some other options for you that may end up being better and only require like 3.5% down.
This loan is ideal for new doctors with no money for a down payment, living in a HCOL area, looking to buy a house in the 800k-2mil range. That is the case for many doctors and so they opt for this loan.
Obviously every case is different.
They are pretty good if that is the only option you have... But the interest rates are a little higher than most. If you are a first-time home buyer and are not planning on a jumbo loan (staying @ less than the 500k range) then there are some other options for you that may end up being better and only require like 3.5% down.
This loan is ideal for new doctors with no money for a down payment, living in a HCOL area, looking to buy a house in the 800k-2mil range. That is the case for many doctors and so they opt for this loan.
Obviously every case is different.
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Doctor Mortgage Loan [Complete Guide] | The White Coat Investor
Mortgage lenders like having physicians as clients, so they offer special mortgages to physicians, dentists, and similar high income professionals. You can put down less than 20% and still avoid Private Mortgage Insurance.
www.whitecoatinvestor.com
I did a lot of research in to this several months ago and the link above is where I started. Between that and google I was able to gather up a large list of lenders specific to my state and sent out a generic email to all of them asking for more information on their particular doctor loans.
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Basically, you are able to put less than 20% down without PMI and don’t need to show 24 months of employment history. They are portfolio loans and they don’t go through traditional underwriting like your typical conforming loan.
They are setup for W2 employees and some banks don’t like it and/or you won’t qualify if you’re receiving only 1099 income but that will depend on the bank and your circumstances. Since it’s a portfolio loan, underwriting can treat your student loans at their discretion by either taking 1% of the balance as your monthly payment, the standard 10 year repayment, or what your IDR plan letter states your student loan is. This is often not what the loan officer/sales rep will tell you - they’ll tell you that they will take your IDR plan calculation - I’ve confirmed that’s false on 2 occasions and it’s up to underwriting to decide.
As far as I am aware, if you qualify for a conventional loan, you’ll get better terms. If you don’t qualify for a conventional loan, you can turn to the doctor loan program. I’ve spoken with lenders of BOA and US Bank with regards to their doctor loan programs in the past but used neither.
They are setup for W2 employees and some banks don’t like it and/or you won’t qualify if you’re receiving only 1099 income but that will depend on the bank and your circumstances. Since it’s a portfolio loan, underwriting can treat your student loans at their discretion by either taking 1% of the balance as your monthly payment, the standard 10 year repayment, or what your IDR plan letter states your student loan is. This is often not what the loan officer/sales rep will tell you - they’ll tell you that they will take your IDR plan calculation - I’ve confirmed that’s false on 2 occasions and it’s up to underwriting to decide.
As far as I am aware, if you qualify for a conventional loan, you’ll get better terms. If you don’t qualify for a conventional loan, you can turn to the doctor loan program. I’ve spoken with lenders of BOA and US Bank with regards to their doctor loan programs in the past but used neither.
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I had one for my mortgage. You can put no money down and don't pay PMI, but the loan costs an extra premium (0.375-1% over market). Overall it was a good decision for me when I was cash-strapped, but you're better off with a conventional if you can put enough money down. The terms saved me 0.5% compared to what I would have paid with PMI
thanks for the info. Yeah I am a first time home buyer but I'm probably looking for a home in $800k-1.1 range. I'm just trying to put down as little as possible when the interest rate is so low. I wonder how low the interests rate would be on a doctor loan?
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I did it for $750K home 3.5% and I put down 5%. Didnt have to put down 5 but it was better so that my monthly payments wouldnt be too high. As others have said there is no PMI which is another plus. Basically its a conventional loan you just down have to put down that much and they do not count your student loans.
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It makes a lot of sense if you don't want to put any of your money down because you're going to use it for something that pays off more (i.e investments or starting/buying an office). Now the alternative is delayed gratification, live in a studio apartment and so on, but not always doable with a growing family, especially if you made your spouse sacrifice a lot during your educational years.
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This is probably a silly question but can you use the doctor loan multiple times or only once?
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Is this the right time to buy a house? Region specific but .... the home prices are extremely high with nowhere to go but down. You hate to buy at the peak.
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I see you live in AZ, we have a lot of people moving out of CA to AZ so we are seeing a small decline now but you guys have tripled in prices since last year
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Multiple, but if you're thinking of of buying multiple at once and renting out the other houses you don't live in that will not work
Yes, I really don't want to use $200k on a down payment on a house where the loan is costing me only 2-3%. I'd rather put that money into anything else that will make 3-4x that.
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I don’t think home prices will go down. In the last 4-5 years, I have waited for the housing market to crash so I could jump in and buy houses at cheap prices like I did during the 2008 housing bubble. Not only it didn’t crash, but home prices have almost doubled in the last 4-5 years. I was afraid to buy houses at the “wrong” prices and I didn’t know what to do with the money. So I just used all of it to pay off all the mortgage debts (my investment properties and my primary home).
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Yes, this is what you should do if you know how to invest your money wisely and don’t waste it on depreciable items like cars and nonessential things like vacations and expensive meals. A lot of young doctors tend to live beyond their means and don’t think too much about saving and investing for their retirement. The question is how to invest your money to make it grow 3-4x more. For a clueless person like me, who doesn’t know much about investing, I think it’s much safer to put as much down payment on a house (or an investment property) as possible and pay off the mortgage debt as fast as possible. I hate being in debt. When I paid off all my debts in February of this year, I started investing in stock and Bitcoin. And so far….I’ve lost about $3-4k in stock….and break even on the Bitcoin investment. For me, it’s much easier to make money in real estate than in other types of investments. With increase in home prices, the demand for renting out your investment properties also increases. With increase in rental demand, you can raise the rent rates every year.
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From what I understand, you must use it for your primary residence and you can only have 1 active dr. loan at a time. So if you wanted to, you could take out one, live in it, refi to a conventional loan when ready, and then obtain another dr. loan for a new primary residence. Lots of rules, details, and red tape would probably have to be navigated depending on your lender though.
I got one for $200k, 0% down, no PMI, 3.125% rate (since rates were so low this year with everything going on). I believe different lenders have different rules. One particular lender I called to ask questions last week said they will allow you to have up to (4) PM's with their company, so long as you're not using them as investment properties. So theoretically, you could have your primary residence and then use another PM to buy a second "vacation" property.
You can't use these to buy rental properties, unless you actually live in them first. For example, I plan to live here another 2 years and then I can rent it out. Don't be stupid and try to scam the system with that. As long as you're using them the right way, they can be a good tool.
You can't use these to buy rental properties, unless you actually live in them first. For example, I plan to live here another 2 years and then I can rent it out. Don't be stupid and try to scam the system with that. As long as you're using them the right way, they can be a good tool.
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Is it just me or what in the world is a new grad dentist doing buying a home for 800-1.2 mil…maybe look more in the range of 200-300k especially for your first home.
Are you even a dentist if you don’t make financially responsible decisions?
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Uhhh I don’t get what you are trying to say…but sounds like an overgeneralization to me. Anyways my advice to the op would be to look for a cheaper house that you can get a normal loan with and if your location doesn’t allow that then go to a different location. All the places I can think of that have average home cost in excess of 800k are not good places to practice dentistry anyhow. A nice home in a rural community with a huge need could be 250k easy.
Just being sarcastic.
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Yes it is just you. You don’t know their circumstances.
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It’s been a while since I posted on SDN.
FWIW, I did physician mortgage loan 3 times!
First home (2013): Home price $510k. Bank A asked for 0 downpayment up to $500k. I brought $10k check to closing. I did some research and found out most doctors move every 5 years, so I decided to go with a 10-ARM term at 2.5% rate. Meaning the rates would go up at year 11 and beyond to an adjustable rate (risky). 10-ARM rates are always cheaper than 30 YR fixed rate. I moved 4 years later! Sold the home for $600k.
Second home (2017): Home price $850k. Went to Bank A again, which now has it’s physician loan limit to $850k and asked for 0 downpayment. I did another 10-ARM at 3.7% rate (rate was higher due to economy roaring, but rates are still historically low). I moved 4 years later again! Sold the home for $1.2M (pandemic market).
Third home (2021): Home price $1.5M. Bank A couldn’t do physician loan at 0 down. they were still at $850k limit for that. Went to Bank B who had higher limit at $1.5M zero down. Rates were ROCK BOTTOM, so I did 30 yr fixed at 2.5%. Crazy enough, 10-ARM rate was higher than 30 yr rate. Even crazier, after I closed the home, a month or so later, Bank A purchased Bank B and changed the 0 down limit back to $850k. I won’t move again, this is my forever home now. The house is actually worth more than $1.5M now due to recent comps, but this is the last stop for my physician loan saga!
TanMan is right. I didn’t use my gains in each transaction to put into the next home. I used it to start other businesses with 20%+ return on investment. You have to be smart with your money and know what you are doing. As you can see from my experience, physician loan can be used to your advantage, but there was also some luck involved. Rates went up quite a bit last 6 months too. I’m probably the last Mohican for the 0 down $1.5M physician loan.
FWIW, I did physician mortgage loan 3 times!
First home (2013): Home price $510k. Bank A asked for 0 downpayment up to $500k. I brought $10k check to closing. I did some research and found out most doctors move every 5 years, so I decided to go with a 10-ARM term at 2.5% rate. Meaning the rates would go up at year 11 and beyond to an adjustable rate (risky). 10-ARM rates are always cheaper than 30 YR fixed rate. I moved 4 years later! Sold the home for $600k.
Second home (2017): Home price $850k. Went to Bank A again, which now has it’s physician loan limit to $850k and asked for 0 downpayment. I did another 10-ARM at 3.7% rate (rate was higher due to economy roaring, but rates are still historically low). I moved 4 years later again! Sold the home for $1.2M (pandemic market).
Third home (2021): Home price $1.5M. Bank A couldn’t do physician loan at 0 down. they were still at $850k limit for that. Went to Bank B who had higher limit at $1.5M zero down. Rates were ROCK BOTTOM, so I did 30 yr fixed at 2.5%. Crazy enough, 10-ARM rate was higher than 30 yr rate. Even crazier, after I closed the home, a month or so later, Bank A purchased Bank B and changed the 0 down limit back to $850k. I won’t move again, this is my forever home now. The house is actually worth more than $1.5M now due to recent comps, but this is the last stop for my physician loan saga!
TanMan is right. I didn’t use my gains in each transaction to put into the next home. I used it to start other businesses with 20%+ return on investment. You have to be smart with your money and know what you are doing. As you can see from my experience, physician loan can be used to your advantage, but there was also some luck involved. Rates went up quite a bit last 6 months too. I’m probably the last Mohican for the 0 down $1.5M physician loan.
how wise or unwise would it be, with 400k student loans, to take out physician loan 1st year out of training for a 400-500k house that we may not want to live in permanently versus physician loan for 700-800k permanent attending house?
