Physician Loans

[zeloc]

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What are the options for 0% down, no PMI loans?

There is a 6-page thread on doctor loans earlier in this forum with many tangents; let's keep this thread for only options that meet the above requirements. Hopefully we can post contact information when available to make it easier for future prospective homebuyers to find what they are looking for.

The ones I know of are:

Bank of America: may be possible in certain areas but I think that they are moving more toward 5% down. I think the loan limits are stricter.

Suntrust: Is mentioned on other thread but do they have actual loans for physicians? Anyone have a link?

Tower Mortgage/Physician Loans (http://www.physicianloans.com/)

US Bank?

 

[dragonfly99]

I'm interested in this too, only I want a loan with 5% or maybe 10% down. I believe Suntrust still offers doctor loans, but I'll post when I know definitely.

I have been told for some of these physician loans programs that you will need 5% down if you want to buy in a declining market...

 

[bjackrian]

Compass Bank offers these still. Drew Daniels is their contact for physician loans: Drew-dot-Daniels-at-compassbank-dot-com.

I am looking to buy in April/May and have not done a huge amount of lender research yet, so I can't verify how the process works with his company, and am definitely interested in replies to this thread.

 

[doctorloans]

Hi guys. I've been on this forum for a long time now, so hopefully I can answer any questions. PM me for more specific info, though, as I am respectful of the forum rules.

The doctor loan still exists, with 0% down, no PMI in most areas. True, declining markets are an ever-growing list, but some banks still offer 0% down and no PMI even in declining markets. You just have to shop around.
You'll also find the physician loan unavailable in many states, and hard to get in others.

 

[Ann07]

Hello,
I am gathering my info on this as well and can find little through google. Could people PM me the contact info for those they used through the various companies offering the 0 down/no pmi loans

Thanks

 

[tkim]

http://www.suntrustmortgage.com/loanofficer.asp?egray

She was excellent.

 

[acs62c]

Can anyone provide a link to a list of the "declining markets" where one might expect a larger down payment? Thanks.

 

[dragonfly99]

Can anyone provide a link to a list of the "declining markets" where one might expect a larger down payment? Thanks.

I don't have a link, but you can expect it to be all the areas of the country where real estate has been tanking. This includes parts of FL and CA, likely parts of the upper Midwest, perhaps Las Vegas, etc.

 

[yaah]

I don't have a link, but you can expect it to be all the areas of the country where real estate has been tanking. This includes parts of FL and CA, likely parts of the upper Midwest, perhaps Las Vegas, etc.

Yeah, I know it is constantly changing. The place I live was not a declining market until last month, coincidentally one week after I had applied for a mortgage. That meant I could get the doctor loan (from BOA), but it was now 5% down.

 

[CarleneM]

I found this link to be extremely useful and current for finding declining markets by zip code: http://www.oldrepublicics.com/productsandservices/decliningmarkets/Pages/default.aspx

Also, now that there is an $8000 tax credit for first time homebuyers in the stimulus plan, we are exploring the option of buying. If anyone is having any success with any of the lenders (?Compass Bank) getting physician mortgages with no money down in declining markets, please let me know either publicly or via PM. I understand BoA wants 5%.

 

[plnii]

I found this link to be extremely useful and current for finding declining markets by zip code: http://www.oldrepublicics.com/productsandservices/decliningmarkets/Pages/default.aspx

Also, now that there is an $8000 tax credit for first time homebuyers in the stimulus plan, we are exploring the option of buying. If anyone is having any success with any of the lenders (?Compass Bank) getting physician mortgages with no money down in declining markets, please let me know either publicly or via PM. I understand BoA wants 5%.

I used Compass Bank and got 0 down with no PMI last August when BoA wanted 5%. They are still doing the loans I think...I have been exploring refinancing with them. Only their 5/1 ARM has a good APR right now, though.

 

[CarleneM]

I used Compass Bank and got 0 down with no PMI last August when BoA wanted 5%. They are still doing the loans I think...I have been exploring refinancing with them. Only their 5/1 ARM has a good APR right now, though.

I did get in touch with Compass and they said they are still doing 0 down. I haven't done the application yet. What is the APR for their 30 year? and their 5/1 ARM? I don't think I'm comfortable with a 5/1 ARM.....

 

[schwab]

I did get in touch with Compass and they said they are still doing 0 down. I haven't done the application yet. What is the APR for their 30 year? and their 5/1 ARM? I don't think I'm comfortable with a 5/1 ARM.....

Rates change every day (often several times during the day), so you'll have to call and ask them what their current rates are.

I'd agree with your discomfort for the ARM. Rates are the lowest they've ever been, so unless you have a very compelling reason (e.g., you only plan to live in the place for a few years and sell it before the five years are up), you should probably go with the 30-year fixed.

 

[plnii]

I did get in touch with Compass and they said they are still doing 0 down. I haven't done the application yet. What is the APR for their 30 year? and their 5/1 ARM? I don't think I'm comfortable with a 5/1 ARM.....

Last time I checked, the rates for their 30 year and 7/1 ARM were much higher (~7.5%) than their 5/1 ARM (~5.5%).

 

[dragonfly99]

If true, the 7.5% is a terrible interest rate right now for a mortgage. But if they are still doing zero down, they've got to do something to make their money...

 

[CarleneM]

Last time I checked, the rates for their 30 year and 7/1 ARM were much higher (~7.5%) than their 5/1 ARM (~5.5%).

How long ago was that?!?! Now, rates on all three at most banks are pretty close together. For that high of a rate, I suppose it is worth the risk of a 5/1 ARM. Residency+ fellowship would be 5 years for me and then on an attending's salary, we could get by for a year or two before selling if they rate got really high (but what if it got to like a historic high of like 20% or something like in 1980?!?! They do have caps usually, right? Like no more than a 2% increase/year and 6% overall?). Obviously not ideal, but a resident isn't going to stay in the same condo for long when once they become an attending, I would imagine. I really hope the rate I'm quoted on a 30 year is more reasonable. Just need my significant other to fill out his side of the paperwork....

 

[dragonfly99]

Does anyone have experience with Pinnacle Mortgage group (based in Colorado)?

 

[chameleonknight]

Has anyone been able to buy a home with a little extra debt? For example, a $250 car payment and ~$200 a month in credit card debt?

 

[Dr Jboo]

Does anyone now how early you can be approved for a loan before your residency start date. I just spoke with BoA and it looks like we won't be able to get approved for a Physician loan until 60 days before July 1 (May1). My husband and I have been looking and would really like to start the homebuying process soon after match day. Has anyone heard anything different from any other lenders?

 

[CarleneM]

Does anyone now how early you can be approved for a loan before your residency start date. I just spoke with BoA and it looks like we won't be able to get approved for a Physician loan until 60 days before July 1 (May1). My husband and I have been looking and would really like to start the homebuying process soon after match day. Has anyone heard anything different from any other lenders?

Compass bank is willing to start the application process and give a pre-qualification now (i don't think they will do a pre-approval without the residency contract in hand).i think you definitely can and should start the process before May 1st- the deal with most of them (I thought) was that you cannot close on a property before May 1 but you can get the ball rolling. You also need to show you have enough money to cover mortgage and closing despite not having a resident's salary yet if you moved in before July1st.

 

[bjackrian]

Last time I checked, the rates for their 30 year and 7/1 ARM were much higher (~7.5%) than their 5/1 ARM (~5.5%).

Compass recently quoted me a rate of 7.0% APR on a 30 year fixed with no down and no PMI (though a significant amount of closing costs). Not a great rate, but they are willing to ignore student loans which is a definite plus.

Has anyone had experience with talking to large banks or smaller ones that do NOT offer doctor loans about how to handle student loan debt (e.g., not immediately rejecting because of a debt to income ratio)? I am planning to go into income based repayment during residency which will give me a payment of about $350/month toward student loans, but I can't document that until after July 1, and I would like to close in late May/early June. Any ideas?

 

[dragonfly99]

7.0% isn't a very good interest rate...I guess that's how they can "afford" to give residents no PMI. You're still paying, it's just that you're paying in a different way (higher interest).
I'm curious how much they said the closing costs might be? 1% origination fee + other things, I'm guessing.

 

[bjackrian]

$3500 in closing fees + about $2000 in prepaid upfronts for $150K Haven't tried to negotiate those yet. Also was a little disconcerted that he discouraged putting down any down payment depsite the fact that we have sufficient savings to put down 10-20% depending on sale price and still have 3 months expenses in a savings account. That said, so far they are the only ones who seem to be able to easily deal with student loan debt for the state I'm hoping to move to (Colorado).

 

[chocomorsel]

If true, the 7.5% is a terrible interest rate right now for a mortgage. But if they are still doing zero down, they've got to do something to make their money...

I got mine in November with 7.125% interest rate. Yes it's high, and yes I do regret it sometimes, but I was in a tight situation where my other loan had fallen thru and didn't want to lose my money that I had already invested in the deal which was $1000. But with 0% down I hear it's not a "bad" deal. Wouldn't say it's a good deal. If you have 5%, definetly go for that with lower interest rate. I'm paying $156 more per month than what I would have paid had I gotten the first loan with 2% down and 6% interest. That's a lot of money. On hind sight, I should have just waited and lost my $1000 dollars. Oh well, nothing I can do about it now.

 

[dragonfly99]

bjackrian
I think it's shady that they would discourage you from putting money down. It's probably because if you don't, they'll make more money on the interest you pay. With 10-20% down, you would/should be paying a lower interest rate to the bank.

 

[bjackrian]

bjackrian
I think it's shady that they would discourage you from putting money down. It's probably because if you don't, they'll make more money on the interest you pay. With 10-20% down, you would/should be paying a lower interest rate to the bank.

That's my thought too. Currently we're looking to see what we can qualify for with my wife as the only one on the mortgage application since she's had a steady job with a decent income x 3 years. We hadn't realized until the last few days that it is possible to get the mortgage in her name, jointly title the house, and (if necessary/desired) have a separate contact guaranteeing joint liability for the mortgage payments should we divorce or separate.

 

[WhatAmIDoing]

I came across this thread while looking for info on loans. I contacted tower mortgage last week, and I just wanted to mention for everyone that they are not a lending service--they are mortgage brokers. I still don't really know that much about mortgages, but that sounds to me like they send your business to any other bank (like the ones mentioned) and charge you a broker fee. I'd rather skip the middle man...

 

[dragonfly99]

I came across this thread while looking for info on loans. I contacted tower mortgage last week, and I just wanted to mention for everyone that they are not a lending service--they are mortgage brokers. I still don't really know that much about mortgages, but that sounds to me like they send your business to any other bank (like the ones mentioned) and charge you a broker fee. I'd rather skip the middle man...

Yes, they are mortgage brokers. The advantage is they are/will be aware of programs/loans available at various banks. It's hard to get a no down loan from most conventional banks right now. If that is what you need, good luck. You might try Suntrust if you live in the Southeast.

If you have 10-20% down, I would just try local banks in the area you are moving. Or credit unions. If you have a spouse with income, or are currently a resident/fellow with income, you could probably get a FHA loan from many banks or credit unions too...this only requires 3.5% down payment. As mentioned above, the $3500 or so closing costs seems pretty standard...not sure if you'll be able to negotiate those away, as all these people (like the title insurance company, the home inspector, etc.) do have to be paid for their work. I have family members involved in the banking and title insurance industry...they have to get paid for the work they do just like the rest of us.

 

[sben]

As an intern-to-be seeking a home loan, I was told today by a bank that, despite a 20% down payment, I would be required to submit proof of 30 days pay (eg pay stubs) prior to closing--and that this is a new law that will apply to any lender. Are other people encountering this?

Obviously, closing on a house during my second month of intern year would be...less than ideal.

Thanks in advance.

 

[KYTNOH]

I contacted Tower Mortgage today. They ran my credit and gave me pre-approval. They gave me no down, no PMI, 3 or 5 year ARMs at 30 years total. 5.75% for the three year and 6.25% for the five year. They said in my circumstances (my wife will make just as much as I will) that I could qualify for between $250-275,000, although we're probably going to actually use about half of that.

A friend is getting an FHA loan with 3.5% down and PMI, but it has a 4.8% interest rate.

I'm contacting a local bank that I have some close connections to tomorrow, so we'll see how that goes.

 

[CarleneM]

I contacted Tower Mortgage today. They ran my credit and gave me pre-approval. They gave me no down, no PMI, 3 or 5 year ARMs at 30 years total. 5.75% for the three year and 6.25% for the five year. They said in my circumstances (my wife will make just as much as I will) that I could qualify for between $250-275,000, although we're probably going to actually use about half of that.

A friend is getting an FHA loan with 3.5% down and PMI, but it has a 4.8% interest rate.

I'm contacting a local bank that I have some close connections to tomorrow, so we'll see how that goes.

Just to clarify- you were pre-qualified, not pre-approved. A pre-approval involves the submission of W2s, pay stubs, bank statements and takes 7-10 days, usually. Pre-qual is when you say how much you make and how much is in the bank and they go by that and run your credit. To actually be taken seriously when making an offer, what you want to get is a full pre-approval. Also, a 3/1 ARM would be very risky.

 

[ph_wudoc]

Physician's Loans doesn't operate in all states, so we went with Compass. It's been a really bad experience. If we close it'll be a miracle. The worst part though is that we actually worked with his assistant, she was rude, often missed important details, and could never answer our questions. Each time we brought up our concerns we were met with disbelief, no one seemed to care if we were happy. If I were you, I would save some money and go with an FHA local broker that your realtor knows, it'll be much easier to leverage at the end if you need to.

 

[tkim]

Physician's Loans doesn't operate in all states, so we went with Drew Daniels. It's been a really bad experience. If we close it'll be a miracle. The worst part though is that we actually worked with his assistant, she was rude, often missed important details, and could never answer our questions. Each time we brought up our concerns we were met with disbelief, no one seemed to care if we were happy. If I were you, I would save some money and go with an FHA local broker that your realtor knows, it'll be much easier to leverage at the end if you need to.

http://forums.studentdoctor.net/showpost.php?p=6446109&postcount=73

http://forums.studentdoctor.net/showpost.php?p=6424171&postcount=23

 

[2tall]

http://forums.studentdoctor.net/showpost.php?p=6446109&postcount=73

http://forums.studentdoctor.net/showpost.php?p=6424171&postcount=23

They should put you on their payroll.

 

[tkim]

They should put you on their payroll.

Who Suntrust? I had a good experience with them, why not tell people about it? My post was more about how Compass sucked versus how good Suntrust was. It's also a counter to other people's positive experiences with Compass. More data.

 

[dragonfly99]

I called Suntrust and they were nice, but the lady said they are thinking of getting rid of their physician loan program 🙁

 

[John Deere Gree]

0 down and 7.5% interest?!? No wonder the housing market is where it is. I hope you realize you will likely have very little equity in your "investment" during the time you are in residency and will likely not break even. (Assuming that if you have no money to put down on a house, you won't have much for upkeep).

 

[wellrounded72]

Does anyone have experience with the Physician Loans division of Tower Mortgage, based in Columbus OH?
So far, I've had a good experience but I am getting nervous as we approach closing on our house. They offered me a zero-down, no PMI, 4.875% 3-year fixed or 5.5% 5-year fixed. I put down 25% anyway. The closing costs are very high, though. They are having me pay for a year's worth of taxes in adavance, plus their high fees.
Any advice would be appreciated.

 

[zeloc]

I purchased a house through Compass Bank and Drew Daniels, 0% down, without PMI, 5/1 ARM. The interest rate was a lot higher for the 30 yr fixed. My plan is to refinance within the next 5 years to a 30 yr fixed or to another ARM. I did fill out the forms for Suntrust, Tower Mortgage, etc, when I started looking at banks but did not hear back from any of them.

I also had a bad experience with Drew Daniels' assistant, who confused important details, confused me with another client, etc. I emailed Drew personally and explained what happened and he apologized and took the assistant off the case and assigned me to his other assistant, which went much better. They were fairly expeditious in getting everything ready for closing.

 

[CarleneM]

We recently purchased a condo through the Drew Daniels group at Compass Bank. Unless we wanted to put 10% down, they were our only option as it was not eligible for FHA financing. We did close on time, though I did have to do a lot of emailing to find out what was going on throughout the process. His assistant did not generally provide a lot of information and I think educating yourself about what's involved in buying a home and being pro-active is key. They do seem to want to work with new residents and are very flexible regarding residency start dates, types of properties they'll finance, etc.

I purchased a house through Compass Bank and Drew Daniels, 0% down, without PMI, 5/1 ARM. The interest rate was a lot higher for the 30 yr fixed. My plan is to refinance within the next 5 years to a 30 yr fixed or to another ARM. I did fill out the forms for Suntrust, Tower Mortgage, etc, when I started looking at banks but did not hear back from any of them.

I also had a bad experience with Drew Daniels' assistant, who confused important details, confused me with another client, etc. I emailed Drew personally and explained what happened and he apologized and took the assistant off the case and assigned me to his other assistant, which went much better. They were fairly expeditious in getting everything ready for closing.

 

[cumc]

Does anyone have experience with the Physician Loans division of Tower Mortgage, based in Columbus OH?
So far, I've had a good experience but I am getting nervous as we approach closing on our house. They offered me a zero-down, no PMI, 4.875% 3-year fixed or 5.5% 5-year fixed. I put down 25% anyway. The closing costs are very high, though. They are having me pay for a year's worth of taxes in adavance, plus their high fees.
Any advice would be appreciated.

I spoke with physician loans, initial experience is good. I am not aware how much would be there closing costs and other fees. When asked, agent told me that it could be any where to a max of 3%. Isn't 3% high for closing? Can anyone give an idea how much is the closing cost approximately.

 

[spitfire5454]

i went to talk to compass bank for thier doctor loan. The lady was really good and honest. she said while the doctors loan is good, its really set up to most benificial to jumbo loans. She said i would get the lowest rate possible if i bought a house for 450K. Obviously im not. For my house at 167K, the best rate was 6.7% IF i set up an account with them and let them do auto draft. If not it would be 7.5%. Apparently the larger the loan, the beeter the rate. She straight up told me if I had 3.5% the FHA loan would at 5% would be quite cheaper, even with the PMI, than the no PMI docotr loan. I guess the moral is if you REALLY NEED 100% financing, Its gonna cost you a lot more in the long run

 

[southerndoc]

Only 167k? You can probably get a better rate if you can put 20% down (not always possible) or even go through other lenders that don't offer traditional doctor loans. Even if you put 5% down you should be able to beat 6.7%.

 

[CompassMBO]

Only 167k? You can probably get a better rate if you can put 20% down (not always possible) or even go through other lenders that don't offer traditional doctor loans. Even if you put 5% down you should be able to beat 6.7%.

It's almost always best to put a down payment, but the best rate is only
available with credit scores over 740. Plus you have to pay PMI unless the first lien is at 80% or below. FHA is still the best loan with minimum down payment.
If you want a 30 yr. fixed rate, and the loan amount is under $417,000, then the rate is not very good, I have to admit. However, the Compass Physician's loan for the Resident Physician is the 5/1 ARM. The rate is fixed for 5 years, (long enough to finish residency), has a rate in the low 5's (with Compass auto-deduct feature), No Down Payment, No PMI, and Seller can pay every penny of closing costs/pre-paids. The minimum required credit score is 660.

 

[southerndoc]

You would be absolutely stupid to do an ARM in this market. With fixed interest mortgages at their lowest levels in years, and with the uncertainty of the real estate market, residents would be absolutely stupid to get an ARM.

Here's why:

Yes, they will finish residency in 3-4 years and the ARM is good for 5. However, nobody knows what the interest rates will be like in 5 years. They will likely be much, much higher. The real estate market is unlikely to return to the pre-recession days. Meaning it's going to be a lot harder to sell a house even when the recession goes away. The reason is banks are so hesitant to loan money, and people have damaged their credit scores by not keeping up with payments in a timely fashion.

The resident won't be able to sell the house after finishing residency for 6 months to several years (this is occurring right now with a few residents I trained with). This means it will be harder to buy another house where the physician plans to practice. The interest rate may jump to 11% after the ARM period finishes, which will make payments extremely expensive.

Yes, an ARM is a great idea for Compass because Compass makes money on it, but it's a bad idea for those financing. ARM's wouldn't be offered if banks didn't make loads of money off them.

 

[CompassMBO]

You would be absolutely stupid to do an ARM in this market. With fixed interest mortgages at their lowest levels in years, and with the uncertainty of the real estate market, residents would be absolutely stupid to get an ARM.

Here's why:

Yes, they will finish residency in 3-4 years and the ARM is good for 5. However, nobody knows what the interest rates will be like in 5 years. They will likely be much, much higher. The real estate market is unlikely to return to the pre-recession days. Meaning it's going to be a lot harder to sell a house even when the recession goes away. The reason is banks are so hesitant to loan money, and people have damaged their credit scores by not keeping up with payments in a timely fashion.

The resident won't be able to sell the house after finishing residency for 6 months to several years (this is occurring right now with a few residents I trained with). This means it will be harder to buy another house where the physician plans to practice. The interest rate may jump to 11% after the ARM period finishes, which will make payments extremely expensive.

Yes, an ARM is a great idea for Compass because Compass makes money on it, but it's a bad idea for those financing. ARM's wouldn't be offered if banks didn't make loads of money off them.

We will have to agree to disagree. At the end of the residency, most will be moving to a different city, state, etc. Income will triple or more. And, based on a purchase price of $167,000, at the end of 5 years if the ARM adjusted to the max, the payment would only go up $460, not much for someone whose income increases so dramatically.

As for selling the house, doesn't that depend on the area of the country they are in? And you are assuming that the real estate market will be the same 5 years from now, which nobody can be sure about. But, in my area, real estate prices have held their value pretty well.

As for Compass making a lot of money on ARMS, we actually make less than if it was a fixed rate if the ARM rate is lower. In addition, the loan is normally paid off in 5 years or less, whereas, somebody on a fixed rate keeps the loan for a much longer period of time making the bank even MORE. Banks aren't hesitant to loan money, most especially Compass on this program, but you have to prove income and have decent credit. What's so wrong about that?

What got the industry in such bad shape was the NINA and NINJNA loans that so many lenders were pushing, plus the ARMS that were so stupid for people to do in the first place (pay option with negative amortization). A plain ARM is still a very safe loan for borrowers and lenders alike, in most cases, but I will be the first to say it depends on the individual and his/her situation. It's obvious you don't think much of ARMS, but for a lot of residents I have done loans for, it makes perfect sense to them. I try and educate them on exactly what they are doing. No arm (no pun intended) twisting and if they don't want to do it, that's fine with me.

 

[southerndoc]

You're right. I'm not a fan of ARMS. Heard quite a few horror stories of people not understanding the implications of them.

 

[MOHS_01]

Maybe the banks know something about our future earning potential that we don't.... 😉

 

[southerndoc]

Maybe the banks know something about our future earning potential that we don't.... 😉

Apparently not. One word: Obamacare.

 

[mikedc813]

I'm in the very beginning stages of looking to buy a home in Tampa and am wondering if I can get some advice from others who are in residency and have recently bought a house. First, I am thinking that going with a fixed rate is better seeing how interest rates are probably going to increase somewhat. Second, while a 15 yr fixed will mean higher monthly payments compared to a 30 yr fixed, I figure I can pay off the house within 15 yrs once I start making some real money after residency. Lastly, does anyone have experience with www.physicianloans.com? Thanks.