Physician Mortgage options for someone finishing residency + IBR

[Slaol]

I know that there are other threads on this board dedicated to home loans for physicians, but many of them are outdated or not relevant to people in my situation.

I am in my final year of residency in Family Medicine and have signed a contract to work in rural Texas next year. My wife and I have never owned a home, and are wanting to buy a home in the town where I will be working (there is not much of a rental market there). The average price for most homes we would be interested in there is $180k- $225k.

I have significant student loan debt (higher than the national average, $>300k), therefore I would need a special program in order to qualify for a loan solely based on debt:income. I have been making Income-Based Repayments (IBR) since starting residency, and my credit score is currently >700.

Questions:

1. Are there any loan program options for physicians that would provide 0% down and include closing costs into the loan?
2. Do I have to have my loans in deferment/forbearance in order to qualify for physician mortgages? (I am hoping to keep making payments in order to reach 120 payments for PSLF)
3. If programs are available, what kind of time frame are we looking at in order to qualify/move forward on the loan?

Thank you very much in advance for any help.

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[ThoracicGuy]

I know that there are other threads on this board dedicated to home loans for physicians, but many of them are outdated or not relevant to people in my situation.

I am in my final year of residency in Family Medicine and have signed a contract to work in rural Texas next year. My wife and I have never owned a home, and are wanting to buy a home in the town where I will be working (there is not much of a rental market there). The average price for most homes we would be interested in there is $180k- $225k.

I have significant student loan debt (higher than the national average, $>300k), therefore I would need a special program in order to qualify for a loan solely based on debt:income. I have been making Income-Based Repayments (IBR) since starting residency, and my credit score is currently >700.

Questions:

1. Are there any loan program options for physicians that would provide 0% down and include closing costs into the loan?
2. Do I have to have my loans in deferment/forbearance in order to qualify for physician mortgages? (I am hoping to keep making payments in order to reach 120 payments for PSLF)
3. If programs are available, what kind of time frame are we looking at in order to qualify/move forward on the loan?

Thank you very much in advance for any help.

Renting an apartment, at least for the first year is probably best. What if you get there and don't like the job? You don't want to be stuck in it just because you have a house...

 

[Slaol]

Renting an apartment, at least for the first year is probably best. What if you get there and don't like the job? You don't want to be stuck in it just because you have a house...

My question was not "should I rent or buy" - I have already decided, besides renting is not an option. There are no rental properties beyond extended stay hotels.

 

[ThoracicGuy]

My question was not "should I rent or buy" - I have already decided, besides renting is not an option. There are no rental properties beyond extended stay hotels.

No apartments in this town?

 

[Slaol]

Nope.

 

[RangerBob]

It's pretty rare for there to not be any rentals. Even in places without apartments (rare, but possible if you're rural enough I guess), then often there will be duplexes/houses for rent. Probably in part because in most places without apartments, you're really out in the boonies and it's hard to sell a home out there--so I'd think you could likely find a house for rent, as I'm sure there are some locals who want to get away but haven't been able to sell their home.

Regardless of that, the answers to your questions:
1) Yes, there are loan program options that will let you pay 0% down and include closing costs into the loan. Fifth Third bank is one option (not sure if they serve Texas though). Wells Fargo offers physician loans that they don't advertise online (so you'd have to actually talk with a loan officer), but I'm not sure if their loans are 0% down. But there's a good chance someone will let you pay 0 down. Though, I'd use that sign-on bonus (I assume you got one, right?) and put that towards your down payment and then get a conventional loan, as you'll get a much better interest rate and have an easier time.

2) You don't have to have your loans in deferment/forbearance to qualify for the physician mortgage. This could also be where there's an advantage over the conventional loan--many physician loan programs will just look at your repayment amount, whereas conventional loans will look at how much you actually owe. However, there are some physician loan programs that do require you to have your loans in deferment/forbearance and to keep thim that way for a year or so--you'll just have to find out A) are there physician lenders in TX, and B) what's their policy on this

3) I don't really know the time-frame, but the earlier you start getting stuff together the better, as you'll need to do a little more than with a conventional loan (sending a copy of your diploma, paystub, etc.). I doubt it's significantly longer than when you apply for a conventional loan. If you were going to move this coming July (likely buying your house in June then) you'd probably want to start getting the process started sometime in the next month or so. If it gets processed quickly, it doesn't hurt to get approved for a loan for $x amount a few months before you actually fly out to TX to look at homes.

Take a look at whitecoatinvestor.com. He lists a bunch of physician loan providers on his website, and I think he even wrote down which states they service. There's also a running physician loan thread here and often some of the loan officers from these programs will provide input/help (such as referring you to someone else if their bank doesn't service TX)

 

[James Martin]

It's pretty rare for there to not be any rentals. Even in places without apartments (rare, but possible if you're rural enough I guess), then often there will be duplexes/houses for rent. Probably in part because in most places without apartments, you're really out in the boonies and it's hard to sell a home out there--so I'd think you could likely find a house for rent, as I'm sure there are some locals who want to get away but haven't been able to sell their home.

Regardless of that, the answers to your questions:
1) Yes, there are loan program options that will let you pay 0% down and include closing costs into the loan. Fifth Third bank is one option (not sure if they serve Texas though). Wells Fargo offers physician loans that they don't advertise online (so you'd have to actually talk with a loan officer), but I'm not sure if their loans are 0% down. But there's a good chance someone will let you pay 0 down. Though, I'd use that sign-on bonus (I assume you got one, right?) and put that towards your down payment and then get a conventional loan, as you'll get a much better interest rate and have an easier time.

2) You don't have to have your loans in deferment/forbearance to qualify for the physician mortgage. This could also be where there's an advantage over the conventional loan--many physician loan programs will just look at your repayment amount, whereas conventional loans will look at how much you actually owe. However, there are some physician loan programs that do require you to have your loans in deferment/forbearance and to keep thim that way for a year or so--you'll just have to find out A) are there physician lenders in TX, and B) what's their policy on this

3) I don't really know the time-frame, but the earlier you start getting stuff together the better, as you'll need to do a little more than with a conventional loan (sending a copy of your diploma, paystub, etc.). I doubt it's significantly longer than when you apply for a conventional loan. If you were going to move this coming July (likely buying your house in June then) you'd probably want to start getting the process started sometime in the next month or so. If it gets processed quickly, it doesn't hurt to get approved for a loan for $x amount a few months before you actually fly out to TX to look at homes.

Take a look at whitecoatinvestor.com. He lists a bunch of physician loan providers on his website, and I think he even wrote down which states they service. There's also a running physician loan thread here and often some of the loan officers from these programs will provide input/help (such as referring you to someone else if their bank doesn't service TX)

I agree with you. whitecoatinvestor.com has list of loan providers who are giving loan to physicians.

 

[Instatewaiter]

I know that there are other threads on this board dedicated to home loans for physicians, but many of them are outdated or not relevant to people in my situation.

I am in my final year of residency in Family Medicine and have signed a contract to work in rural Texas next year. My wife and I have never owned a home, and are wanting to buy a home in the town where I will be working (there is not much of a rental market there). The average price for most homes we would be interested in there is $180k- $225k.

I have significant student loan debt (higher than the national average, $>300k), therefore I would need a special program in order to qualify for a loan solely based on debt:income. I have been making Income-Based Repayments (IBR) since starting residency, and my credit score is currently >700.

Questions:

1. Are there any loan program options for physicians that would provide 0% down and include closing costs into the loan?
2. Do I have to have my loans in deferment/forbearance in order to qualify for physician mortgages? (I am hoping to keep making payments in order to reach 120 payments for PSLF)
3. If programs are available, what kind of time frame are we looking at in order to qualify/move forward on the loan?

Thank you very much in advance for any help.

I don't know about closing costs but there are definitely options that are 0% down for physicians. They usually have a monetary cap (somewhere around 440K) I don't think you need to be in forebearance or deferment.

These ARE VERY SLOW MOVING LOANS. I had a closing date and they missed it by 2 weeks... and we agreed on the house 3 months prior. They are a bit of a pain in the ass. We used huntington. I'd recommend against using them based on a terrible, terrible experience I had dealing with them.

 

[UTPhysicianLoan]

I know that there are other threads on this board dedicated to home loans for physicians, but many of them are outdated or not relevant to people in my situation.

I am in my final year of residency in Family Medicine and have signed a contract to work in rural Texas next year. My wife and I have never owned a home, and are wanting to buy a home in the town where I will be working (there is not much of a rental market there). The average price for most homes we would be interested in there is $180k- $225k.

I have significant student loan debt (higher than the national average, $>300k), therefore I would need a special program in order to qualify for a loan solely based on debt:income. I have been making Income-Based Repayments (IBR) since starting residency, and my credit score is currently >700.

Questions:

1. Are there any loan program options for physicians that would provide 0% down and include closing costs into the loan?
2. Do I have to have my loans in deferment/forbearance in order to qualify for physician mortgages? (I am hoping to keep making payments in order to reach 120 payments for PSLF)
3. If programs are available, what kind of time frame are we looking at in order to qualify/move forward on the loan?

Thank you very much in advance for any help.

I am in my final year of residency in Family Medicine and have signed a contract to work in rural Texas next year. My wife and I have never owned a home, and are wanting to buy a home in the town where I will be working (there is not much of a rental market there). The average price for most homes we would be interested in there is $180k- $225k.
There are some phenomenal 100% financing options available for residents and fellows.

I have significant student loan debt (higher than the national average, $>300k), therefore I would need a special program in order to qualify for a loan solely based on debt: income. I have been making Income-Based Repayments (IBR) since starting residency, and my credit score is currently >700.
The amount of your debt is honestly not a factor for most physician mortgage lenders, it’s the monthly payment that is key in determining debt to income ratios. I suspect your payment is quite low under IBR. For example, I just recently helped a dual physician family in residency with over $650k in student loans, monthly payments were in IBR and we were able to qualify them with the IBR payment. They qualified for 100% financing and they were ecstatic. I’d encourage you to contact us with specific questions, I think there is likely a solution for you if you want to buy a home.

Are there any loan program options for physicians that would provide 0% down and include closing costs into the loan?
Absolutely, there are several scenarios under which you can walk in to the closing on your home with no money out of pocket at all.

Do I have to have my loans in deferment/forbearance in order to qualify for physician mortgages? (I am hoping to keep making payments in order to reach 120 payments for PSLF)
Absolutely not, you can qualify for most physician loans under IBR/Pay-as-you-earn or any other partial payment plan.

If programs are available, what kind of time frame are we looking at in order to qualify/move forward on the loan?
That’s a great question! I would get fully credit and income approved first, that will take you a week or two, then once that is done, you can write an offer and typically close within 30 days. I give away the first chapter of my book for free, it will walk you through the landmines and ensure you have a flawless home purchase: http://www.whyphysicianhomeloansfail.com/
I’d encourage you to contact us with any questions you might have. Feel free to PM me.

 

[bwmd]

The point of the doctor loan is that total debt is essentially irrelevant. The PhysicianLoans people essentially demand a fully-financed 0% down loan, everything including closing costs thrown in. Because you are a doctor with an incredibly low likelihood of defaulting, some of these companies would love for you to put absolutely nothing down (bigger the financed amount, the more they make). I do recall that PhysicianLoans had a 2% origination fee, which I wasn't happy about. In the end, we didn't go with them, but my wife and I did buy a house as we finished our MS4 with a mountain of debt and nothing but two ERAS match letters as a sign of future gainful employment. Multiple lenders were happy to work with us, you shouldn't have a problem. We got our preapproval letter within 1 business day. We closed on a house within two months of starting the process.

You can continue IBR. Do note, however, that if your new income is high enough that you no longer have a partial financial hardship, your interest with capitalize and payments may go up substantially (up to the 10 year repayment level). Sounds like based on your debt load that may not be an issue for you though, but I'd do the math to check so you know what you have in store.