First, doctor loans are very rarely fixed-rate mortgages. Typically, physician loans will be adjustable rate mortgages (ARMs). With an ARM, you typically pay a lower, fixed interest rate for the first few years of the loan. After that initial period, however, your interest rate will fluctuate and often increase.
Secondly, who qualifies for physician mortgage loans?
Both doctors and nurses are eligible for their physician mortgage loan as long as they are credit union members. Loans are available for up to $453,000 with no down payment or private mortgage insurance and for higher amounts with a small down payment.
Considering this, how does a physician loan work?
With a doctor mortgage loan and a decent credit score, physicians can borrow 95% to 100% of the home’s purchase price with no PMI. A low or zero down payment leaves more money for other goals like paying off student loans, investing for retirement or saving for college.
Are physician loans worth it?
Physician loans may also have higher fees than conventional loans in terms of closing costs. That’s often a worthy trade-off for being able to qualify to borrow a healthy amount of money without the lender giving the side-eye to your student loan debt, but is still something you should be aware of.
@Baxter Richardson yes there are lenders in California that do offer physician loans. … Basically the physician loans have a 0-15% downpayment, no prepayment penalties, no mortgage insurance requirement, and a relatively small increase in interest rates over standard mortgage loans.
Documents Required to Avail Doctor Loan
Last 2 months’ salary slips (for salaried) or income proof (in you have an independent practice) Last 3 months’ bank account statements of your salary account (for salaried) or current account (in you have an independent practice)
Physician mortgage loans are normally 0.25% to 1% higher than the lowest rate 20% down alternative loan. That’s probably better than PMI, especially for smaller shorter term loans. But it is definitely not the best interest rate option and lenders don’t like to admit that.
Now, when you apply for a mortgage, the lender will cap the loan-to-income ratio at four-and-a-half times your income. Use our Mortgage calculator, to help you work out how much your monthly payments would be if interest rates rose in the future.
The 36% rule is a good place to start
A general rule of thumb to ensure you are not borrowing more than you can realistically afford is to use the 36% rule. This says that housing expenses should not exceed 36% of your gross monthly income. Gross income is what you are paid prior to any deductions.
It’s not always better to make a large down payment on a house. … It’s better to put 20 percent down if you want the lowest possible interest rate and monthly payment. But if you want to get into a house now and start building equity, it may be better to buy with a smaller down payment — say 5 to 10 percent down.
Even though some lenders do not offer an explicit physician mortgage, many still recognize the value of doctors as banking customers. Quicken Loans is one of those lenders.