May 2021

A physician mortgage could be just what your doctor-client ordered

As graduation day approaches, newly minted doctors may be thinking about buying a home. But medical professionals can face some special hurdles — especially early in their careers. They may lack savings for a down payment, and their student debt could disqualify them for a conventional mortgage.

Fortunately, many lenders recognize that a new doctor has great future income potential that reduces the risks of lending. They offer a special type of mortgage — usually called a physician mortgage or doctor loan — that can make it easier for a medical professional to buy a home.

Here are some facts about physician mortgages and how they could help your doctor clients achieve their goals.Footnote1

How are physician mortgages different?

While exact terms may differ with different lenders, here are some common characteristics:

  • Lower down payments, even no down payment with some lenders
  • Relatively high loan amounts compared to conventional loans
  • Relaxed debt-to-income ratios that may not include student debt in the calculation
  • No private mortgage insurance
  • No income history needed — some lenders simply require proof that the borrower will begin a new job within 90 days of closing

Which medical professionals qualify for a physician mortgage?

While lenders vary, most offer loans to a number of different specialties. For instance, Bank of America’s Doctor Loan is available to a variety of actively practicing professionals, including medical doctors, dentists, and doctors of osteopathic medicine, among others.Footnote2

How can a physician mortgage benefit clients?

A physician mortgage can give your clients the flexibility to purchase a home now, based on their expected income. That means they won’t have to wait while they pay off debt, save for a large down payment or establish a longer job history.

Is there a down side to a physician mortgage?

As with many loans that allow lower down payments, a physician mortgage may come with a somewhat higher interest rate. In addition, starting with a lower down payment would likely mean paying a higher monthly payment, as well as more interest over the life of the loan.

Is a physician mortgage right for your client?

Every client's situation is different. An experienced lending specialist can help them review their situation to see what the best choice is for them.

A note from your lending specialist:

I'd be happy to tell your clients about the Bank of America Doctor Loan, which has many of the benefits mentioned above and allows as little as 5% down on mortgages up to $1 million.Footnote3

1 "The Ultimate Guide to Physician Mortgage Loans in 2021", Leveragerx

2 An applicant must have, or open prior to closing, a checking or savings account with Bank of America. Applicants with an existing account with Merrill or Bank of America Private Bank prior to application also satisfy this requirement. Eligible medical professionals include: (1) medical doctors who are actively practicing, (MD, DDS, DMD, OD, DPM, DO), (2) medical fellows and residents who are currently employed, in residency/fellowship, or (3) applicants who are medical students or doctors and are about to begin their new employment/residency or fellowship within 90 days of closing. Those employed in research or as professors are not eligible. For qualified borrowers with excellent credit. PITIA (Principal, Interest, Taxes, Insurance, Assessments) reserves of 4–6 months are required, depending on loan amount.

3 Minimum down payment requirements vary by property type and location; ask for details.

MAP3514491 | 03/2021

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