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You might think that saving lives is priceless, but when it comes to medical degrees, it’s rather expensive – qualifying as a doctor leads to six-figure debt.
That’s where physician loans, or doctor mortgages, come in. These are mortgage loans with special terms that are only offered to doctors to help them along the path to homeownership.
Lenders recognize that doctors are extremely low-risk borrowers, despite their high debt, so they’re willing to make special provisions.
The benefits of physician loans are certainly appealing, but they don’t necessarily make sense for all doctors.
The decision ultimately comes down to personal circumstances, such as how long you intend to stay in your job and house.
Is A Physician Loan A Conventional Loan?
Because doctors are deemed as being low risk, physician loans have more favorable terms than conventional loans.
Various doctor loan providers let you access as much as 100% financing without private mortgage insurance (PMI), which is normally charged to anyone who can’t afford a down-payment of 20% or more on their mortgage.
Another difference is that conventional loans count student debt within the debt-to-income ratio, which means it’s easier to get approved as long as you have a good credit score.
Physician loan applicants are also unlikely to need current employment; a signed contract to prove you’ll start employment soon is generally sufficient.
How Do You Qualify For A Physician Loan?
Although the requirements vary slightly between mortgage lenders, certain perquisites are consistent across all providers of physician loans:
- Proof of a Medical Degree.
- A signed contract proving you have a job as a doctor that will start in 60-90 days.
- FICO score of 700.
- Deferred student loans.
- A debt-to-income ratio of 45% or less (excluding student loan).
What Are The Best Physician Loans?
- Arvest Bank
- Bank of Oklahoma Financial
- BBVA Compass
- BMO Harris Bank
- Cadence Bank
- Fairway Independent Mortgage Corporation
- Fifth Third Bank
- First National Bank of Pennsylvania
- Flagstar Bank
- Fulton Mortgage Company
- Horizon Bank
- Huntington Bank
- Iberia Bank
- Life Michigan Credit Union (LMCU)
- Loan Depot
- NBT Bank
- PhysicianLoans USA
- Regions Bank
- TD Bank
- University Federal Credit Union
Arvest offers various non-conforming mortgage loan programs, including physician loans.
These are suitable for physicians who have recently graduated, currently have a house, and have been practicing medics for many years already.
You can receive up to 103% of your house value in a loan, but everything over 100% has to be used for taxing, insurance, or other closing costs.
Arvest boasts flexible underwriting guidelines with no private medical insurance and a residency program.
BankMD is a digital-only offshoot of TransPecos Banks focused on the niche of medical professionals in Texas, thus combining 100 years of experience with a specialized product.
Their loan products boast up to 100% financing with no PMI and no prepayment penalty. It’s also effortless to apply: fill in your needs online, and you’ll find out if you’re approved in minutes.
BankMD also offers mobile banking and specialized underwriting.
Bank of Oklahoma Financial
Bank of Oklahoma Financial (otherwise known as BOK Financial) offers a variety of home loans, including an Advanced Medical Professionals program.
You can loan up to $650,000 – or $1,000,000,000 for specific medical professionals only – with down payments as low as 3%. There’s no PMI, and you can close the deal 60 days before the employment start date, once you have your contract. You can also choose between a fixed and a variable interest rate, which is a significant advantage.
If you have a BOK Financial checking or savings account and use it to make your payments to the loan, you could be eligible for a 0.25% discount on your mortgage interest rate.
BBVA offers flexible mortgage options to practicing physicians and medical residents.
As an established bank with 672 branches in the USA, BBVA is a name you can trust.
Through the doctor loan program, you can loan up to $1,750,000 with a loan-to-value ratio of up to 100%. There are also low down-payment options and no need for PMI.
However, condominiums require down-payments.
To learn more, read our BBVA Compass Bank Review.
BMO Harris Bank
A subsidiary of BMO Financial Corporation, BMO Harris Bank is a multi-billion-dollar bank with hundreds of branches.
It offers a BMO Physician Loan Program to doctors and dentists with a FICO score of 700 or more. All loans under this offering require no PMI and no income history for approval.
You can loan up to $750,000 with 100% financing – although physicians who have been practicing for a decade or more can only receive up to 90% financing.
There are a few options to choose from, including a 3/1, 5/1, 7/1, or 10/1 ARM loan. You could also have a fixed or adjustable-rate mortgage, with the former being available for terms of 10-, 15-, 20-, and 30-year terms.
Cadence Bank offers an Early Professionals Loan Program with 100% financing, no origination fee, and no PMI requirement. Along with doctors, this is available to professionals such as professors and engineers.
You can choose between fixed-rate and adjustable-rate mortgages, including 5/1 ARMS. It’s possible to loan up to $1 million for a loan.
There’s also a ‘One-Time Close’ loan for home construction, which allows you to loan up to $2 million. You can choose between 10/1 ARM, 15 year fixed-rate, and 30-year fixed-rate programs.
Fairway Independent Mortgage Corporation
Fairway Independent Mortgage Corporation is a mortgage specialist that has been operating for more than 23 years and is now ranked as one of the top mortgage companies in the U.S.
The doctor loan is available to all medical doctors, dentists, dental surgeons, and veterinarians within ten years of completing their original residency. You can apply when your contract is within 60 days of closing.
You can loan up to $2,000,000, although eligibility depends on your income and debt-to-income ratio. No PMI is required, and you can loan up to 95% of the house value.
Fifth Third Bank
Claiming to put 166.7% into everything they do, Fifth Third Bank offers a range of mortgage programs.
Its Physician and Dentist Loan program offers the opportunity to loan up to $750,000 with no down payment, or up to $1.5 million with a low down payment (or $1 million for residents, fellow, and new physicians). As usual, no PMI is required.
You can choose between a fixed or ARM loan, and there are mortgage refinancing options available for new physicians. You’ll need your contract to start within 90 days of the closing date.
First National Bank of Pennsylvania
The largest branch of the First National Bank Corporation, a financial services company with more than $33 billion worth of assets, is this Pittsburgh-based subsidiary. You need a minimum credit score of 700 and a debt-to-income ratio of 43% or less to apply but can borrow up to a hefty $1.5 million.
There’s a wide range of loan programs available, including an ARM 7/1, 10/1, and 15/1. You can also obtain a fixed rate for 10-30 years.
To borrow the full $1.5 million, you’ll need a combined loan-to-value ratio of 89.99% or less, but for a loan of $750,000 or less, this goes down to 95%. No PMI is required.
The Flagstar Bank Professional Loan program is for attorneys and other professionals with advanced degrees, as well as dentists and doctors.
You must be in the first ten years of your career with a credit score of at least 710 to be eligible. It’s also necessary to have a contract that starts within 60 days of the deal closing.
You can loan up to $850,000 with no down payments or up to $1.5 million with low down payments. There are various adjustable-rate options, including a 5/1 and 7/1 ARM, but no fixed-rate options.
Fulton Mortgage Company
Fulton Mortgage Company has a few mortgage options available, including special requirements for residents, fellows, and practicing physicians.
Professionals cannot have been out of training for more than ten years.
As long as you have a credit score of at least 700, you’ll be able to loan up to $1.5 million with no down payments.
You can choose a mortgage at a 15-year fixed rate or a 3/1, 5/1, 7/1, or 10/1 ARM.
Horizon Bank offers a doctor loan for physicians, dentists, and optometrists, but it’s not available within most states.
To apply, you also need a payroll deposit with an auto-debit from a Horizon bank account, which is a significant limitation.
You can loan up to $750,000 with no down payment or up to $1.5 million with flexible down payments.
Exclusively for medical doctors (with an MD, DO, DDS, DVMM, or DMD), the Physicians Only Loan Program from Huntington Bank has all the benefits you’d expect.
You can loan up to $750,000 with no down payment or up to $2,000,000 with flexible down payment options.
There’s also no PMI and no prepayment penalty, as well as the chance to choose between fixed or variable rates.
IberiaBank provides loans with preferable terms to physicians, dentists, and veterinarians in both residency and practice.
It’s possible to loan up to $1 million with no down payment, which is less than some other providers but still a substantial offer.
You can also choose between a 5/1 and 7/1 ARM and a 30-year fixed rate option, and there’s also the chance to obtain a construction loan.
KeyBank is one of the largest banks in the US and offers a variety of home mortgage options, including a doctor loan program.
The KeyBank loan is one of the most generous available in terms of the amount of money you can borrow; you can obtain a loan of up to $3.5 million, although this requires a more conventional down payment.
Otherwise, you can receive 100% financing for up to $750,000, 95% financing for up to $1 million, and 90% financing for up to $1.5 million.
Lake Michigan Credit Union (LMCU)
A credit union is a financial cooperative, which means members rather than private investors own unions.
This generally results in favorable terms, which is the case for the LMCU doctor mortgage.
You can receive up to 100% financing on loans of up to $1.5 million, although larger amounts require down payments up to 5%.
No PMI is needed, student loan debt is excluded from debt calculations, and you can receive up to $650 in closing cost credits.
LoanDepot offers loans up to $2 million with no PMI. You’ll need a credit score of at least 700 and a contract that begins within two months of closing the deal.
For the full $2 million loan you’ll need a 10% down payment, but this goes down to 5% for a $1.5 million loan.
You can choose between fixed and ARM interest rates, although the fixed rate is only available for those with a 5% down payment.
The NBT Bank mortgage loan is designed for the following with a credit score of 700 or more:
You can loan up to $850,000 with loan down payment options, but there’s an option for 100% financing or higher loan amounts.
The loan, therefore, isn’t suitable for everyone.
As the name suggests, PhysiciansLoans USA specializes in home loans for doctors in the USA.
You can obtain 100% financing with no PMI. The 100% financing option is available on loan amounts up to $650,000, while you can loan up to $2 million if you’re willing to pay low down payments.
The loans are relatively flexible: you can choose between fixed and ARM options and move into the house up to 90 days before your contract starts.
It’s also possible for sellers to pay 3-6% of the closing costs, which helps you to save even more money.
Regions Bank has a loan program for physicians and dentists looking to buy their primary residence.
This is open to:
- Doctors of Osteopathy
You’ll be able to loan up to $750,000 with no down payment or up to $1 million with low down payments.
PMI isn’t required, and student debt will be excluded from the debt-to-income ratio used.
SoFi is short for Social Finance and is true to their name, making it their mission to help their borrowers find fair financial products.
Although SoFi doesn’t specifically call their scheme a ‘physician loan,’ it does offer a jumbo loan with no PMI and another jumbo loan with a down-payment of just 10% – this is just as good as the majority of doctor mortgage loans on the market.
However, unlike physician loans, which generally ask for a contract rather than current employment, Sofi requires pay stubs to prove eligibility, and you’ll need to pay PMI.
You can choose between a 30-year or 25-year fixed rate or a 7/1 or 5/1 ARM. One advantage is the $500 welcome bonus.
Learn more, read our SoFi Review.
Synovus physician loans are available to the following looking to buy their primary residence using the loan:
- Licensed Physicians
You must be an MD, DO, DMD, DDS, or DPM.
You can receive 100% financing up to $750,000, and no PMI is necessary. There are both fixed-rate and ARM options available.
The self-proclaimed ‘most convenient bank,’ TD Bank, offers various flexible mortgage loans for doctors.
To be eligible, you must be an MD, DO, DPM, DDS, DMD, surgeon, or resident with at least two years complete.
You can receive 100% financing on up to $750,000, 95% financing on up to $1.3 million, and 90% financing on up to $1.8 million.
No PMI is required, and you can choose between a fixed or ARM term. Construction loans are also available.
UMB is a multi-billion-dollar financial services company with over a hundred years of experience in the industry.
Although the bank doesn’t offer a specific mortgage loan for physicians, it does provide a Mortgage Portfolio Professional Loan program for various doctorate professionals licensed in their career, which includes medical doctors.
To be eligible, you’ll need a FICO score of 700 and a debt-to-income ratio of 43% or less. You won’t have to pay PMI and can loan up to $2,000,000 depending on the equity you already have. To borrow the full $2,000,000, you’ll need a down payment of 10%, but this drops to 0% for those loaning up to $750,000.
There are products with a fixed interest rate for 15-, 20-, and 30-year terms. You’ll need to have a contract with a start date 60 days prior.
University Federal Credit Union
The University Federal Credit Union offers mortgages that ‘offer more.’
Alongside other loans tailored to various professions, doctors and nurses can choose a Medical Community loan.
Residents, fellows, and practicing physicians can loan up to $424,000 with no down payment or up to $1.5 million with low down payments.
No PMI is needed.
Physician Loans FAQs
Does Chase offer physician loans?
Chase doesn’t offer a particular loan for physicians. However, it does provide a range of mortgage options: fixed-rate mortgage, ARMs, jumbo mortgages, DreaMaker (with low down payments, and reduced PMI options for those with low-to-moderate income), FHA mortgages (a loan insured by the government), and a Veterans Affair loan.
Jumbo mortgages share similarities with physician loans because you can borrow more than you’d normally be able to. Chase offers financing up to 85% of the value of a home as long as borrowers have a good credit score and significant reserves. Many doctors may fit into this category. However, PMI is required.
How much student loan debt does the average doctor have?
According to the Association of American Medical Colleges, the average doctor in the US has a total debt worth an astounding $190,694.
It’s easy to see that, without student loan debt being excluded from the debt-to-income ratio, it would be difficult for doctors to get approved for mortgages.
How long does it take to pay off student loans for doctors?
Since the average salary of physicians is over $200,000, doctors can pay off their student loans relatively quick if they’re motivated to do so.
Of course, the exact amount of time it takes will depend on the individual circumstances, such as, if they live in a city with a high cost of living and how much they’re willing to save.
You can expect it to take about thirty years to pay off medical school loans, but this could be reduced to half or even a third of the time if the borrower is suitably diligent.
Is a 10 1 arm a good idea?
A 10/1 ARM (also known as a 10-year ARM) has a fixed interest rate for the first ten years, after which the interest rate changes every year. This makes it a hybrid mortgage because it combines features from an adjustable-rate mortgage (ARM) and a fixed mortgage.
The major benefit is that you’ll initially start with a low fixed interest rate, which is almost always preferable over a variable interest rate.
However, since you’ll ultimately end up with a variable interest rate, you could end up worse off in the long run. An important factor to consider is how fast you’ll be able to pay off your loan.
Generally, a 10/1 ARM is tied to an index, an interest rate based on investment returns, so the amount you’ll be paying depends on economic conditions such as global interest rates.
You need to be sure that you’ll still be able to meet your interest rate payments when the variable interest rate is introduced, as you could end up getting hit by rates too high for you to manage.
Is A Physician Loan for You?
If you know you’re going to stay in the same area for a long period, and you have a contract as a doctor, getting a physician loan can seem like a no-brainer.
However, keep in mind that many doctors leave their job after just a few years, and that it’s tough to figure out where you want to live when you’re just beginning your career. If you end up moving homes in five years or fewer, you might not be able to build up enough equity to justify a house purchase.
You should also be careful only to buy a house you can really afford – just because you could get a $1 million home with a physician loan, doesn’t mean that you should. If your FICO score is low, you’ll struggle to get approved anyway.
However, for doctors who are confident they’re ready to settle down in an area, a physician loan is certainly preferable to a conventional mortgage.