4 REASONS WHY YOU SHOULD CONSIDER A PHYSICIAN LOAN

Image source

Med school is an expensive education in the United States and often causes prospective doctors to deal with hundreds of thousands of dollars in student debt upon graduating. Consequently, those in the medical field often have more trouble getting mortgages and other loans that they might need, as their student loans cause their credit score to drop. However, many banks offer physician loans or doctor loans for this purpose. In this article, we will be looking at reasons why you, as a med student, should consider getting a physician loan:

Credit scores represent how likely someone is to return a loan, and they also indicate how likely you are to obtain a loan. Lenders and banks are far more likely to accept any loans you apply for if you have a high credit score. Since most new doctors have barely worked and already have large student loans, they have a poor credit score to get any new mortgages or loans. The requirements for a physician loan are less stringent, allowing newly graduated doctors to get their first house despite needing more credit for a conventional loan or mortgage.

All mortgage loans require a downpayment on loan. This downpayment refers to a percentage of the loan you will give upfront for the mortgage to be enforced. It is usually a substantial sum of money that most new doctors lack the means to accumulate. A physician loan usually offers mortgages with smaller and sometimes even no down payment, making them ideal for doctors needing these mortgages and loans.

The process of applying for a mortgage or loan is usually quite lengthy. It requires several forms and documents, including extensive lists of your finances and costs, such as W-2 Income. Compared to this, the documentation requirements on physician loans are far more lenient. You may only need proof of your doctor’s employment to qualify for such a loan. Self-employed doctors, while not having as lenient requirements as their employed counterparts, can still get these loans with very little documentation.

Private mortgage insurance is a type of insurance created after the 2008 recession to protect lenders. This insurance adds an extra cost when applying for a loan. However, physician loans have no such requirement, which can save you thousands. Pairing this with the fact that there is no downpayment makes these loans a very lucrative endeavor for new doctors.

Physician loans are ideal loans for their minimal down payment and easy documentation process. These loans, however, are not available for some. You must be a medical student, practicing physician, dentist, or veterinarian. You must produce proof of your education and employment to qualify for the loan. You also need to create a repayment plan indicating your future salary. Depending on the institution you are loaning from, your credit score must be at least 680.

Private mortgage insurance is a type of insurance created after the 2008 recession to protect lenders. This insurance adds an extra cost when applying for a loan. However, physician loans have no such requirement, which can save you thousands. Pairing this with the fact that there is no downpayment makes these loans a very lucrative endeavor for new doctors.