No matter what profession you have, at some point, you may need a loan to purchase a house or your dream car. However, other professions like medical doctors or physicians often get preferential treatment from lenders. If you are a physician, there is a specialty type of loan you can apply for to buy a home. Other loans come with special terms and are meant for those in the medical field. Read on to learn the top things you need to know about getting a doctor’s loan.
1. Purpose of the Loan
To qualify for a doctor loan, you should be a medical resident, attending physician, dentist, or veterinarian. You can use your physician loan to buy a home, car, upgrade your healthcare facility, buy equipment, hire specialists, adopt telemedicine, invest in electronic health records, or purchase medical billing software or even medical appointment scheduling software. You must have a signed contract that indicates your salary, proof of education, good credit score, or a debt-to-income ratio of less than 45%. However, the lenders’ requirements vary.
2. Choose the Right Lender
Not every lender offers a physician loan since this is reserved for a few medical professionals. It can be difficult to get a loan with favorable terms, especially for those who have just completed their studies and still have outstanding student loans. However, if you look for the ideal Physician Banks, you can get special credit, and your student debt is not considered. This will boost your buying power, and you can also enjoy lower payments. A physician home loan applies to people who are just out of school but need a home to settle so they can begin their work.
These specialty loans are unique and ordinary lenders do not offer such services. Other banks are happy to provide this kind of specialty credit to doctors because they know the benefits of having good clients with high earning potential. Completing a degree to become a medical doctor usually takes 7 years, and physicians are generally viewed as high-income earners. This dampens the risk of providing credit to such professionals.
3. Credit Score
Before you choose your doctor loan, you ensure that you have a good credit score. While doctors get preferential treatment from different lenders, it does not necessarily mean that they don’t check your credit score. However, if you are a doctor, you are on top of the situation, and the approval process is not that stringent as long as you can prove that you can pay the loan. There are fewer restrictions because the physicians have the potential to earn a high income once they are established in the system.
4. Interest Rates, Fees, and Other Charges
Fees vary from lender to lender, but they are generally affordable since lenders are primarily concerned about attracting higher-income clients. Your interest rate will depend on your financial situation, but medical professions who qualify to get doctor loans are different from other ordinary clients. Some lenders will even accept your employment offer letter as proof of income. It’s rare to hear of an unemployed medical doctor since they are in demand.
While a doctor loan comes with favorable conditions, your monthly repayment costs are determined by the same factors that apply to conventional loans. For instance, your monthly mortgage payment consists of principal, interest, tax, and insurance. Homeowner’s association (HOA) fees may apply depending on the place where you buy your home. These are monthly payments, but not part of the mortgage payment.
5. Down Payment
When you get a physician mortgage loan, you can pay a minimal down payment, and some lenders do not require it. When you apply for a conventional home loan, you will be required to pay about 20% of the total purchase price as a down payment to protect the lender if you fail to pay your loan. With a doctor loan, you can still enjoy a low-interest rate without making any advance payment.
6. Loan Limits
Physician mortgage loans usually don’t have similar borrowing caps applied to conventional loans. This gives the physicians more flexibility since they can enjoy the privilege of getting more money which is not available to ordinary people. However, keep in mind that you should not borrow more than you can pay since this can impact your financial situation. To maximize your salary, you should borrow below the average amount allowed, even if you can get more.
If you are a new medical professional and are considering buying a home, you can get a doctor loan. This is a special type of loan offered to medical professionals who have great potential of earning high incomes in their careers but may be facing challenges in the beginning. However, it is essential to speak with a mortgage broker and financial consultant to weigh the pros and cons of the option. Be sure to make an informed decision that will not impact your income in the future.
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