Homebuying for Doctors

Doctors have many unique financial circumstances that can complicate the homebuying process, but they are not obstacles to home ownership so long as they are handled appropriately.

Save time, money and major headaches by knowing these five facts:

Dr. Home Loans – There are exclusive home loans designed just for doctors that are often called a "Physician" or “Doctor Loan.”  They are offered by a few lenders and often include the following terms:
1) Zero – 5% down payment even on a jumbo loan
2) no PMI payments
3) flexibility on student loan debts
4) pre-qualification based on future income

Despite these general similarities, there are huge differences between the loans offered by various lenders.  They can differ widely when it comes to closing costs, interest rates, types of properties that qualify, and even underwriting guidelines... and availability can vary from from state to state and even county to county.

At DMD Chicago Realty, we make a point of knowing all the lenders that work with physicians and familiarizing ourselves with there terms so that we can help our clients sift through the fine print and find out which loan is best for you and your family.  Though difficult to find, these programs are often a life-saver for young doctors with lots of student loans and not much saved for a down payment.

Making Partner – When you make partner in your private practice, it will be very difficult to qualify for a mortgage for the next 2 years.  If you are like many young doctors, you are hoping to purchase your dream home after making partner in your practice.  If this is you, take note!  Partners are considered “self-employed” and require two years proof of income after becoming partner.  This means a lot of red tape that your real estate agent will have to walk you through to make sure there are no issues at closing.

Student Loans – Deferred student loan debt should not count against you when you apply for a mortgage.  However, many realtors and loan officers may not be familiar with the process of approving loans for individuals with student loans the size of your medical school debt.  The process of providing proof of deferment is relatively simple, but if not done properly by your agent or loan officer, it can delay or derail the purchase of your new home even the day before closing.

Down Payment – Not having enough money saved for a down payment is the most common obstacle to homeownership for young doctors.  However, this doesn’t have to stop you from buying a home when the time is right for you.  There are several ways to purchase a home with a low or even with no down payment.  Look into “Doctor Loans” (zero – 5% down) offered by lenders in your area, or consider an FHA loan  (3.5% down).  Also, find out whether the credit union at your hospital offers any down payment assistance programs for first time homebuyers.

Future Income – It is possible to qualify for a mortgage based or your future income.  Many doctors want to start looking for that perfect home after finishing residency and finally getting the job that will pay a decent wage.  However, many lenders will require you to wait until you have your first paycheck to close on a mortgage.  Some lenders will allow you to close on a new home 30 – 60 days prior to starting you new job depending on where you plan to buy.  Lenders that often work with doctors will be the best place to start.