For a long time, the Bank of America Physician Loan was the best and in some cases the only option available as financing for physicians and medical residents who wanted to buy a home. On April 1, 2009, Bank of America indefinitely suspended its Physician Loan Program due to the economy and impending restrictions on risky lending practices. This has made finding financing for the purchase of a new home very difficult for young doctors, especially those still residing. There are other programs available, but they are often difficult to find and are almost always limited to specific geographic areas. If you can find a lender that offers medical loans in your area, then it’s worth checking out because the advantages of owning your own home can often make it more affordable than you think.
As a real estate agent specializing in medical real estate, I can personally attest to the fact that for medical residents and young doctors, the most important question when buying a home is whether or not you can afford your own home in this moment of his life. . With so much student loan debt, many young doctors don’t even consider homeownership until a few years after residency. And many who do are often easily discouraged. However, with the right financing, home mortgage payments can often be more affordable than renting a similar property. The bottom line is that if you plan to stay in the same city for years to come, home ownership is definitely something to consider, and you should start by learning about medical loans.
So what is a medical loan? The Bank of America and similar programs were based on the idea that young doctors do not fit the conventional profile of homeowners. They have a lot of student debt and a comparatively lower income. Under conventional lending practices, they would be very risky borrowers. Lenders offering doctor loan programs understand that a doctor with a lot of debt is no less creditworthy – that’s what it means to be a young doctor.
Dr. Loans and other similar mortgages:
- Offers 100% financing that does not require a down payment
- Does not require private mortgage insurance (PMI)
- Offer flexible debt-to-income ratios not counting deferred student loan debt against applicant
- Offer competitive interest rates that do not penalize the applicant for higher risk indicators.
What options are there still? There are some major lenders that offer doctor loan or doctor mortgage programs. They can get you the financing you need and may even have experience working with doctors, but they operate nationally and may not have any loan options in your specific area. For example, there are very few options available in the Chicago area, and those that do exist have proven difficult for home buyers to find. Be careful though, because many of these mortgage brokers and lenders emerged overnight after the Bank of America Program was discontinued and some will try to take advantage of the situation by charging much higher interest rates than normal citing “higher risk” and a history of “low-skilled” borrowers. Remember that the entire philosophy of a doctor loan is based on the understanding that doctors have unique financial circumstances that do not, in fact, make them risky borrowers.
FORanother option is finding a local realtor or realtor where you want to buy a home that specializes in medical real estate. They will often have a connection to a good mortgage broker who offers medical loans. This is often a better approach because your real estate agent can help you connect with trusted mortgage brokers, and they will often already have a working relationship with lenders who specialize in this field. Additionally, you will find that these real estate agents are experienced with doctors’ unique work schedules and financial circumstances, so they are best equipped to assist you in the financing process and beyond.
How can you request one? Start by searching online for a doctor loan program in your city. Again, many of these programs are limited to geographic areas, so be as specific as possible (ie “Chicago Physician Loan Program” for Chicago and its suburbs). If you can’t seem to find one in your area, try finding a local real estate agent who specializes in real estate for medical professionals. They must have a connection with a lender or mortgage broker that offers some type of medical loan. Then they should guide you through the entire process, from financing to closing.
Remember, not all doctor loan programs will be the same. However, they should all have better terms than the financing you could get with a conventional mortgage, some will be noticeably better than others, especially when it comes to the interest rates they offer. Just be diligent to check and don’t just go for the first lender to say the words “Medical Loan.” Keep this in mind and you’ll be on your way to owning your own home in no time.