Everybody wants to save money, which is why a low interest rate is almost always on the top of the list for someone who is shopping around for a mortgage. This is no different for doctors looking to buy a home with a physician home loan.
With so much buzz around this low down payment solution, you might be wondering if physician home loan interest rates are better than the other mortgage options available to you.
While physicians may not necessarily receive lower mortgage rates compared to conventional mortgages, doctors do benefit from specialized loan products designed to accommodate their unique financial circumstances. Physician home loans come with features such as lower down payment requirements, no private mortgage insurance (PMI), and more lenient underwriting guidelines.
It’s important to note that interest rates on physician home loans can vary and may be higher, lower or comparable to conventional mortgages, depending on the lender and your financial profile. Let’s look at how physician home loan interest rates fluctuate and who would be best positioned to benefit from this special homeownership program.
What is a Physician Home Loan?
After years of medical school and college, doctors often have trouble applying for regular mortgages. Even if they have just finished their residency, they may not have any savings and they might not be able to provide proof of income or employment.
A physician home loan is a special type of loan designed for the unique needs of doctors. Doctors traditionally earn a high income or expect to earn a high income in the near future, but they can sometimes find themselves with no cash, little credit, and high debt, especially if they’ve just graduated from medical school or just finished with residency. Or, perhaps they’re still in school with no current source of income.
Physician home loans are similar to conventional loans, but there are some key differences. Using a physician mortgage loan allows you to qualify with a down payment of less than 20% and still avoid having to pay Private Mortgage Insurance (PMI).
Physician mortgage lenders also use slightly different underwriting criteria, focusing more on how much you have to pay on your loans each month instead of their overall balance and by accepting a signed employment offer as proof of income. This makes it easier for doctors to qualify for loans straight out of medical school or residency.
Physician vs. Conventional Mortgage Loans
Physician mortgage loans are different from conventional loans in many ways:
There are some differences about the type of property that you are allowed to purchase with a physician home loan compared to a conventional loan. For example, you will likely be limited to only single family homes, condos, townhomes or properties with a maximum of 2 units. You will also likely be required to use the home as a primary residence, so no vacation homes or investment properties under the program.
Are Physician Home Loan Interest Rates Better?
Interest rates change daily, which is why lenders emphasize that your rate isn’t actually your rate until you “lock it in.” Just like other mortgage products, physician home loan interest rates have fluctuated over time based on market conditions. But in recent years, doctor home loans have consistently beaten out conventional loan rates.
With rising interest rates across the board in 2023, doctors and medical professionals are looking at higher borrowing costs just like all other mortgage borrowers. Depending on the timing of your home buying process and the interest rate environment overall, you might be looking at slightly lower or higher physician mortgage interest rates when comparing available mortgage options. Like we said, it all depends on your financial profile, your loan term, your loan amount, and your down payment.
Is a Physician Home Loan Right For You?
For many doctors, a physician home loan is the best way for you to purchase a house. However, it is important to note that just because you are a physician or other medical professional that does not mean a physician loan is the best option for you.
You have a unique situation, and there are many loan options available to you. As a physician, you have more options than most and it’s important to review a total cost analysis – a report that compares all of your home loan options so you can make the best homebuying decisions.
If you would like to know more about our physician home loan programs, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all of your questions and create a detailed loan comparison so you can create a solution that is best suited to fit your needs.
