SunTrust Physician Loan: Everything You Need to Know

If you’re a physician of any kind — a doctor, a dentist, or another kind of medical professional with an M.D. next to your name — you’re luckier than most when it comes to obtaining a home loan. Different banks, including SunTrust, have a specialized kind of mortgage loan called a physician’s loan that’s specifically designed for doctors looking to purchase their first home.

Let’s take a look at the details about the SunTrust physician loan, and why it’s a viable alternative to a conventional mortgage.

 

What Is a Physician’s Loan?

If you’re applying for a conventional mortgage loan, you will be hard-pressed to find a bank that will grant you the loan if you have an excessive amount of student debt. This can be bad news for physicians — aspiring or otherwise — because, according to the Association of American Medical Colleges, the average physician has more than $190,000 in student loan debt.

But thanks to the physician’s loan, even the most debt-saddled doctor can take comfort in knowing that homeownership is well within their grasp.

A physician’s loan is a home mortgage loan with favorable terms — terms, in fact, that are more favorable than the average conventional mortgage loan.

To qualify for a physician’s loan, you’ll need the following:

  1. Proof of your medical degree.
  2. A signed contract from your job that states your position as a doctor will start within 60 days or less.
  3. A FICO score of 700 or greater (N.B.: there are a few lenders that will allow a FICO score as low as 680).
  4. Proof of deferred student loans.
  5. A DTI (debt-to-income) ratio of 45%, exclusive of student loans.

The Advantages of a Physician’s Loan

The most obvious advantage of a physician’s loan is, of course, the fact that doctors can get it even if they’re saddled with a six-figure medical school debt. This means that homeownership isn’t a “far away” dream for the average doctor, even if it takes them a few years to establish themselves in the medical field.

But there are other advantages to a physician’s mortgage loan, as well. For example:

  1. Depending on certain circumstances, some physicians qualify for up to 100% of the financing. Because doctors are “low risk” borrowers for obvious reasons (i.e., they are less likely to default on their loans than other, “blue collar” borrowers), banks are more likely to give them full financing if they have good credit.
  2. There’s no private mortgage insurance (PMI). Private mortgage insurance is what a lender requires a “risky” borrower to take out in order to ensure that the lender will get paid if the borrower cannot pay his/her debt. By paying a premium, as one would with any insurance policy, the borrower ensures that the lender will get a payout if she/he defaults. PMIs are normally assigned to loans that lenders consider “high risk.” However, because doctors are low-risk borrowers, they don’t have to pay PMI on their physician’s loan.
  3. You’re able to get the best possible rate. If you’re a physician going for a physician’s mortgage loan, you’re almost guaranteed to get the best possible rate (either at prime, or just below prime).

Are There Any Disadvantages to a Physician’s Loan?

There aren’t many disadvantages to a physician’s loan, according to many loan experts who work within the market. However, if you, as a physician, are looking to move out of state within a year or two, it’s best to hold off on obtaining a physician’s loan until you move to the state where you’d like to permanently settle. Most experts suggest that you hold off on selling your home three to five years after you obtain a home using a physician’s loan. That will give you time to build equity in the home, and that equity will be “earned back” when you sell the home after 5 years. As long as you get at least 20% back in equity on the sale, you can use that as a down payment on the next house (a recommended move, especially to avoid capital gains taxes).

What’s more, subsequent physician’s loans may not be in your best interest. The typical physician’s loan can get you, as a doctor, approved for up to $750,000 in financing. That may be a great idea if you’re making great money, but if you’re still in the early stages of your career, you may be biting off more than you can chew by taking out such a huge loan, even if it is 100% financed. Financial experts suggest that your monthly mortgage payment should be no more than 50% of your monthly take-home pay.

What Does a SunTrust Physician Home Loan Offer?

Well, what we’ve found is that it varies from state to state and adjust from time to time. At its very core it offers various fixed rate and adjustable rate options with up to 100% financing, depending on certain parameters. The one thing that is certain is that there is no PMI (Private Mortgage Insurance).

In summary, while a physician’s loan can be a viable option for a doctor who is looking to become a first-time home buyer, it may not be the perfect option. It can certainly allow you to get one step closer to your goals, but if you aren’t careful, you’ll be buying a house that you cannot afford, no matter how much money you make as a doctor.

At Curbside Real Estate, we take pride in our expertise in physician’s loans. We streamline the entire process of buying — and selling — your home, which leaves you able to focus on your career as a doctor. We’ll make sure that you don’t take out more than you can afford, and we’re always available to answer your questions, no matter how many you have.

By filling out our simple online form, we will not only match you with a physician’s loan that best suits your needs, but we’ll also match you with a real estate agent who will get you in the perfect home for you (if needed). Best of all, we put aside a portion of our funds for our social welfare programs that help a child in need.

For more information about us and our services for physician’s loans, contact us today and let’s see what we can do for you!

Physician Home Loans: Better Mortgage Opportunities for Physicians

Do doctors have better mortgage opportunities than other people looking to buy a home? Absolutely! Becoming a doctor is an accomplishment in itself! From surviving med school to making your way through residency, becoming a physician takes a lot of work, but it comes with some much-deserved rewards. One benefit of becoming a doctor is being able to take advantage of the unique home financing opportunities that are available to physicians. Doctor loans, otherwise known as physician loans, give new doctors great financing options despite their specific financial situation.

If you are getting ready to approach the important milestone of purchasing a home, it is important to consider all the different aspects and options related to your financing options. By educating yourself on all of your possible options, you can make the best choice possible when it comes to financing the purchase of a new home.

Doctor loans can be a great tool to help you achieve the goal of purchasing a home and are a flexible option for new doctors to consider as they enter the home-buying process. There are lenders available that are eager to help physicians purchase homes.

Learn the impressive mortgage options that are available to you as a doctor with this helpful guide on physician loans.

physician home mortgage loans

Understanding Physician Loans

What Is a Doctor Loan?

When a person is applying for a home loan, there are many factors that bank brokers examine in the financial portfolio of the potential applicant. Physicians, specifically new doctors, often have an extremely limited work history and high amount of debt from student loans. While this type of portfolio would usually mean that an individual would not be able to receive a loan, there are unique mortgage opportunities for doctors in these specific circumstances: doctor loans. Physician home loans are not only a benefit for physicians but can also be extremely beneficial for banks and lenders as well.

What Are the Benefits of Offering Doctor Loans?

Typically, lending to such a high-risk portfolio would be a financial concern, but this is not the case for lenders offering mortgage opportunities to physicians. Doctor loans can be cost-effective options for financial institutions as well as physicians.

  • Referral Programs: Becoming a doctor allows you to join a network of like-minded medical professionals. Banks and lenders know this! When a lender helps you finance a home, they are optimistic that you will recommend them to fellow physicians and other colleagues. This is why lenders are so eager to work with physicians and also why you should expect a high quality of customer service when seeking out a doctor loan.
  • Default Rates at Low Levels: For physicians, default rates are often at levels that are much lower than average.
  • Cross-Selling Opportunities: Choosing to work with a lender can lead to many other financial opportunities. As you seek out a bank or lender to work with, be aware that this relationship may be something that can be beneficial to both the lender and you in the future. You might not be choosing a loan — you may be choosing a long-term financial relationship that can benefit you along the road as well.

physician home mortgage loans

How Can I Become Eligible for a Doctor Loan?

Physician home loans are an exciting financing option, but only for a select few. In order to have these options available, banks and lenders must set specific guidelines to determine an individual’s eligibility for a doctor loan. Physician loans often operate under these unique qualities and circumstances:

  • Physician loans are offered only to dentists, veterinarians, and physicians.
  • They require minimal down payment options, in the 0-5 percent range.
  • Typically, they do not require PMI, also known as private mortgage insurance.
  • Financial institutions keep payments on student loans out of debt-to-income ratio calculations.
  • A contract listing a salary or future can be used in substitute of pay stubs or W-2 forms from previous employers.
  • Loan interest rates are similar regardless of lending amount.

A doctor loan is ideal for an individual that has just entered the medical field. These lending options are often available to physicians that are only 5 to 10 years out of residency. Purchasing a home can be achievable even early in life with the help of a doctor loan.

Is a Physician Loan the Right Idea?

The exceptional opportunities that a physician loan can give you might sound too good to be true. Let’s take a look at some of the top benefits of doctor loans:

  • Minimal down payment.
  • No need for Private Mortgage Insurance.
  • Student loan debt isn’t a factor in your debt-to-income ratio.
  • A job offer can be sufficient as proof of your earnings.

That being said, physician loans do come with some cons:

  • May be restricted to certain types of properties.
  • May be associated with higher fees and interest rates.
  • Often only available to new grads.
  • Certain banks may have requirements like opening a checking or savings account.

With any lending opportunity, it is important to factor in all of the considerations and to take a good look at your plans as well as your personal finances. When done the right way and for the right reasons, physician loans can be a valuable tool to help you find a mortgage that you can afford alongside your student loans. A student loan can also help you build a relationship with a bank that can benefit you for years to come. These types of relationships with banks can have a positive impact on your financial goals and lead to other opportunities later down the road.

physician home mortgage loans

Finding Physician Loans the Right Way

If you’re ready to take on a physician lending opportunity, you need to make sure that you are seeking physician loans the right way. Common mistakes can actually end up costing you big dollars, so it is important to find a physician loan correctly and to avoid these common errors.

Find an Expert Realtor

Do your homework when you are choosing a realtor! It’s best to pick an individual or real estate group that has years of experience in the business. When you do this, you can know with confidence that you’ve chosen an individual with experience in the area you are interested in buying a home. A good realtor can also be a great resource for finding referrals and will have a solid portfolio of past deals.

When you choose a low-quality realtor, you may be saving money initially but this will cost you in the long run. Low-quality realtors will not have strong negotiation powers and will be poor communicators. They may even waste your time looking at properties that don’t meet your expectations or requirements.

Choose a realtor that will help you identify the property of your dreams and can run a comparative market analysis to ensure you find the perfect home to buy.

Consider All of Your Expenses

With physician mortgage loans, financing your future home is easier than ever. That being said, there are a lot of costs associated with purchasing a property. Make sure that you are considering the current costs of your student loan and that your future wages in your physician career can help accommodate these expenses.

Also be aware of the right times to buy! The real estate market is constantly changing, so you should do all that you can to be mindful of these changes. Careful planning can help you determine the right time to purchase your home.

Understand the True Cost of Owning a Home

Some cities and homeowners associations (HOA) have certain associate fees. Property taxes and other costs are all factors that you should be mindful of as a new homeowner. From property taxes to typical fixes expenses, it is important to factor all of these costs into your physician loan mortgage.

Don’t Focus Too Much Attention on Interest Rates

Doctor loans are an extremely valuable lending option for future home buyers that happen to be a physician. A financial planner can help you find the right doctor loan from a lender that is perfect for your needs. Financial advisors are happy to work with doctors and can help guide you in the right direction as you purchase a new home.

physician home mortgage loans

Are Physician Loans Available in My Area?

Now that you’ve looked out for some common mistakes and know the benefits of choosing a doctor loan, you can check out physician loans in your area. Doctor loans are available in the majority of states in the United States. There are many growing programs that are beginning to offer doctor loans because of their convenience and unique attributes.

Finding the Best Physician Loan Rates

With any lending opportunity, you are going to want the best rate possible. Physician mortgage opportunities can lead to great rates on a mortgage. However, there are other tips you can follow to get an even better rate on your mortgage.

Work on building a good credit rating and having a high credit score. If you can repair your credit and save up for a down payment, you will be on your way to getting a great mortgage rate and purchasing a new home. Specifically, you should do the following before seeking a physician home loan:

  • Work on repairing your credit. While you can get a good mortgage rate as a physician, a stronger credit rating and higher credit score can be extremely beneficial. This can also help you get the best mortgage rate possible on doctor loans.
  • Educate yourself about physician mortgage loans and other lending options. You need to be well-prepared on every aspect of the home buying process. From the purchase of your home to your financing options, it is important to be as well-educated as possible about all aspects of the process. This can help guide you as you ask questions of any financial advisors you might be working with.
  • Every moment can be a learning opportunity. Physician relocation is not uncommon, so the first home you buy out of residency may not end up being your forever home. This home-buying experience can still be a valuable learning tool and serve as a great milestone in your life.
  • Weigh the pros and cons of all of your lending opportunities. There are a variety of different options available to you for financing a home. Whether you choose a doctor loan or not, it is important that you consider all factors carefully and are educated on all of your options. That’s the only way you can make the best choice possible.

Choosing a Physician Lending Opportunity

If you are working as a doctor or are an upcoming physician, you should consider taking advantage of the unique lending opportunities available exclusively to physicians. Banks and lenders are eager to work with doctors for good reason! You’ve achieved the goal of becoming a doctor. Let these unique lending opportunities allow you to achieve the goal of financing a home.

The Bank of America Physician Loan Is a Go-To Option

There are many benefits to being an SBA (Small Business Association) preferred lender. Imagine having the ability to approve your own financing. Bank of America is one institution that conveniently has this ability. The bank and the Small Business Association share a portion of the risk, essentially guaranteeing the loan.

There are many other beneficial factors to consider this kind of loan as well. Two types of lenders exist when it comes to an SBA loan – a “PLP” SBA lender and a “CLP” SBA lender. The difference in their structure affects how these loans will be implemented. Below, we’re going to study the dynamics of becoming an SBA preferred lender to get a greater understanding of how these lenders operate and the differences between them.

 

Physicians Loan

Preferred Lenders Program

The Preferred Lenders Program streamlines the loan process by giving lenders the authority to finalize the credit approval. This is the highest level of approval and status, which Bank of America has within the SBA loan program. When aspiring or established physicians apply for a Bank of America physician’s loan, they are essentially asking for a guarantee from the SBA as well as Bank of America. This process can be time-consuming and arduous, so having the assurance that the loan will be expedited and approved can be a great stress reducer.

Other lenders who aren’t approved as an SBA preferred lender have to go through the process of sending loans to the SBA for approval, which can take up to a month. An SBA preferred lender, on the other hand, has the power to underwrite its own physician loan at its discretion. Obtaining this status assures that your loan doesn’t have to be approved directly by the SBA; Bank of America has the power and authority to do it. This allows this financial institution to delegate the loan according to its preference. The streamlining ability expedites the loan process tenfold.

Bank of America became an SBA preferred lender by meeting eligibility criteria, which includes:

  • Having the continuing ability to meet and maintain specific requirements for lender approval.
  • Having the proven ability of processing, servicing and liquidating loans.
  • Surpassing the supervision and examination of state or federal regulatory authority, satisfactory to the SBA.
  • Not being a financing subsidiary.
  • Being open to the public on loan issuance.
  • Its duration of participation with the SBA.
  • Being able to surpass the Lenders Risk Rating
  • Performance ratio based on the quality of submissions and rate of defaulted loans.

For physicians, this loan type is considered a 7(a) loan. Bank of America is able to merge with the SBA on a temporary basis to provide physicians with small business loans that are structured under 7(a) guidelines.

The loan amount can range from $50K to $5 million in size. The interest rate terms are negotiated between the physician and Bank of America. The loan can range up to 10 years for equipment necessities. It can also range from five to seven years for working capital. The proceeds from the Bank of America doctor loan can be used for various items, including:

  • Equipment, machinery and supplies.
  • Working capital (for operations and marketing).
  • Improvements to facilities, such as renovation or expansion.
  • To build a new business location.

Physicians Loan

Certified Lender Program

The other program, which is called “The Certified Lender Program,” or CLP, permits lenders with an exemplary record of creating and servicing loans to streamline the approval process under certain procedures. Even though they have to submit their loan requests to the SBA, these lenders only have to provide minimal information.

Usually, they get a 36-hour decision on loan applications. However, they are allowed certain delegatory authorities regarding the process. Certified lenders are hands-on with the SBA loan guarantee process and make up roughly 8 to 15 percent of the SBA business loans in circulation.

The loans with certified lenders must be first approved by the lenders, followed by a second approval from the SBA. So, unfortunately, it’s a two-part process within the loan equation. The loan process takes longer with Certified lenders than it does with preferred lenders because two underwriters are necessary for the loan’s approval. This process will take approximately two to three weeks to complete.

There is a five-year approval period for both preferred and certified lenders. After this, they can renew their grant status.

As you can see, it really just boils down to how the loan is structured and negotiated. Physicians seeking loan approval must be aware of the different structures and what status their lender has with the SBA. As a qualified borrower, which is normally a medical resident, student or physician who is already approved for employment and has a signed contract in place, one must compare physician’s loans among at least three different lenders to weigh the options.

Although this particular type of loan has its perks, such as a zero (or very low) down payment, no PMI (private mortgage insurance) requirement, or lending based on a signed physician’s contract, it’s still best to come to the table with an investment. It will save you interest costs in the long term. Additionally, having equity in your home will provide more security and fluidity, especially if an unfortunate event occurs.

So, if you’re looking for a quality lender for your doctor loan, Bank of America is an ideal choice in a number of ways.