Buying a home is a big financial decision for anyone. But for physicians and other medical professionals, the mortgage process can come with a few unique considerations.
Years of training, substantial student loans, a new attending position, residency or fellowship, relocation, or a mix of W-2 and 1099 income can make your financial profile look a little different from that of the typical borrower.
The good news? Different doesn’t necessarily mean difficult.
Before you apply for a mortgage, here are three things physicians and other medical professionals should know.
1. Your student loans don’t automatically prevent you from buying a home
Medical education can come with significant student debt. If you’re carrying hundreds of thousands of dollars in student loans, it’s understandable to wonder whether that debt will make it difficult to qualify for a mortgage.
It doesn’t necessarily.
One important factor is how your lender calculates your student loan payment when determining your debt-to-income ratio (DTI). Your DTI compares your monthly debt obligations with your gross monthly income and is one factor lenders consider when evaluating your ability to repay a mortgage (Consumer Financial Protection Bureau).
The way student loans are treated can vary depending on the lender, your repayment plan, and the type of mortgage you’re applying for.
Some physician-focused mortgage programs may offer more flexible treatment of student loan debt. Depending on the lender and your circumstances, your actual required monthly payment may be used rather than a payment calculated from your total outstanding balance.
This can be particularly relevant for physicians and other medical professionals who are early in their careers and have significant education debt.
The takeaway: Don’t assume that your student loan balance automatically determines whether you can qualify for a mortgage.
Instead, ask your lender specifically how your student loans will be treated during the qualification process.
And remember: being approved for a certain loan amount doesn’t necessarily mean you should borrow that much. Your lender can help you understand what you may qualify for, but you should determine what monthly payment makes sense for your overall financial situation.
2. Your employment situation may matter just as much as your income
For many physicians and medical professionals, the timing of buying a home doesn’t line up neatly with a traditional employment history.
You might be:
- Finishing residency or fellowship
- Starting your first attending position
- Relocating for a new job
- Working as a 1099 independent contractor
- Combining W-2 and 1099 income
- Transitioning between practices
- Starting a new position with a signed employment contract but no paycheck yet
A nontraditional employment history doesn’t necessarily mean you have to wait years before buying a home.
Some mortgage programs may allow qualifying borrowers to use a signed employment contract or offer letter when documenting future employment. The specific requirements depend on the loan program and lender. For example, current Fannie Mae guidelines have provisions for certain borrowers with future employment contracts, subject to specific requirements around the property, employment terms, start date, income, and reserves (Fannie Mae Selling Guide).
This can be particularly helpful for residents and fellows who know where they’re headed next but haven’t started their new position yet.
Starting your first attending job?
Don’t necessarily wait for your first paycheck to start exploring your mortgage options.
Speaking with a lender early can help you understand:
- What documentation you’ll need
- Whether your employment contract can be used
- How your income will be calculated
- How your student loans will factor into your application
- How much you may be able to borrow
- What you’ll need to have ready before closing
The same principle applies to other qualifying medical professionals who may be transitioning into a new role or have a less traditional employment history.
The earlier you understand your options, the more prepared you’ll be when you’re ready to buy.
3. Don’t just apply for a mortgage. Shop for one.
This may be the most important advice of all.
Not every lender offers the same mortgage programs, and not every lender evaluates a medical professional’s financial situation in exactly the same way.
That can matter when you’re dealing with student loans, a new attending salary, 1099 income, a smaller down payment, or other circumstances that don’t fit neatly into a traditional mortgage application.
The CFPB recommends comparing mortgage offers from multiple lenders. In fact, it currently recommends getting at least three preapprovals and comparing loan terms, interest rates, and programs. (Consumer Financial Protection Bureau)
Physician home loans can be particularly worth exploring because they are designed with some of these circumstances in mind. Depending on the lender, they may offer benefits such as lower down-payment requirements, no PMI, or more flexible treatment of student debt.
But here’s the important part: Not all physician loans are the same.
Different lenders can have different:
- Interest rates
- Loan limits
- Down-payment requirements
- PMI policies
- Student loan guidelines
- Reserve requirements
- Employment and income requirements
- Closing costs
- Property eligibility requirements
That’s why it’s worth comparing your options rather than assuming the first mortgage you’re offered is the right one.
And don’t compare lenders based on interest rate alone.
Look at the overall cost and structure of the loan, as well as the lender’s experience working with borrowers in your situation.
For physicians, that might mean finding someone who understands residency, fellowship, attending compensation, student debt, and employment contracts.
For other medical professionals who qualify for physician mortgage programs, it can mean finding a lender who understands the specific income and employment structure of your profession.
The right lender should understand more than just your credit score. They should understand the financial picture behind your career.
What Should You Have Ready Before Applying?
A little preparation can make the mortgage process much smoother, especially when your schedule is already packed.
Depending on your circumstances, you may want to have:
- Recent pay stubs
- W-2s
- Tax returns
- Recent bank and investment statements
- Student loan information
- Employment contract or offer letter
- Documentation of additional income
- Information about current debts
- Identification
- Documentation of your down payment funds
If you’re a resident, fellow, or medical professional starting a new position, your employment contract may be particularly important.
And one more tip: talk to your lender before making major financial changes while you’re preparing for a mortgage.
Taking on new debt, making a large purchase, moving money between accounts, or changing employment can potentially affect your mortgage application or require additional documentation.
What About Physician Home Loans?
Physician home loans are specialized mortgage programs designed for eligible medical professionals.
While they are commonly associated with physicians, some lenders also offer these programs to other professionals, such as dentists, pharmacists, optometrists, and podiatrists. Eligibility varies by lender, so it’s important to confirm whether your profession qualifies.
Depending on the program, physician mortgages may offer:
- Lower down-payment options
- No PMI
- More flexible student loan treatment
- Flexibility around employment contracts
- Different underwriting guidelines than conventional mortgages
But a physician loan isn’t automatically the best choice for everyone.
If you have a substantial down payment, strong assets, and attractive conventional financing available, a conventional mortgage may ultimately be a better fit.
The goal isn’t to find a “physician loan.”
The goal is to find the right mortgage for you.
The Bottom Line
Your career in medicine may make your mortgage application look a little different from the average borrower’s.
That’s okay.
Whether you’re a resident preparing for your first attending job, an established physician relocating to a new city, or another medical professional who qualifies for a physician mortgage program, understanding your options before you start house hunting can make the process much easier.
Don’t assume your student loans, employment history, or career stage automatically put homeownership out of reach. And don’t assume the first mortgage you hear about is your only option.
Take the time to understand your financing, compare lenders, and work with professionals who understand the unique financial realities of a career in medicine.
That’s where Curbside comes in.
Curbside Real Estate was started by doctors, for doctors. We connect physicians and qualifying medical professionals with carefully vetted lenders and real estate professionals who understand the home-buying process and the demands of a career in medicine.
Ready to start exploring your options? Get your Curbside Consult.
**This blog post is for informational purposes only and is not intended as financial or real estate advice. Consult with a professional advisor before making any significant financial decisions.