Is a Physician Loan the Right Loan for You? A Closer Look


2020 started one of the hottest real estate markets that the US has ever known. And two years later, there’s little sign of slowing down.

People are moving all over the country thanks to the remote work lifestyle. They’re fleeing the big cities in favor of smaller, more affordable, and more enjoyable towns.

Even doctors are on the move. As countless new doctors finish med school, they move around the country to their first full-time hospitals. And luckily, they can get a physician loan to make the house buying process as easy as possible for recent graduates.

But what are physician loans, and are they the best types of loans for new doctors? Keep reading below to find out now. 

What are Physician Loans?

Physician loans are one of the true gems in the mortgage industry. They are similar in function to VA loans for those who have served our nation in the military.

Both allow for qualified applicants to get a mortgage without putting any money down on the home. And even without a down payment, mortgage rates are very competitive, making this one of the best loan options available.

These doctor-focused mortgages are intended for recent medical school graduates who currently have low to moderate-income, very little cash, and a high debt-to-income ratio from their student loans.

Under normal circumstances, it would be very hard for these applicants to get a mortgage. But lenders offer these different loans specifically for doctors who are unlikely to default on the loan due to a very high potential income. 

Benefits of a Physician Loan

There are very few instances when anyone can get a mortgage loan without a down payment. Doctors are one of the few who may qualify for a loan that allows those without much capital to buy a home.

Normally, those who put down less than the traditional down payment amount are required to pay private mortgage insurance (PMI). For qualified physician loans, this requirement is waived.

There is also flexibility when it comes to employment history and income. Normally, mortgage applicants would need two years of consistent work history to qualify for a loan.

But for new doctors, there may be some wiggle room here, depending on the specific lender, making this the best loan for recent graduates or those working an internship. 

The only drawback is that physician loans don’t come with fixed interest rates. The interest rate will vary depending on the current market, so it may rise, increasing your monthly payment. 

How to Qualify for a Physician Loan?

Physician loans are usually available for graduates with a D. or O. degree. Some lenders will also extend these loans to dentists, veterinarians, and those with the following degrees;

  • D.S.
  • M.D.
  • P.M.
  • V.M.

You’ll need to provide either proof of your current income as a practicing doctor or a contract of employment that you will start after completing an internship or residency. 

Physician loans can only be used for a primary residence, not a vacation home or rental property. Check out this doctor mortgage lending guide for more information. 

The Best Loans for Doctors

So are these the best loans for doctors? There are many different types of loans, but for a qualified doctor, the physician loan is the only option for bypassing the downpayment requirement.

If you’re strapped for cash after med school, it’s the best option. But with a variable interest rate, refinancing in the future is ideal.

Looking for more tips like this? Visit our blog now to keep reading.