by Forrest Friedow, Partner & Senior Financial Advisor, Larson Financial Group

For a newly practicing physician, or even a resident or fellow training in an area with lower housing costs, a physician loan can be a great way to purchase a home. Here are our top three reasons a physician loan may be the home financing solution for you.

  • Low or no down payment. The amount of the down payment will depend on the purchase price, home type and location. In many parts of the country, it is possible to find zero down on a home up to $750k, while in other areas, 5-10% may be the minimum.
  • No mortgage insurance. Often referred to as “PMI,” this insurance is required for lenders who purchase a home with less than 20% down. Physician loans are specialized products, privately financed and are not required to charge PMI, an added cost that is not deductible to high-income earners under current tax law.
  • Debt-to-income ratio. Physicians often carry large student loan balances, which can be even more burdensome for a couple who both carry these loans. Physician loan products do not consider student loans when calculating debt-to-income ratio, a key determinant in the approval process.

There are many factors in determining whether to opt for a physician loan versus conventional financing, even when the 20% down payment is available. It’s important to speak with various lenders to find the product that best suits your needs, however, because lenders in the same city may offer very different terms.

Talk with a trusted advisor about the pros and cons as it relates to your situation but be very cautious about one key factor: Banks like physicians and will often lend a doctor more money than they can afford to pay. Your advisor can discuss this with you as well.

Is a physician loan right for you? We can help you decide.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates. This article is not intended to be a solicitation for an extension of credit for a loan.