The concept of the Physicians Loan was the brainchild of Bank of America. They started the first program to particularly offer loans with lowered down payment and higher debt to income ratios for graduates of medical school. The idea caught on and now many banks and lending institutions provide special types of loans for physicians and sometimes dentists, veterinarians and other healthcare professionals.
Positive Characteristics of the Physician’s Loan
This type of loan be limited to a new resident, new attending (7-10 years out of residency or less), or dentist only (although some offer loans to veterinarians, optometrists, podiatrists, and even attorneys and many lenders will lend to a doctor at any stage of his career, or even for a second home.They frequently offer lower money down (0-10%) than the usual 20% that a conventional loan requires. They often don’t require the borrower to purchase mortgage insurance and will usually accept a contract for services of evidence of future earnings rather than having to prove a consistent income over 2 years with pay stubs.
Some Requirements for Getting the Physicians Loan
Most banks will require physician clients to open a bank account that mortgage payments are automatically drawn from monthly. The loans are usually for any type of owner occupied property and the interest rate is the same regardless of the size of the loan. Like some other discount loans, Physician Loans often allow the down payment to come in the form of a gift from a family member. They do require a cash reserve or escrow to cover several months of principle, interest taxes and insurance. They need a reasonably good credit score and are usually pretty lenient about the debt to income ratio, since they anticipate a huge future income for these clients.