Nickel City Funding is here to help Orchard Park, NY residents learn about a unique home financing tool for physicians and their families. Mortgages in this program are commonly referred to as “Doctor Loans” or “Physician Mortgage Loans.” Early-career doctors often use these loans. However, varieties of medical professionals—from Dentists to Veterinarians—have taken advantage of this program.
Physicians, doctors, and dentists may take on substantial debt to put themselves through school. Often as these people start paying off this debt, their credit score improves. Payments towards these loans help establish their credibility to pay off other large sums—for instance, mortgages. However, as they pay off debt, they may not be able to save for a home down payment. In this case, a lender may consider giving them a doctor loan, which may come as a 100% financing mortgage. It is a great way for a doctor to obtain a home when they are still working to build up savings.
Qualifying for a Doctor Loan
The first thing needed to obtain a doctor loan is often a signed employment contract. While other factors will be evaluated, this contract demonstrates your ability to pay back a mortgage. In addition, you will need to find a bank that is willing to do doctor loans. In the approval process, the bank will review your financials and debt ratios. Student loan debt is often not considered as heavily. Therefore, if you perform well, you may be offered lower interest rates and down payment thresholds. You can be early in your career, as well, so you may still even be a resident when you apply.
Costs and Benefits of Doctor Loans
We hope that homebuyers can take advantage of this custom mortgage product; however, there are some costs and benefits to consider before you sign the dotted line. As you are usually in your career at an early stage, you should consider whether to take on more debt right after paying for medical school.
Here are some of the benefits of Doctor Loans:
- Some lenders will compete to get a doctor’s business at their bank, so they may offer incentives to take the mortgage, such as lower fees and interest rates.
- Some lenders will subject the borrowers to less stringent review requirements than others.
- Sometimes, a Doctor Loan is the only mortgage that one can qualify for, especially if they have high debt and little savings or established income streams.
Here are some costs of doctor loans:
- You may be lured into the loan program with the promise of low-interest rates and fees; however, these may rise steeply over time.
- You are adding monthly debt payments on top of your existing student or credit card debt from school.
- You may be able to get into a different loan program with better rates over the life of the mortgage, and with more protections.
- You will take a long time to build equity in your home, especially if you start with no down payment.
You should speak to someone you can trust when considering a Doctor Loan. Nickel City Funding in Orchard Park, NY wants to help you weigh your options. Call us today for a quote!