As a physician, chiropractor, dentist, nurse practitioner, or even a veterinarian, you may be doing some thinking about how you’re going to buy your dream home despite the fact that your student loans are higher than average.
See, this is actually a common and frustrating dilemma for doctors and other medical professionals.
When you graduate from medical school, you’ll earn the opportunity to make some pretty serious money.
But unfortunately, you’ll also need to deal with the fact that you’ll have higher-than-average student loans skewing your debt-to-income ratio off-kilter.
Thankfully, however, there is a solution.
It’s called a physician mortgage loan, and it’s a type of mortgage loan specifically designed to help doctors buy homes despite a bad-looking debt-to-income ratio.
Here are the basic pros and cons of a physician mortgage loan.
1. Pro: You Don’t Need A Down Payment
One of the great things about a physician mortgage loan is that it doesn’t typically require a down payment.
This truly gives medical professionals the ability to buy their dream homes, in accordance with their income, without being unduly penalized for their student loan debt.
And that’s pretty cool, right?
2. Pro: You Can Do It Despite Your Student Loans
Student loans can take a long time to pay off.
But here’s the really frustrating part.
Even with your student loan payments, as a medical professional, you probably have the ability to earn plenty of money to buy your dream home.
This is one of the big perks of getting a medical degree.
Thus, physician mortgage loans give you the power to buy your home even though your debt levels could keep you from getting a traditional home loan.
3. Pro: As Long As You Have A Contract, A Decent Income, And A Good Credit Score, You Can Qualify
You’ll still need to apply and qualify for a physician mortgage loan.
It isn’t an automatic process.
However—as long as you have a working medical contract, a decent income, and a good credit score, you should be able to qualify pretty easily.
1. Con: The Interest Rates Are Higher
One of the downsides of a physician mortgage loan is that the interest rates are a bit higher.
This offsets some of the upsides to the fact that it doesn’t usually require a down payment, and that it ignores your riskier-looking debt-to-income ratio.
2. Monthly Payments May Be Higher
Depending on how much you make, the cost of the home, whether or not you’re going to put a down payment on the home, and the interest rate of your loan—your monthly payments with a physician mortgage loan may be higher.
Of course, if you earn enough, this shouldn’t be an issue.
But, it is something to take note of.
In fact, due to the higher interest rates and the higher monthly payments, some doctors who use physician mortgage loans to purchase homes end up refinancing relatively quickly once their debt-to-income ratio starts to improve.
3. You’ll Need To Protect Yourself From Getting Behind On Payments
Of course, paying little to no down payment, and dealing with higher interest rates, you’ll want to make sure that you don’t fall behind on the payments if something goes wrong.
For this reason, it’s really important to make sure that you are getting adequate benefits through work, or even through your own resources.
For example—if you were to end up getting injured, physician disability insurance could help you to make your payments until you ended up going back to work.
This is just one example of a type of benefit that could protect you from falling behind on those payments if disaster strikes in life and the unforeseen ends up happening.
Nobody ever wants to think about the worst happening.
And hopefully, even if you carried physician disability insurance, you’d never need it.
But hey—it’s always better to have it and not need it than to need it and not have it.
Conclusion
There you have it.
The six most important pros and cons of a physician mortgage loan.
As a medical professional, you deserve to be a homeowner.
And your student loans shouldn’t penalize you in that process.
Equipped with this information, you’re ready to get out there and apply for your first physician mortgage loan.
Does it sound like a good deal?
It’s definitely another option that could help you to buy that dream home sooner rather than later.
And it’s always good to have more options, right?
