The Physician Position: Purchasing A Home Despite Having Student Loan Debt

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Medical school requires a lot of ambition, focus…and money. In fact, the average cost of medical school was approximately $32,495 for one year of study through a public medical college as of 2017. If a med student wishes to attend a private medical college, they can expect to shell out roughly $52,515 for one year of attendance. As the years progress, med students can expect those costs to stay the same or even rise.

As such, many med students often go into student loan debt. They spend years paying off those loans, which is can cost a tidy sum of money. Keep in mind that physicians earned a median salary of $196,380 annually as of 2016. On the lower end of the scale, a physician might only make $60,080 a year. That might seem like a lot to some but considering all the student loan debts they have to pay, it's not a lot of money after all.

Paying out so much money for student loan debt can make buying a home a difficult process for physicians. Fortunately, there physician mortgages available to make your dream of owning a home possible. Physician mortgages can help open the door to homeownership when you find that traditional mortgages are not an option.

The Benefits of a Physician Mortgage

For starters, a physician mortgage tends to offer more leniency than traditional mortgage loans. The lender that offers a mortgage loan for doctors provides trust to that individual based on their career choice. Generally, a physician is a responsible person with a solid enough income to make reliable payments on their loan terms.

Therefore, you are more likely to find approval through a physician mortgage loan than you are a conventional loan. Perhaps the biggest benefit of a physician mortgage is that the lender will often allow you to apply for the loan while you are still participating in your residency, or shortly after you graduate.

A traditional bank, on the other hand, would prefer to see a stable length of employment, which can make homebuying harder for a recently graduated med student. Fortunately, there are some physician mortgage lenders that are willing to accept a job offer letter as a statement of income.

Another benefit that physicians can enjoy are lender programs that provide 0% down, which is not something you would often find with a conventional loan. Conventional lenders often expect a certain percent down before you can qualify for a home loan. Furthermore, physician mortgage loans do not enormous fees or rigid requirements that might otherwise prevent you from obtaining the home of your dreams.

Finally, a physician can benefit from a physician mortgage loan because the lender does not consider your student loan as part of your debt-to-income ratio, or DTI. When you go to a traditional bank for a mortgage loan, you will find that they have strict requirements on your DTI. If your DTI is too high, you will not qualify for a loan. Therefore, if you are only earning $60,080 a year, but you owe over $200,000 in student loan debt, your DTI would be too high to qualify you for a conventional mortgage loan.

Keep in mind that a mortgage financing service for physicians will still consider other forms of debt, which can include credit card debt, personal loans, and auto loans. As long as you keep other forms of DTI low, you should have no issues qualifying to a physician mortgage loan through a qualified lender. Also, you still need to ensure you have a decent credit score to qualify for the loan. Make sure you check your credit report so you know what to expect when you speak to a lender.

1 December 2018