Today, several professionals seek real estate funding! Of that, the young and aspiring physicians record the most mortgage underwriting decline rates. It shouldn’t look like a surprise. There can be a possibility of most attending residents to have a negative net worth. Furthermore, the majority of them are straight out of a medical school and usually don’t file taxes. So, a question arises here. How do these medical candidates qualify for mortgage having a negative net worth? It is where the concept of physician home loan, also known as doctor mortgage comes in.
Simply put, the home loans for physicians were developed to address and solve the physician challenges in training. It also helps the new doctors to qualify comfortably for their residence home. That aside, these loans have several benefits. The three crucial advantages are as follows.
Benefits of physician home loans
- You need lesser down payments than traditional loans
The down payments varying between 0% and 3% are applicable for doctor mortgage loans. Additionally, there are down payment options that are accessible to eligible applicants. These grants usually don’t ask for any repayment. It is also not taxable as an income. However, the grant funds get used for down payment. It is useful for covering the closing expenses. It allows you to buy a new resident even when you have no money in the pocket.
Physician home loans conventionally don’t come with mortgage insurance. Simply put, mortgage insurance is a forced insurance scheme that secures the physician bank when a borrower is at fault. Though the borrower pays it, it safeguards the bank offering the loan. The insurance is costly. In the majority of cases, it isn’t tax deductible similar to mortgage interest.
- The physician home loans enable you to close for about 90 days before you start a brand-new employment contract with your future earning
It is essential especially for the physicians who are relocating wide across a country. It is also applicable for doctors and physicians whose family must settle for them to start their medical practice and profession. The majority of traditional and FHA loans need about 30 days’ pay stubs before the physicians can think of closing their new home purchase.
It’s important to note that no two-doctor employment contract looks the same. At the time of applying for a physician or home loan, it is imperative that the employment contract is reviewed by lenders early. It will enable physicians to plan better.
- The physician loans consider the student loan debt differently as compared to the FHA or conventional loans
The majority don’t include deferred student loans. Additionally, they can also enable you to make use of an Income-Driven Repayment (IDR) to qualify. It decides whether you are qualified or get declined from receiving the loan.
For attending residents with increased student debt loans, these aspects might make a doctor mortgage the only choice. The FHA and traditional mortgage loans are not much allowing of student loans. Also, the way it is estimated has an influence on the total debt to income ratio amount. Hence, as you understand these subtle aspects and benefits of physician home loans, you can decide better whether or not to opt-in for it.