Zero Down, No-PMI Mortgages for Doctors

Medical professionals face unique challenges when applying for a mortgage, especially those just out of school or who have recently completed their residency or fellowship.

Saddled with student debt and not earning to their full potential, newer physicians often can’t qualify for a traditional home loan.

As a result, many lenders offer physician loans offering more flexibility than traditional loan types. They allow practicing physicians and those in post-training to purchase a home despite not meeting standard lending criteria.

What Is a Physician Loan?

A physician loan is a specialized mortgage geared for newer doctors and other medical professionals. This could be someone recently out of medical school, currently in their residency or fellowship, or becoming established as an attending or in private practice.

Physician loan lenders understand the challenges that newer doctors can face when taking out a mortgage, including:

• Substantial student debt

• Low income as a resident or fellow

• Short or no employment history

Student loan debt – especially that of doctors – is particularly troublesome. But these lenders are more likely to overlook loan payments that take up a considerable portion of your income.

In many cases, getting a physician loan allows qualified borrowers to buy a home with zero money down and without mortgage insurance.

Physician Loan Guidelines

Not all mortgage companies offer physician loans. Lenders that do establish their own guidelines.

However, there are some common rules of thumb that you can expect regardless of lender.

Credit Score

Most lenders require a minimum credit score of at least 700 for physician loans. Some offer mortgages with a credit score as low as 680, while others could require up to 740 – especially on higher-value loans.

The credit score requirement for a physician loan will be higher than that for a conventional mortgage, which is available with a score of 620, or an FHA loan, which allows a score as low as 500 if you have a 10% down payment or 580 with a 3.5% down payment.

See if you qualify for a doctor loan.

Debt-to-Income Ratio

One of the most attractive features of physician loans is that they offer far more leeway when evaluating your debt-to-income ratio. More than 70% of new doctors have substantial medical school debt, with an average balance of around $200,000.

For conventional loans, lenders look for a debt-to-income ratio of no more than 45%. With FHA loans, that figure increases to 56.9%. But for medical professionals with massive student loan debt, meeting these ratios can be tricky.

With physician loans, lenders still examine how your recurring debt obligations stack up against your income but allow for flexibility regarding the impact of student loans. Still, keeping other debts—like auto loans and credit card minimums—as low as possible increases your chances of approval.

Loan-to-Value Ratio (Down Payment)

Many physician loan lenders offer physician loans with zero down payment (100% loan-to-value or LTV).

It’s common to find companies able to finance purchases up to $1 million with no money down. Purchases up to $1.5 million are available with just 5% down; some lenders even offer loans up to $2 million with around 10% down.

By comparison, conventional loans require a minimum of 3% down, while FHA loans require you to bring at least 3.5% to closing. Maximum loan limits, however, will be much lower than with a physician loan.

Advantages of Physician Loans

Physician loans can be an effective path to homeownership for medical professionals who cannot qualify for traditional mortgages. Some of the primary advantages include:

• Zero Money Down – Many programs allow you to purchase a home with zero money down, with loans over $1 million available for just 5% down.

• Greater Flexibility When Qualifying – High student loan balances can disqualify you from many traditional mortgages. Physician loans offer greater flexibility when assessing your debt-to-income ratio.

• Larger Loan Limits – Physician loans are commonly available for up to $2 million. In contrast, conventional loan limits for most areas are $766,550 in 2024, while the standard FHA limit is $498,257.

• No Mortgage Insurance – Conventional mortgages require mortgage insurance on all loans with less than 20% equity; FHA requires mortgage insurance regardless of down payment. With a physician loan, you can make no down payment and avoid mortgage insurance.

• Minimal Employment History – Most mortgages require you to have at least two years of employment history to qualify. With a physician loan, you can get approved even before beginning your new job. Plus, self-employed physicians may be able to qualify with just a single year of practice.

Disadvantages of Physician Loans

On the other side, there are some disadvantages of physician loans that are important to consider before choosing this type of mortgage:

• Fewer Fixed-Rate Loans – While some lenders offer fixed-rate options, physician loans typically have adjustable rates. Your monthly payments could increase once you're out of the initial fixed-rate period.

• Interest Rates Are Higher – Because of the more relaxed underwriting and lack of required mortgage insurance, physician loans often come with higher interest rates than other types of home loans.

• Some Fields Don’t Qualify – Lenders don’t offer physician loans to all types of medical professionals. Depending on your degree, you may need to shop around for a company that lends in your field.

• It’s Easy to Become Underwater – When you're financing 100% of your purchase price, it means you start out with zero equity. If property values stagnate in your area, it may take years of repayment before you owe less than the home is worth.

Lenders Offering Physician Loans

Not all lenders offer physician loans, and many are offered by specialized mortgage companies, local credit unions, and community banks. However, some large financial institutions with established physician loan programs lend to medical professionals in nearly all mortgage markets.

Bank of America

The Bank of America physician loan program is open to professionals who have an MD, DDS, DMD, OD, DPM, or DO. However, doctors employed in research positions or as professors are not eligible.

Loans are available for up to $850k with 3% down, up to $1 million with 5% down, up to $1.5 million with 10% down, and up to $2 million with 15% down.

Based on the amount you put down, you'll need to have between four and six months of mortgage payments (PITIA) in reserve. Still, you can qualify for a loan as early as 90 days before beginning your residency or fellowship.

Fifth Third Bank

The Fifth Third Bank physician loan program is available for both new and established doctors with degrees including MD, DO, DPM, DDS, DMD, DVM, and OD.

New doctors in residency, within 90 days of beginning residency, or within 12 months of completing residency, can borrow up to $1 million with no down payment.

The established physician program is for any qualifying professional employed in a hospital, dental center, or physicians’ group for at least 12 months. Established physicians are able to borrow up to $1 million with zero down or $2 million with 10% down. Physicians who have been self-employed for at least one year can also qualify.

Fifth Third Bank offers both fixed-rate and adjustable-rate physician loan options.

Truist

The Truist physician loan program offers mortgages to both newer and established professionals. Residents, interns, and fellows with an MD, DO, or DPM can borrow up to $1 million with zero down payment.

Established physicians with an MD, DO, DPM, DDS, or DMD can borrow up to $1 million with zero down, $1.5 million with 5% down, or $2 million with 10.01% down. However, doctors with 10 to 15 years post-training must put 10.01% down on all mortgages.

Truist physician loans are also available to non-permanent resident aliens with certain types of visas.

BMO Bank

The BMO Bank physician loan program is open to newer and established doctors with an MD, DDS, DMD, or DO. Loans are available up to $1.5 million with 5% down and up to $2 million with 10% down. However, physicians with over ten years in practice will need a down payment of at least 10.01%.

BMO Bank offers both fixed-rate and adjustable-rate physician loans, and you can close on your purchase up to 90 days before commencing employment.

As with most physician loans, mortgages are only available for your primary residence. However, while these loans are typically limited to single-family homes, BMO Bank allows you to purchase a property with up to two units.

TD Bank

The TD Bank physician loan program is available to professionals with an MD, DO, DPM, DDS, or DMD up to ten years after completing their residency.

Mortgages are available in both fixed-rate and adjustable-rate for up to $1 million with zero down, up to $1.5 million with 5% down, and up to $2 million with 10.01% down.

Incoming residents can qualify before beginning their residency. Practice owners and self-employed physicians can qualify with at least two years of employment history.

Physician Loan Alternatives

Just because you're eligible for a physician loan doesn't make it the best choice in all situations. These physician loan alternatives may offer a better option for some homebuyers who qualify.

Conventional Mortgages

Borrowers who meet conventional guidelines will likely find lower rates with a conventional mortgage. This is particularly true for those able to make a 20% down payment and avoid paying for private mortgage insurance.

FHA Loans

FHA-backed loans have a lower credit score requirement and allow a debt-to-income ratio of up to 50%. The federal government guarantees these mortgages, so rates can be lower than physician loans. However, most FHA loans have a one-time upfront mortgage insurance premium of 1.75% and an ongoing annual premium of 0.55% of the loan amount.

*borrowers in Alaska, Hawaii, Guam, and the US Virgin Islands may have higher limits

VA Loans

Medical professionals who have served in the United States military may be eligible for a mortgage insured by the Department of Veterans Affairs. VA Loans allow for zero down payment, don’t require mortgage insurance, and come with some of the lowest rates on the market.

Unlike conventional and FHA loans, VA mortgages have no maximum loan limit. In this sense, they're more comparable to physician loans, often available for high-value mortgages up to $2 million.

However, most first-time VA borrowers can expect to pay a loan funding fee ranging from 1.25% to 2.15%.

*VA guidelines allow lenders to establish their own credit score and debt-to-income requirements. These are ranges that you’ll commonly encounter.

How to Get a Physician Loan

If you are a medical professional, few mortgage options offer a physician loan's flexibility and purchasing power. With zero down payment loans widely available for up to $1 million, these physician-focused mortgages can help you purchase a home while still getting established in your career.

However, physician loans do have higher costs than some other types of mortgages. Buyers who qualify for a conventional or government-backed loan may be able to lock in lower rates.

To discover what mortgage options are available, check today's rates and apply with a trusted lender experienced in working with medical professionals.