Don’t forget about local banks with in house underwriting. Glad it has all worked out well for you. Had a baby and bought a house right upon starting a new job. We were able to get a local lenders doctor loan zero down 225k on a 10/1 at 3.5%. They would do 0% up to 417K then 5% upto 650K. Of course this can be done in a good way but I think this article is poor at highlighting pitfalls. Nothing would make me happier than a new higher buying a house straight away as you would have near zero leverage and just take whatever bum cut I decided to give you. I agree with your points to some extent but you are basically saying headache = financial ruin. They paid inspection fee. By not having a down payment, you have more financial freedom with your money and the ability to focus it where you need to the most instead of pooling resources for months in an effort to make the down payment. If you have a relationship with them for at least 1 year they will let you get a mortgage in areas they don’t typically service (Louisiana and California in our case). If you are a resident physician or a practicing physician, BBVA’s Professional Mortgage Loan provides you maximum financial flexibility. If you’re struggling to pay medical bills, explore options that could actually reduce the amount you’re required to pay. I find it interesting that everyone is talking about HIGHER Rates for the Doctor Mortgage. Fifth Third Bank, National Association, 38 Fountain Square Plaza, Cincinnati, OH 45263, NMLS# 403245, Equal Housing Lender. I agree with the other post that it almost always makes sense to wait until you are happy and settled in your job and ready to buy a house that meets not only your current needs but also your potential needs for the next 8-10 years. 0% down. Did this in 2006 with a 6 year residency, house only 130k. I knowingly took the risks of headaches but I made sure the way I did it so there would be no financial ruin, and a solid chance of gain. The downside is that there’s less transparency in the process because you’re not applying directly with a lender. I didn’t end up buying the place, but the construction loan was offered as a separate loan through the same bank with a downpayment of 10% on an amount up to 320K if I remember correctly. I used Wells Fargo in California for a physician mortgage and could not detect an increase in the interest rate. The only checking account they would let us use for this has a $12/mo fee if your balance drops below $1500. And you only need fair credit to qualify. My name is Kent Costello and I am a Senior Loan Officer (Specializing in Doctor Mortgages) with Midland States Bank (Public traded Bank listed on the NASDAQ: MSBI). 10% down up to $1.25M, then We had to much student loan debt and didn’t want to burn through all of our savings for the 20% down payment. A year later we paid off our mortgage. I did this for a home starting residency and will again now that we are moving again. Thanks, The reasons I went with buying? I believe it is in the $150K range. 3) If you leave are there interest penalties? Article. 15% down up to $1.5M (cap), SNB TCF Financial Corporation is a Detroit-based, premier Midwest Bank that offers a wide variety of services to its customers. Hunter, what you did here would not be good for most people. That being said, if you’ve decided to make that rather bad decision (I did 3.5 yrs ago and got “lucky”) there is no reason not to go with a physician loan. Required fields are marked *. And thus my foray into physician mortgage loans began. It’s two separate issues. First, we did not go with the maximum amount possible, but rather chose a house for $138,500. My field has plenty of replacement jobs in my area due to good competition. 5% is a high interest rate for a mortgage. Currently, the bank has a D- rating from the BBB for failure to respond to complaints and for having multiple unresolved complaints. So it’s not a guarantee that physician loans always equal a higher rate…it’s more dependent on your timing and the interest rates as a whole. So I’m happy I got my loan when I did. A top rated Physician Loan Specialist Neil Surgenor at TD Bank commented, “Physician mortgage loans are an amazing product allowing physicians to focus their time on paying down other higher interest and non-tax-deductible debt first while benefitting from the special rates with no mortgage insurance. The process was very easy. There are a few lenders that will do a 0% down payment loan (up to a certain loan limit of course) depending on what state you’re in. The good (and maybe even equally bad) is that physician loans are pretty painless and allow a cash strapped resident easy access to a large mortgage. The bank has approximately 475 centers across 21 States, but it’s primarily located in Midwestern states including Michigan, Illinois, Minnesota, Ohio, South Dakota, and Wisconsin. You can apply on its website for loans between $1,000 and $35,000. Wow so you can get 10% down on a 1.5M dollar house, California real estate is crazy. Jennifer Curtin, MD recently came out of residency and decided to use one of these to buy a house. Why would you need Down Payment Assistance, if you receive a 100% Mortgage? It fit all of the approved numbers I could find (<2X salary, <25% after tax monthly income, etc), but even though I can "afford" this thing doesn't mean I enjoy forking out an extra $1500/mo in principle and interest payments (plus additional taxes and insurance, but there would be too much math in calculating those numbers on a cheaper house… they said there would be no math in ortho…). What could go wrong. Eventually after a rough process, I got a loan and into my house. By the time we moved in early in 2007 the market had fallen significantly. And it was returned back as an invalid email address :-/. 5% down up to $1M, then We sent each of our recommended mortgage lenders a list of questions to answer to get specific information about each of their physician mortgage products. New Doctor Loan Program is ideal for licensed Interns, ... Loans are subject to credit review and approval. We used [email protected] bank for a 400k loan @5% with 0 down. Among these include a lengthy, expensive education, the mountain of student debt that follows, and the all-consuming nature of their profession. The program currently offers five, seven, and ten-year adjustable-rate mortgages for 15 and 30-year fixed-rate loans, and if you qualify for this loan, you don’t have to worry about any kind of down payment or private mortgage insurance before taking out the loan. Here is the link to his podcast episode http://bit.ly/2eqxsAy. Purposely picked a location that is easily possible. If we had held on to our first house then we would have been ahead, instead we sold and broke even. Have your purchased a home using a physician mortgage? I had travelled a long way for the closing process and was left in limbo. Check to see if youʼre preapproved for a loan Get Started Alternatives to medical loans. The plus side is that the real estate market has surged upwards, hopefully he can put this nightmare behind him. We originate in ALL States (except for Maryland – due to Brick and Mortar requirement.) Contact Us. Theres better things to do with your time, and at some point you cant stop thinking about that. Any amount of mortgage will have some interest while if they can get 10% assistance from Kaiser for the down payment and remaining 90% mortgage, they save 10% in mortgage interest. Rates are no longer that low, but still more attractive than Conventional, Government and Jumbo. My wife and I were lucky that we had the earning power to escape that because many of our neighbors were (and are) trapped in their underwater mortgages and could only get out by engineering a short sale. Just to add my 2 cents, I have a podcast called Docs Outside the Box (www.docsotb.com) where I interview interesting doctors doing extraordinary things outside of the medicine. Existing Doctors – can get 100% up to $650k, 90% from $650,001 to $1million, and 85% from $1,000,001 to $1.5million. Finally gave his notice last month upon the completion of the 2 year contract. Maybe you do amazing on this house because you bought at the right time, but you’ll still have a lot of headache if it doesnt sell or you become a landlord. Buyer beware when dealing with BBVA. 2) Can you prepay off the borrowed amount? Also, not every standard mortgage broker may be aware of their bank's physician loan program, so save yourself the angst and just call the physician lender reps serving your state directly. There are many cultural factors, advertising, etc that heavily promote the idea of home ownership but I would urge new attendings to resist those. With a mountain of student loan debt, minimal savings, and only a new job contract to show a potential lender, I knew my only shot at being approved for a mortgage loan was through a physician loan program. Some of the grants require you to live in the home for up to 3 years, some have zero restrictions. However, we did 2 things right to make this a great choice for us. United Medical Credit is a medical loan network that tries to connect you with lenders to finance your healthcare bills. I am sorry to leave this comment, but want to share a bad experience to hopefully help my peers. Most docs will lose interest in that fast, especially with starting a new position and settling into attending life. After a few years, I was able to refinance into a conventional loan. Sold in 2014 for about 2/3 what we paid (lost about $130k). Further, the bank has a 1.9/5 star rating on WalletHub from more than one thousand reviews where customers, both current and previous, wrote about their frustrations dealing with customer service and online banking options offered by TCF. Fifth Third and Fifth Third Bank are registered service marks of Fifth Third Bancorp. These folks must have 2 years of tax returns at their attending-level income to qualify for a physician mortgage loan. Like the author, I think its crazy to not only buy before you’ve started, but a fixer upper? © 2021 - The White Coat Investor – Investing & Personal Finance for Doctors. Good article. I suppose a possible “advantage” of the physician loan would be that you could deduct the mortgage interest from your taxes, which you wouldn’t be able to for PMI. One item that became a bit dicey – I’m an active duty Army EM doc, so ~1/3 of my annual salary is “bonuses” tied to contracts I sign each year. I have since spoken with many local bankers here about my experience and they could have easily matched the loan terms. I guess the question about pre pay is could you pre pay off the loan to avoid interest penalty if you wanted to leave the job or are you trapped in the job, sounds like you can get out of it at cost if needed so that’s nice. After a rough process, I eventually got a physician loan and into my house. I saw a bank with 2.67 when I got 2.75 they didn’t have a zero down option. This was less than my yearly salary. TCF Bank also offer physician mortgage loans, which is the primary focus of this company review. It’s designed specifically for healthcare workers — from physicians to chiropractors and veterinarians. She wrote to me about her experience. Im sure each time is different and cant be compared but BofA was no fun at all. Credit score requirements vary between lenders. Did the WCI strategy and paid off all my student loans over the next 17 months ~300K, maxed out all pre-tax retirement and roth, rented and looked for a good buy on a home. The 6 year residency should help. Thanks for the response Jennifer. I almost sent you a similar email about our experiences last June/July. Additionally, options are available at 90% for the financing of second homes up to $1,000,000 and 80% for homes up to $1,5000,000. You can have 3% to 6% Seller Concessions to Pay for Closing Costs and Pre-Paids (Taxes, Insurance and Interest.) Just a note about a bad experience with BBVA. LightStream, a division of SunTrust Bank, offers direct medical financing with APRs … I had to be back at work out of town the following morning by 7 for a case. And they never will be. The kicker? I made dozens of calls and without any prior experience, felt like I had no idea what I was doing or what was best. Surprisingly, the required down payment percentages and the physician loan maximums vary A LOT between lenders. Sounds like a bad idea to me You’ll probably reply that your rental property investment returned more than paying your loans off would have, but you are very very lucky that’s the case. I called my business banking contact who said he would “look into it.” Took 3 weeks and 3 more emails/calls to finally get a response, and was told “Yep, that’s a new fee. Eligible medical professionals include Doctors of Medicine (MD), Doctors of Osteopathy (DO), Doctors of Dental Surgery (DDS), Doctors of Dental Medical (DMD), Doctors of Chiropractic (DC), Doctors of Veterinary Medicine (DVM), Doctors of Pharmacy (PharmD), and Doctors of Osteopathic Medicine (OD). These are mortgage loans with special terms that are only offered to doctors to help them along the path to homeownership. You do not have to Pay MORE in Fees and receive a HIGHER Rate…That defeats the Purpose of these Mortgages. Also interestingly, I had received the other 40+ billing statements for my other 4 products over the previous 3 years. [Editor's Note: Many of my advertisers are mortgage lenders who offer “physician mortgages.” These are basically mortgages that for (probably) a slightly higher rate and fees will allow a doctor and similar high income professional to not put down 20% and still not pay Private Mortgage Insurance, the most worthless financial product an individual can pay for. That’s a pretty easy one. Loans for Residents and Physicians. One financial institution that has long supported medical professionals of across various career stages and medical specialities is Bank of America. In the article you state you purchased a fixer-upper that needed renovations but I wasn’t clear on how the construction loan worked. The ARM has a better rate than the 30-year physician mortgage, but the rate becomes variable after seven years. Since these are not part of my main compensation, they were officially disallowed from being considered when determining how much of a loan I qualified for. The conventional 80/20 offers the best rate on the primary mortgage, but the second mortgage has a … This site is designed to discover which loan is best. 4 years later we sold it for 150K and bought our current house. Compare the best physician mortgage loans with LeverageRx! Was on the market nearly 16 months after graduation and still cost 8k to me at closing. As low as 0.25%. You are very fortunate that it has worked out. I’m a 1099 guy / independent contractor. Fortunately, there is a cure to this financial ailment: physician mortgage loans. Not every bank offering physician loans offers them in every state. I wanted to rent initially to make sure I liked my job and the area (small midwest town) and to get the loans out of the way, it actually made be a bit nervous to take on a mortgage just because for the few months that the loans were paid back it was nice to be owned by no one. TCF Bank offers clients a wide variety of loan options for customers including personal loans, home loans, and credit-building options. I had a physician loan from citywide. If you’re a living like a resident supersaver, you can probably pay off the student loans, max out the retirement accounts, and save up a down payment. Doctor Loan USA assists medical residents and physicians with obtaining physician/doctor mortgage loans. It took a few months to consider the strategy, vet it out and get the new product approved. I’ve spent a good deal of time and research to understand these loans and stay current with them. I thought it was such a crazy process without any guidance, that I felt compelled to create a service to help my friends, colleagues, and other physicians through it all. Feel free to reach out if you have any questions. @Taime – Yes we have grant programs for residents and fellows in specific approved areas throughout the country. We then used 40k of savings for a down payment on a rental property in our rapidly increasing market of north Texas. New Doctors – can get 100% up to $500k, and 95% up to $1million. My husband and I are also looking into this loan as well. It is smaller (1600 square feet), but just fine for my wife and I and now a daughter. – Suck it up and carry the full of two mortgages until I can accept the loss or break even. we are like a deer at the headlight.Thank you, I could use some guidance as well. I agree with your comment JWEb. After completing its integration with Chemical Bank last year, TCF Bank is expected to merge with Huntington Bank in 2021. Needless to say, I had a heated discussion with the branch manager about whether he really wanted to throw away a relationship of this size for a $150 fee notice that was never received on a product that was falsely advertised. If circumstances forced us to stay in this home I wouldn’t really mind. The problem with just buying and not thinking probabilistically is that it limits your ability to just get up and go painlessly, not that it will ruin you.