Doctors, dentists, and many others who go into the medical field often graduate with high amounts of student loan debt that they have to begin paying back after six months of graduation. While they may not be making a large amount of money immediately following graduation and have a large amount of debt, they are also very likely to earn a high salary as they advance in their careers.
This is why a number of mortgage companies offer what is commonly called a physician loan. This type of mortgage is aimed at those who may not be earning a large amount of money when they apply, so lenders usually require a fairly small down payment or even no down payment at all. They also often do not require private mortgage insurance, and some go as far as to not factor in any educational debt when determining whether an applicant qualifies for a loan.
These physician loans are actually fairly new. They were first offered by Bank of America in the mid-2000s, and, according to John Cross, a regional sales executive with the lender, have a very small default rate.
Most lenders who offer this type of mortgage do so with the goal of helping new doctors purchase a home while they establish a practice and pay off their student loan debt, although a small handful also provide physician mortgages to those who have been in the field longer.
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