Why Doctors Pay More with Conventional Loans—And How the Right Team Can Change Everything
TL;DR:
Physician mortgage loans offer key advantages over conventional mortgages, including no PMI, flexible student loan treatment, and contract-based approval. Doctors who work with specialized physician lenders and real estate agents can avoid costly mistakes, qualify sooner, and secure better loan terms tailored to their career stage.
If you’re a physician looking to buy a home this summer, you’re not just shopping for a house. You’re also choosing the team—and the loan—that will shape your financial future.
Too often, doctors walk into homebuying using the wrong tools: a conventional mortgage, a generalist mortgage broker, or a real estate agent who doesn’t understand physician contracts, compensation, or timing. That’s when mistakes happen—and they’re rarely cheap.
Let’s break down why physicians often overpay with conventional loans, and why working with a physician-specialized banker and agent makes a world of difference.
Conventional Mortgages Cost More Than You Think
On paper, a conventional loan might seem like the “standard” choice. But for physicians—especially early-career doctors—it can be a poor fit.
Here’s why:
1. PMI Adds Hundreds to Your Monthly Payment
Unless you put 20% down on a conventional mortgage, you’ll likely be paying private mortgage insurance (PMI). That’s an extra $200–$700/month in many cases—money that adds no value and doesn’t help you build equity.
Physician mortgages eliminate PMI—even with 0–5% down.
2. Student Loan Math Works Against You
Most conventional lenders calculate student debt using 1% of your loan balance per month—even if you’re on an income-driven repayment plan. For a doctor with $300K in loans, that’s $3,000/month being counted against your debt-to-income ratio.
Physician lenders often use your actual payment or disregard deferred loans, which means you qualify for more home at a lower cost.
3. Conventional Underwriting Ignores Your Earning Potential
If you’re between residency and your attending job, a conventional lender won’t use a future contract—they’ll wait for pay stubs. That can delay your purchase or reduce your buying power.
Physician mortgages let you qualify based on a signed employment contract up to 90 days before your start date. That’s a big deal if you’re relocating and need to secure housing before Day One on the job.
Brokers vs. Banks: Not All Lenders Are Built the Same
Many doctors assume a mortgage broker will “shop around” and find the best deal. But here’s the problem: most brokers don’t have access to true physician mortgage products.
Why?
Physician mortgages are typically portfolio loans—custom programs held by the bank itself, not sold on the secondary market. They don’t show up on generic rate sheets, and brokers can’t access them because they’re not public offerings.
Brokers may pitch “low down payment” programs, but these are often:
- FHA loans (which include PMI)
- USDA or VA loans (with strict restrictions)
- Conventional 3% or 5% down programs (still with PMI)
What they can’t offer is the full physician package: no PMI, high loan limits, contract-based approval, and flexibility around student loans.
Only direct-bank lenders with in-house physician programs can deliver that.
Why a Specialized Banker and Real Estate Agent Matter
Getting the right loan is only half the battle. Working with professionals who know how to advocate for doctors is what turns a stressful transaction into a smooth one.
A Physician Mortgage Banker Will:
- Understand your employment contract and how to use it for underwriting
- Know how to time closing with your start date and relocation
- Help you structure the loan to minimize upfront costs while maximizing flexibility
- Advise you on rate locks, timing, and income documentation specific to your field
A Physician-Savvy Real Estate Agent Will:
- Understand your compressed timeline between graduation, board prep, and relocation
- Know how to spot neighborhoods that fit hospital commute needs, on-call realities, and resale value
- Help you win in competitive markets by pairing your contract with a strong physician mortgage pre-approval
- Advocate for you with listing agents and sellers who might not understand your situation
Quick Recap: What Makes Physician Mortgages Different
You’ve likely heard the pitch, but here’s a quick refresher on what physician mortgage programs offer:
- 0–5% down payment options with no PMI
- Approval based on a future-dated employment contract
- Flexibility on student loan debt calculations
- High loan limits compared to conventional loans
- Programs often available to MDs, DOs, DMDs, DDSs, residents, and fellows
They exist for a reason: banks understand that physicians are low default risks, even with high student debt and little upfront cash.
Final Thought: Don’t Outgrow Your Loan Before You Close
Many doctors who go the conventional route—or work with a broker—end up needing a refinance within 1–3 years. Why? Because their financial situation improves quickly, but their loan isn’t built to evolve with them.
A physician mortgage is designed for the trajectory of your career, not just where you are today. And the right banker and agent know how to align that loan with your goals, timing, and lifestyle.
Bottom line: If you’re a physician looking to buy this summer, don’t settle for conventional. Work with a team that knows your world—and can help you move forward without missteps.
Need a referral to a physician mortgage lender or agent in your area?
Visit DrHomeFinance.com and get matched with someone who knows exactly how to help.
