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June 21, 2022 0 Comments

Stack Ranking Low-Money-Down Mortgages Available For Doctors

If you’re a physician and exploring your options for different mortgages, one of the most attractive selling points for a physician mortgage is the ability to put very little down or nothing at all. 

To put it simply, down payments are not always advantageous. 

A 5% down payment has an average break-even point of 12 years. Think of it this way: 5% down could be $25,000 upfront, but may only save you $175 on your monthly payments. 

And just as importantly, a low down payment frees up more of your capital for other things that matter to you, whether that’s putting the extra money toward a larger and nicer home, paying off your student loans sooner, or anything in between. 

We’ve compiled a list of the top-performing categories of low-money-down mortgages, to help you make the most informed decision for yourself and your family.

1) VA Loan For A Disabled Veteran

A VA loan for a service-connected disability is a specific type of VA loan that carries heightened benefits.

This type of mortgage loan is extended by the Veterans’ Association (VA) to veterans who were disabled in the line of duty, and are receiving disability benefits from the VA. 

These loans top our list of low-money-down mortgages, and we’re glad that they do. It’s hard to think of anyone who deserves fantastic mortgage benefits more than someone who was wounded protecting the freedom of others. 

Veterans with a service-connected disability enjoy the following benefits on their VA loan mortgages: 

  • 100% financing, no money down
  • No Private Mortgage Insurance (PMI)
  • Waiver of the VA Funding Fee that other veteran applicants pay
  • Exclusive housing grants
  • Exemptions on property taxes

There is typically a sliding scale in place with some of these benefits, with veterans on 100% disability status being prioritized. 

2) Physician Mortgage Loan

Next up is the physician mortgage loan. 

Just as we were in firm agreement with veterans receiving preferential mortgage options, we really believe that physicians and other medical professionals (such as veterinarians, dentists, and more) have earned their high rank on this list. 

After all, physicians have devoted years of their time and often very large sums of money to learn how to preserve and improve the health of other people. 

So it makes perfect sense to us that physicians and certain other medical professionals qualify for a range of special mortgage benefits, such as: 

  • Paying 0% down
  • No PMI requirements
  • Flexibility on your debt-to-income (DTI) ratio, since many individuals applying for these loans, are fresh out of school and haven’t begun working yet
  • The option to close on your mortgage 90 days before starting your new job (or potentially even sooner), so you and your family can settle in well before your start date
  • Access to larger loans than your financial credentials on paper (DTI, present income, and others) would make you eligible for
  • If you’re transferring to a new hospital or practice that will be paying you more than your present role, your loan limit will be determined by your future income

If you’re a medical professional and would like to learn more about the benefits you can enjoy with a physician mortgage loan, click here

3) VA Loan

As we covered at the top of this article, VA loans are special mortgage loans for veterans. 

Similar to a VA loan for veterans left disabled from a service-connected accident or injury, generic VA loans require 0% down. 

However, there are some key differences, such as

  • A one-time upfront PMI fee 
  • Lack of access to grants and tax credits available to disabled veterans

Even veterans who haven’t been disabled while performing their duties are still offered relaxed credit and DTI requirements, among other benefits. 

4) Conventional Loan

Conventional mortgage loans (otherwise known as conforming loans) are, by definition, the “middle of the road” option in the world of home loans. 

As a general rule of thumb, you can expect the following if you opt for a conventional mortgage: 

  • A 20% down payment will be required if you want to avoid paying PMI on your loan
  • After you have 20% equity in your home or higher, future PMI payments will be waived
  • You will be fully accountable for your credit score and DTI, with no preferential treatments built into the loan as there are with VA or physician mortgages

In other words, if you’re a physician, it makes zero sense to apply for a conventional loan instead of a physician mortgage. The same holds true in relation to VA loans if you’re a veteran.

5) FHA Loan

The Federal Housing Administration has special loan offers for low-income individuals and families. 

The FHA is a division of the United States Department of Housing and Urban Development and provides PMI to certain lenders affiliated with their programs.

FHA loans have the following requirements: 

  • A down payment of 3.5% or higher is required, and interest rates will be higher than on a conventional loan
  • Ongoing PMI that must be paid for the duration of your mortgage, regardless of how much equity you’ve established
  • A minimum credit score of 580, and a DTI of 43% or lower

Because of these relaxed requirements, FHA loans are generally easier to acquire than conventional mortgage loans.

6) State Programs

Various programs exist in every state to help low-income individuals find decent housing. 

State program loans are very similar to FHA loans but they’re harder to be approved for.

They’re notorious for involving huge amounts of paperwork and bureaucratic red tape, which is why they’re the second-to-last mortgage option on our list.

7) Rural Development Loan

USDA Rural Development is part of the U.S. Department of Agriculture. The organization’s goal is to help rural areas of America thrive economically. 

They often require 0% down, and sometimes feature more attractive interest rates than conventional mortgages. 

Choose The Best Mortgage For You & Your Family

When it comes to mortgages, nothing is more important than exploring your options.

If you’re a physician who’s currently working, or if you’re wrapping up your residency, I can help you close on the home of your dreams 90 days before you start your new job, for 0% down, with no PMI.