One of more unique ways borrowers in the health care industry can get a mortgage is the doctor’s loan. Here’s how the flexible program works…
One of the benefits of being a physician when it comes time to getting a mortgage is having more financial flexibility. This can help bridge the gap between renting and owning a home. This financing vehicle allows physicians to borrow money more easily, here’s how:
Student loan payments– most loan programs take the minimum payment on a student loan and apply that into the qualifying ratios when computing your debt to income ratio. This can limit borrowing power especially if the payments are several hundred dollars per month. If you have a student loan that is in deferment for year or longer, the doctor loan allows you to have that student loan payment not count in your debt to income ratio allowing you to borrow more on a mortgage. To have monthly debts not hurt your borrowing chances it requires two dollars of income per every dollar of monthly debt. For example if your student loan payment is $500 per month you need two dollars of income so $1000 per month of income to offset $500 per month on a student loan payment or any other monthly payment other than mortgage loans.
Low down payment-Program allows you use just 5% down and includes ability to obtain gift funds including for closing costs. This program goes all the way up to the maximum county conforming high balance loan limit in the county in which you’re looking in. For example in the county of Sonoma,California $554,300 is the maximum high balance loan limit eligible for this program.
The basis of the doctor’s loan is to allow doctors, specialty doctors, and dentists to have an easier time securing financing to purchase or refinance a home.
The program also allows doctors to use future income to qualify. For example let’s say you’re in your residency. Within 30 days you have an employment contract to earn substantially more. Lenders that offer the program will allow you to use the future income to qualify to buy the house! This is something FHA, Conventional and VA and Jumbo financing do not allow.
The doctor’s loan requires a minimum credit score of 680 and supporting income and asset documentation certainly will be required. If you’re a physician and are looking for some mortgage options, the doctor’s loan is flexible choice. Ask your mortgage lender if they have this program. If they do not offer it, find a mortgage company who does. It’s incumbent on you as the home buyer to make sure you done all of your research as to what’s available in the marketplace to tip the scales in your favor for securing the best type of mortgage financing available.
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