Thinking about getting a doctor mortgage loan?

You’re probably wondering how much you can borrow and what type of home you can purchase. This is a difficult question to answer without knowing your individual situation. As a new resident, you’ll probably earn around $45,000 per year in most markets, so you won’t be able to afford a luxury home just yet unless you have a large down payment you are willing to part with.

Factors such as the amount of consumer debt you hold, your credit score and if you’ll have a co-borrower will impact the amount you can borrow with a doctor mortgage loan.

The good news is since physician loan lenders don’t include your student loans in the debt-to-income ratio, you’re more likely to actually be able to qualify for a mortgage. Keep in mind that banks who don’t offer the doctor loan will not extend credit to you in the majority of cases because your substantive student loan debts will be considered a risk.

You can use this calculator from Zillow for a rough guideline on monthly payments and what you might be able to afford. The calculator below is designed for conventional mortgages, but it can be used as a doctor mortgage loan calculator just as well. Most online calculators are fairly accurate, although you should always talk to your lending officer to get the facts.

When you use the calculator, make sure you click on the advanced tab and uncheck PMI, as doctor loans do not require you to pay for mortgage insurance.

You’ll also want to input the other fields with local data. For example, how much is the property tax in the area you’ll be purchasing in?

You can find out property tax rates here.

The road to financial freedom can be a long one. Purchasing a home early in your life is one surefire way to get there just a bit faster. In this post, we’ll explore a necessary concept in mortgage finance: amortization.

Although the word “amortization” may be a little intimidating, it is a straightforward concept.
Amortization is the process of paying down a loan over a set period of time, usually with an interest payment included.

Once you close on your home and move in, you’ll enjoy one month of your home without paying the mortgage. This is because mortgages are paid in arrears, which means you pay for it after the fact.

When you get your first mortgage bill (or it’s deducted from your banking account), the total sum will be comprised of two parts:

1. Principal, which is money that directly pays down your loan balance.
2. Interest, which directly pays down the interest you owe on the loan.

If you look at the mortgage amortization chart below, you’ll see how these two components work together over time. For the majority of doctor loan—and conventional mortgages—you’ll start out paying more interest. The amount you pay for interest will gradually decrease over time. The amortization schedule determines the percentage of funds that pay down interest versus principal.

Sample Amortization Schedule

Let’s say you borrowed $325,000 through a doctor loan lender at 4.30% over 30 years. Take a look at the first row above, highlighted in yellow. Your first payment would be $1,608.33. Of that amount, a whopping $1,164.58 would go towards paying down the interest portion of the loan. The principal would be paid down by a mere $443.75.

Will I always pay more interest?

As the loan matures, you’ll start paying more towards your principal than interest. In this example, things don’t tip over until payment 168, when you’ll pay $801.91 towards interest and $806.42 towards the principal.

What can I do about this?

For this reason, we recommend paying one extra (one month) payment per year. This can save you a significant amount of money over the life of the loan and help you navigate a more comfortable ride down the road to financial freedom.

Read more about how to get a physician loan here.

Jumbo loans are large, non-conforming loans that cannot be purchased or guaranteed by Fannie Mae or Freddie Mac. These loans are used for buying property costing more than $417,000. This limit was established for most areas in the United States, however there are 39 counties that have higher limits. Click this link for the PDF detailing limits on those counties, as provided by the Federal Housing Finance Agency

Jumbo loan conforming limits are set and updated every year.

A jumbo physician loan mortgage is no different, except that they don’t require the same debt to income ratios or PMI. If your income is high enough and you have saved a decent sized nest egg, you may want to consider a jumbo loan. Our advice is always conservative when it comes to home purchases:

1. Don’t buy more than you can afford
2. Buy in a quality, established neighborhood
3. Pay off your loan early by submitting one additional payment per year