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0% down, no PMI doctor loans. Our physician mortgage experts will save you money (and make buying your home a lot easier).

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Doctor Mortgage Paperwork—What Documents Will I Need to Qualify?

June 10, 2016 by Ricardo Leave a Comment

doctor mortgage

Gathering the right documents for a doctor mortgage isn’t any more difficult than a regular mortgage.

That being said, you’ll want to be as prepared as possible and start compiling the necessary paperwork before you apply. It will make the loan process much smoother and help your loan officer get your loan done and closed on time.

Ask your loan officer what specific documents you’ll need to qualify for a doctor mortgage. This is not a comprehensive list and each bank has different requirements, so use this as a starting point.  

  • Government-issued photo ID with full name, birthdate and current address.
  • Social Security number.
  • If you’ve just been matched to a residency program, provide your employment contract.
  • Two years of 1040 Personal Tax Returns.
  • W2’s from your last two years of employment, if applicable.
  • If you’re practicing, include the past two month’s pay stubs.
  • Two years of your employment history.
  • Proof of alimony, child support or other maintenance income (if applicable).
  • All information, including address and lender information and documentation for any real estate you own.
  • If you’re putting money down on your doctor mortgage, have verification ready to document the source of the down payment funds.
  • Property information: purchase price, address, year built, type of property (single family home, town home, condo, etc).
  • Payment history from phone payments, cable TV, electricity bills, ect.
  • Statements from checking and savings accounts from the past 3 months.
  • Statements from retirement funds (IRA, 401K) and other investments for the last three months.
  • Recent statements from all credit cards.
  • Contact information for home owners association (if applicable).

If self-employed, you’ll be required to supply additional documentation, which will potentially include:

  • Tax returns from your business for the previous 2 years.
  • K1 statements showing income and percentage of ownership for the previous 2 years.
  • A year to date P&L statement and Balance sheet.

Remember, it’s your responsibility to provide the necessary documentation on time so your loan officer can process them and share with underwriting. You do not want to be the one that is holding up your own closing.

One final word of caution—don’t be surprised if you’re asked to provide additional docs as the process gets underway. This happens with conventional loans and doctor loans alike. The banks don’t know what they don’t know, and will invariably come up with a few items they’ll need down the line. Try to remember that and always approach new requests as cheerfully as possible. Your lending officer will appreciate that and may even work a little harder and push to get underwriting to move faster. All in all, you want to do anything you can to get your bank the documents it requires.

Make sure you are prepared and can access things quickly. You’ll be happier and in your new home that much faster.

Be sure to read our Definitive Guide to Physician Loans for a lot more helpful information.

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Will I Need PMI?

February 9, 2016 by Ricardo Leave a Comment

Doctor Mortgage PMI

Doctor mortgage loans provide many advantages, and not requiring PMI might be one of the biggest ways you can save money. Many people think of PMI (private mortgage insurance) as a necessary part of any mortgage loan if the buyer has less than 20% equity in the home. For those new to the home buying process, that means if you put less than 20% down on a house, you’ll pay a monthly premium for PMI. This additional cost for mortgage insurance protects the lender’s investment if you fall behind on your monthly payments and default on the loan. Here’s an excerpt from MGIC, a mortgage insurer.

PMI…is a financial guaranty that reduces the loss to the lender or investor in the event the borrowers do not repay their mortgage.By using MI to reduce risk, the quality of the mortgage as an asset is enhanced.  – MGIC

If you don’t pay your mortgage note and default on your conventional mortgage, the mortgage insurance company is responsible for a portion of the loan amount.

In sum, PMI is designed to protect the lender, not you. It’s an additional monthly cost for you. If you’re paying PMI, you’re not paying down your balance.

How much can PMI cost me?

PMI rates vary pretty widely, but most banks charge anywhere between .3% and 1% of the original loan amount. On a $400,000 home with 5% down, you might be paying anywhere from $95.00 to $316.00 per month on insurance. If  you paid 1% with a particular lender, wouldn’t you rather save $316.00 per month? Over 5 years that would be over $18,960.00.

Here’s where doctor mortgage loans come in.

Sometime in the mid-2000’s, bank analysts ran detailed reports on thousands of mortgages held by doctors and determined that default rates were extremely low.

Banks don’t do things that are risky or have the potential to create losses. As a physician, you are considered one of the most stable, credit-worthy professionals, so in general banks want to engage and keep you as a long-term customer.

Thus, the no PMI doctor loans were born.

Not having to pay PMI on a doctor loan means you can put more of your money towards a home and paying down your loan balance, not towards reducing risk for a bank.

I’ve included this video for our visually inclined readers:

For more information about doctor mortgage loans, read our Epic Guide to Physician Loans.

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The Doctor Mortgage Loan Calculator – How Much Can I Borrow As A Resident?

February 5, 2016 by Ricardo Leave a Comment

doctor mortgage loan

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.

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What is Mortgage Amortization?

January 22, 2016 by Ricardo Leave a Comment

mortgage amortization

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

doctor loan 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.

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Doctor Loan Mortgage – What is a Jumbo Loan?

January 19, 2016 by Ricardo Leave a Comment

doctor loan mortgage

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

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Contact Us For More Information

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Testimonials

“My husband and I used Doctorloanusa.com to obtain a physician loan for our new house. The lender that we were connected with was wonderful and went above and beyond our expectations. We love our new house and we have you to thank for this mortgage program. I have referred several of my friends to your site, and specifically to the physician loan lender that helped us.”

– Dr. Bryant

“Our physician mortgage lender was absolutely amazing throughout the process. He made himself available at all hours of the day to help us with whatever we needed. We looked at several other companies and their service could not compare to our experience with him.

Most other companies did not understand our situation as new physicians with medical school debt, but he made the mortgage process easy and gave us a great doctor loan package. We could not be more happy with our experience!”

– Doctors Jessie & Bill L.

“We want to thank you both for all of your hard work on our doctor loan.  You were timely, efficient and even had a sense of humor! Awesome.”

– Dr. Voni S.

“We are moving in on Friday and we are so excited. This is a life-changing event and our dream home could NOT HAVE HAPPENED if it was not for all your hard work, especially in our unusual situation. Thank you so much for working to get the loan and you are OUR HERO!.

– Dr. Ellen G.

“Thank you so much!  I have been through this process before and I can say that this was a much smoother process and I credit you with facilitating that. The home we purchased is exactly what we wanted and where we wanted it. This would not have happened without your help and mortgage program.

We run across many people who are in the same position as Gaby and I – relatively fresh out of training, a lot of earning potential, but not a whole lot of savings… I will gladly give your name to them if I learn they are shopping for a physician loan. Thank you again!”

– Dr. D.F.

“You and your team did an outstanding job within such a short amount of time. Thanks for making it happen! Kudos!”

– Donte D, REALTOR®

“Thank you so much again for working so diligently with me to obtain our new home.  We had a setback with the moving company but finally got our belongings back. We are settling into the new home. Thanks again!”

– Dr. Geoffrey M.

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Founded in 2007, Doctor Loan USA gives doctors access to programs across the country that offer doctor loans. We provide our clients with the best … Read More

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