Options for Doctors, Lawyers + More

Flying drone with camera

After the 2008 financial crisis, the government placed strict underwriting restrictions on mortgage lenders.

To qualify for a traditional mortgage today, you typically need to show two years of steady income. You’ll also need a 20% down payment to avoid paying private mortgage insurance (PMI). And for 2022, your mortgage loan amount can’t exceed $647,200.

These rules are intended to protect the average American. But, for some professionals, like doctors and attorneys, they can cause problems.

Medical and law school graduates often have very little savings to put toward a down payment due to their high student loan debt. Individuals in these fields may also have high debt-to-income ratios, especially if they’re in residency. And, due to their projected future income, they might want to buy a home that exceeds the conforming loan limits.

The good news is that many lenders offer home loans that are specifically designed to meet the needs of doctors, lawyers and other high-debt, high-income-potential professionals. Let’s take a look at how these loans work and a few of the top lenders that offer them.

Why do lenders offer professional mortgage loans?

After traditional mortgages close, most lenders end up selling the mortgage to a government-sponsored lender like Fannie Mae or Freddie Mac. This is why traditional mortgages must conform to the standards that these lenders set.

See also  FTX Co-Founder Sam Bankman-Fried Faces US Extradition, Bankruptcy Court Says Top Execs Won’t Be Compensated – Bitcoin News

Lenders keep professional mortgage loans in-house, however, allowing them to set their own underwriting standards. Lenders have a few reasons for going through all the trouble of creating and servicing professional mortgage loan products.

First, lenders target these loans to people in professions that have a reputation for high incomes. Banks know that while doctors, veterinarians and attorneys might not be making a lot of money now, each of these professions has a high average income and strong job security. And this reduces their risk.

Second, lenders offer professional mortgage loans because they want to develop a long-term relationship with high-value customers and market banking products to them. Finally, banks can charge higher interest rates on nonconforming mortgages to offset their risk.

Related: How to Buy a House Despite Student Loan Debt

What are the pros and cons of professional mortgage loans?

The first major benefit of professional mortgage loans is that they often come with low down payment requirements. Some don’t require any down payment at all. For cash-strapped new graduates or medical residents, that’s a huge advantage.

With conventional loans, borrowers must pay for private mortgage insurance if their down payment is less than 20% of the purchase price. Yet professional mortgage loans, like physician mortgage loans, don’t require PMI. That can save borrowers thousands of dollars per year.

See also  Bobby Bonilla’s Mets Compensation Deal NFT Sells for $180,000

Special mortgages for lawyers, doctors and other professionals can also help borrowers buy homes that are above the loan limits for conforming mortgages. This can help avoid the need for a jumbo loan with a higher interest rate.

Get Quotes for Your Doctor Mortgage

What mortgage product would you like a quote for?

Step 1: Job

Step 2: Home

Step 3: Your Info

What is Your Occupation Status Currently?

NEXT

What most closely represents the price range of the house you’re searching for?

What is your preferred down payment?

What stage are you at in the home buying process?

How soon do you hope to secure a mortgage approval?

How many banks would you like quotes from?

Have you experienced any bankruptcies or short sales?

 
financetin
Logo