Property

Physician mortgages, buying during training, and owning your practice's building

Lenders treat physicians as low-risk borrowers with predictable income growth, and a whole product category exists because of it. Used well, a physician loan lets you buy years earlier than a conventional mortgage would allow. Used badly, it lets you buy too much house too early.

How a physician mortgage works

Down payment

0% down commonly up to $1 million, 5 to 10% down up to $1.5 to $2 million, varying by lender. No private mortgage insurance despite the low down payment.

Student loans

Lenders exclude deferred loans or count only the income-driven payment when calculating your debt-to-income ratio, which is what makes approval possible with $300,000 of loans.

Signed contract counts

Most programs lend against a signed employment contract starting within 60 to 90 days, so you can close before the first attending paycheck.

Who qualifies

MD, DO, DDS, DMD and often DPM, PharmD, DVM and residents or fellows. Rates run slightly above conventional; the tradeoff is the down payment you keep invested.

Buying during residency or fellowship

The math works if you will stay four or more years and the local market is stable. Transaction costs of roughly 8 to 10% round-trip make a three-year residency a coin flip against renting. Buy below what the lender approves: the attending salary is coming, but so are loan payments, insurance and retirement contributions.

Buying above the conforming limit

• Jumbo loans need 10 to 20% down and 6 to 12 months of reserves; a physician loan often beats them at the same price.
• Private banks will price a mortgage aggressively if you move investment accounts to them. Compare the all-in cost, not the rate.
• Luxury inventory sits longer and sells further under asking; days on market is leverage.
• Order specialist inspections on larger properties: roof, septic, structural, environmental.

Owning the building your practice is in

For practice owners, buying the office through a separate LLC and leasing it to the practice turns rent into equity and creates a second income stream that survives the sale of the practice. SBA 504 loans finance owner-occupied medical real estate with about 10% down. Ambulatory surgery center real estate works the same way at larger scale.

Renovations that hold value

Exterior and mechanical work (roof, siding, windows, HVAC) recoups 70 to 100% of cost in most markets. Upscale kitchens and baths recoup 40 to 60%, so treat them as purchases for your own use. Budget a 10 to 20% contingency on any older structure.

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