Ryan Mandley · Physician Loan Specialist · NMLS #1181993
Most residents assume a mortgage is something that happens after training. A physician loan is built for exactly the opposite case: a borrower with a modest income today, a large one in a few years, and student debt that would sink a conventional application.
Residents and fellows are eligible
If you hold an MD, DO, DDS, DMD, DPM, PharmD, VMD or are a CRNA, you can qualify while you are still in training. The loan is underwritten on your current residency or fellowship income, so the question is simply whether that salary supports the payment.
A resident salary supports more than people think, mostly because of the next point.
Student loans: the window that closes when training ends
This is the single biggest reason to look at buying during residency rather than after.
While you are in residency or a clinical fellowship and qualifying on that income, student loans in deferment, forbearance, or showing a $0 income-driven payment can be left out of your debt-to-income ratio entirely. Six figures of debt simply does not count against you.
Once you are an attending, that full exclusion ends. Your documented income-driven payment is used instead, and a deferred loan with no documented payment is counted at 1% of the balance per month. On $300,000 of loans that is $3,000 a month of assumed debt. Your attending income is much larger, so you will usually still qualify, but the treatment is never as favorable as it is during training.
Getting more buying power: a co-borrower
A parent or other family member can join the loan as a non-occupying co-borrower. Their income helps you qualify, with one limit: it can make up no more than half of the total qualifying income. That is often enough to turn a tight resident approval into a comfortable one.
When buying in residency makes sense
- You will be there at least four or five years. A long residency, or a fellowship at the same institution, gives a home time to cover the cost of buying and selling.
- Rent is high where you are. In much of Arizona, Florida and Texas, a resident's rent is close to what an owned home would cost each month.
- You have reserves. This program requires cash in the bank after closing, typically a few months of payments. Gift funds count.
When it does not
- A three-year residency and you plan to leave. Selling costs alone can eat the equity you would build in that time.
- No cushion for repairs. A broken air conditioner in a Phoenix July is not optional. If one surprise bill would put you on a credit card, wait.
- You expect to match or take a job somewhere else. Renting the home out is not a fallback here, since this program is for a primary residence and is priced that way.
The short version
Long training program, high local rent, a few months of reserves: buying during residency is often the stronger financial move, and the student loan treatment is better now than it will ever be again. Short program or uncertain plans: rent, and call me when you sign your attending contract.
What to do first
Get a real answer on your numbers before you look at a single listing. Fifteen minutes on the phone covers your training timeline, your loans and what price range actually works. You can also run a rough payment yourself with the physician loan calculator, or check whether you qualify.