Doctors and other healthcare professionals face many disadvantages when it comes to getting traditional loans. Their massive student debt, low start-up income, and limited credit history make them unlikely candidates.

Fortunately, lenders have adapted to the unique financing needs of doctors and other medical professionals by designing loan programs specifically for them.

Among these are physician mortgage loans, medical practice loans, and physician personal loans. Let’s take a closer look at each of these to understand how they can be used, their various pros and cons, and to determine which healthcare professionals qualify for the loan type.

Physician mortgage loans

Physician mortgage loans are a special type of home loan designed to cater to doctors — clients who operate within higher income brackets than most, but also have higher debt-to-income (DTI) ratios than most.

Usually, borrowers with high DTI ratios are viewed as high risk. But doctors are the exception, given that they consistently demonstrate low default rates. As a result, lenders have found gaining the long-term business of these clients is worth more than the risk they take in lending doctors money.

Physician mortgage loans can be used in the same way any other, more traditional mortgage loans can be used.

Pros

  • No PMI, or private mortgage insurance, is required to take out this loan, even though borrowers usually put less than 10% down.
  • Low to no down payments are welcome when taking out this loan. In fact, zero-down, 100% financing options are available.
  • Jumbo loan amounts are offered for physician mortgage loans when compared to most traditional mortgage loans.
  • Relaxed DTI requirements are in place with physician loans so your student loan debt won't hold you back from becoming a homeowner.
  • Only proof of a job contract is required to close on your home. If your employment hasn't began yet, that's ok as long as it starts within a few months.

Cons

  • Because no downpayment is required, you may feel the impulse to go ahead and buy a home before you can afford it. Most people have to save for a downpayment first, and therefore have more time to prepare for the big investment they are making.
  • Physician mortgage loans make buying a house incredibly easy, but those mortgages still have to be repaid. They can add hundreds of thousands of dollars to your already sizable debt, causing you to cast a bigger financial burden upon yourself.

Who qualifies?

Many different medical specialties qualify for physician mortgage loans. Among those are included are surgeons, cardiologists, radiologists, dentists, podiatrists, veterinarians, optometrists, nurse practitioners, and more.

Get Started: Compare the Best Physician Mortgage Loans Online

Medical practice loans

Medical practice loans are a healthcare-specific version of a small business loan. They are borrowed by doctors to finance all things related to starting and running a successful private medical practice. The loan gives them the extra funding they need to open, operate, and grow their businesses by providing working capital, assisting in the purchase of inventory or equipment, and purchasing commercial real estate.

Pros

  • Variety of uses, including practice startup, acquisition, and expansion; debt refinancing and consolidation; equipment purchase, working capital, and partner buyout.
  • Longer repayment periods than traditional small business lenders would allow.
  • Downpayments also tend to be less demanding with medical practices than traditional small business loans.

Cons

  • You become personally liable if, for whatever reason, your practice is unsuccessful and you default.
  • Getting approved can be time-consuming.

Who qualifies

Typically, physicians who already have a practice or who are licensed to begin practice are the best candidates for medical practice loans. However, other healthcare professionals like dentists and veterinarians may receive financing as well.

Get Started: Compare the Best Medical Practice Loans Online

Physician personal loans

Physician personal loans are personal loans that are tailored to the needs of medical professionals. They’re intended to help doctors cover any extra costs that they may incur, especially during their first few years out of training. Personal loans can be used to offset the initial cost of interviews, exam fees, relocation fees, or anything else that may crop up. Once you have the loan, it’s yours to do with it as you see fit.

Pros

  • Cover a plethora of expenses. Unlike physician mortgage loans or medical practice loans, you aren’t limited to using the money for one specific purpose or goal. Instead, you can use it however you most need to.
  • Can help you build your credit. Oftentimes, doctors don't have great credit by the time they finish their residency programs. Personal loans are a way you can borrow money, repay it, and begin building your credit.

Cons

  • It can be difficult to repay debts, and personal loans are no exception. It's easier to continue building on your debt and never really paying anything off if you’re not carefully considering why you’re taking out a personal loan in the first place.

Who qualifies?

Doctors from many different fields are eligible, as well as fourth-year medical students, residents, and other attending physicians. However, there are borrowing minimums and caps for different groups.

Get Started: Compare the Best Physician Personal Loans Online

Hannah McCall
Mortgage LoansPublished June 30, 2021