Loans for Doctors: Mortgages, Personal Loans & More
Medical professionals often start their careers with a strange financial situation. They are thousands of dollars in debt, have little in savings, and have usually never worked a day in their life. From a lender’s perspective, this is not ideal. After all, most lenders want a borrower to have work history, proof of income and a decent debt-to-income ratio. As you probably know, most residents and doctors just starting out can not offer up any of these things.
For that reason, financial institutions have created financing solutions specifically for doctors. After all, the borrower looks bad on paper, but doctors are practically guaranteed to earn a high salary in the future, right? This article is going to review the three most common loans for doctors.
1. Physician Mortgages
Physician mortgages are financing solutions for medical professionals who want to buy a home. Because residents and young doctors lack work history, savings, and have a lot of medical school loans, they would not qualify for a conventional mortgage. Or if they did, they would be charged a high interest rate and their options would be limited. To accommodate physicians, therefore, many mortgage lenders and banks created something called the “doctor home loan.” Here are its benefits:
No Private Mortgage Insurance (PMI)
Conventional mortgages require you to purchase private mortgage insurance (PMI) if you put down less than 20%. The cost of PMI ranges between less than 1% – 5% of the loan, depending on the lender. There are no physician mortgages that charge the borrower private mortgage insurance.
Down payment is optional
Traditional mortgages and FHA mortgages require some form of a down payment, even if it’s just 3%. Physician mortgage programs, however, offer doctors 100% financing! That means you can borrow $400k for a new home and not put a penny down.
No work history needed
It is understandable that a lender wants the borrower to have a strong work history and proof of income. Not so with physician mortgages. As long as you can prove that you have a contract with a hospital or employer in the future, you can qualify for a physician mortgage without ever having worked a job in your life.
Debt-to-income ratios don’t apply
As mentioned, all your student loans will not count against you when taking out a physician mortgage. Lenders created doctor loan programs with the understanding that the medical professional cohort of the population will have more debt than your average joe, but are still trustworthy customers.
Unlike traditional mortgages, a physician mortgage allows you to borrow more and purchase the home of your dreams. It is not uncommon for a physician mortgage lender to permit a borrower take out as much as $1-$1.5 million to buy a home.
Physician Mortgage Lenders
LeverageRx works with over 35 physician mortgage lenders, here are a few of our favorites:
To see which lenders are in your state, click here to Compare the Best Physician Mortgage Loans Online
2. Physician Personal Loans
Physician personal loans are personal loans tailored to the needs of medical professionals. They’re intended to help doctors cover costs, especially during the first few years out of training. For example, personal loans can be used to offset the initial cost of interviews, exam fees, relocation fees, or other unexpected life events that are bound to pop up. And, even though you are taking on debt when you take out a personal loan, paying the loan back will help you build and improve your credit. Part of financial planning for physicians is knowing the tools and strategies available to you. Here are the physician personal loan companies that LeverageRx recommends:
Panacea Financial is banking build for doctors, by doctors. They offer physician personal loans and state on their website they can provide funding in less than 24 hours, no co-signer needed, no hidden fees and 100% digital. Visit Panacea Financial to learn more.
If you live in Florida, Georgia or Alabama, then Ameris Bank offers doctors an exclusive line of credit. The minimum amount you can borrow is $10k and the maximum is $150k. There are no origination fees and the principal can be repaid at any time. Visit Ameris Bank’s website to learn more about their Doctor Line of Credit.
Bankers Healthcare Group (BHG)
A personal loan from BHG can be used to renovate a home, buy a car or go on vacation. The company prides itself of being available 24/7 to accommodate the hectic schedules doctors often carry. Learn more about BHG here.
Laurel Road has all the financing needs a doctor may need. With flexible terms, Laurel Road offers personal loans to meet your needs. Borrow up to $80,000 with a fixed interest rate. According to their website, you can check your rate in little as five minutes. So what are you waiting for? Visit Laurel Road’s personal loans page here.
As the name suggests, Doc2Doc lending is committed to solving the financial needs of doctors in America. That said, if you took a loan out with Doc2Doc Lending, it would actually be serviced by a the Bank of Lake Mills. No co-signer is needed, you can get a loan with a fixed interest rate and according to their website, be approved and funded within days. Visit Doc2Doc Lending here.
3. Medical Practice Loans
A medical practice loan is a financing solution designed for medical professionals who want to open their own medical office, acquire an existing medical office, or make improvements to a medical office they already own. If you are in need of working capital, it is far better to take out a practice loan than to use credit cards, personal loans or a traditional business loan. That’s because practice loans will generally have better terms than conventional financing solutions.
Eligible Uses for Practice Loan
To qualify for a practice loan, you must meet certain criteria and prove that the money will be used for one of the following reasons:
- Starting a medical practice: Office space, attorney fees, accountant fees, office furniture and equipment, payroll, marketing costs & working capital until you turn a profit
- Buying an existing practice: The owner of an existing medical practice is willing to sell you the entire office or a percentage of it. You must have proof of the arrangement.
- Consolidating debt: If you already own a medical practice and want to consolidate previous loans or debt obligations related to the business, a practice loan can be used for that purpose
- Cash flow: Cash flow is similar to working capital in that you already have a business but are waiting for payments from patients to come in and need money in the short-term to pay staff, utility bills, rent, etc.
- Medical equipment: Medical technology and equipment is always updating. A practice loan can be used to buy medical equipment for your practice.
- Miscellaneous: If you need to move offices to another location, renovate your current office, get out of a lease, etc. There are several ways to be eligible for a practice loan that are not listed above. It is best to talk to a loan officer.
Practice Loan Lenders
There are several lenders across the country who issue practice loans to doctors. For example, Citizens Bank, 1st Med Financial, Bank of the West, and many more offer financial solutions for private medical practice owners. That said, here are some of LeverageRx’s favorite picks:
Bank of America
Bank of America is the #1 servicer of practice loans in the country. The bank offers 100% financing on practice loans up to $5 million. You can use funds to start, expand, or acquire a practice. The bank also makes loans to purchase office space, buy equipment and consolidate debt. Learn More: Bank of America Practice Solutions Review
Bankers Healthcare Group
Bankers Healthcare Group offers a range of customizable financing solutions to healthcare professionals (notice we also ranked them above for physician personal loans.) Many licensed practitioners rely on BHG for all their financing needs. Read more about their practice finance loan product here.
U.S. Bank offers 100% practice financing for terms up to 10 years. Recent dental practice loans have averaged $325,556 with an average rate of 6.7%. Learn More: U.S. Bank Medical Practice Financing Review
Wells Fargo has a dedicated department for health practitioners and offers 100% financing to start, acquire, or expand a medical practice. Wells Fargo also offers practice support, project oversight, and access to health care business specialists. Learn More: Wells Fargo Practice Finance Review
Live Oak Bank
Live Oak issued practice loans to medical professionals across 48 states last year. The average dental practice loan was nearly $1.4 million and the average physician practice loans was more than $1.6 million. Both loan types had average interest rates of 5.8%. Learn More: Live Oak Bank: Medical Practice Financing Review
You may know Provide as Lendeavor, the company changed their name in late 2020. The difference between Provide and all the options listed above is that Provide prides itself on being 100% digital. In other words, if you take out a doctor loan with Provide, you will deal with less paperwork. Read more about Provide here.
Get Started: Compare the Best Medical Practice Loans Online