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Physician Mortgages: Understanding the Underwriting Process

Mortgage underwriting process for physicians

Shopping for a new home is always exciting, but there’s so much more to it than spending a few hours each Saturday touring prospective houses with your realtor. Before you can even start looking for properties, you’ll need to figure out how much home you can afford and how you’ll pay for it.

For most homebuyers, that requires applying and getting approved for a mortgage.

Filling out a mortgage application and getting preapproval doesn’t take long. But the mortgage underwriting process (required to get actual financing) does take time — not to mention a fair amount of financial scrutiny.

Ready to buy a home with financing through a doctor loan?

Here’s what you need to know about the underwriting process for a physician mortgage.

What is Underwriting?

Underwriting is one of the most important steps in the mortgage process. It’s the phase in which your mortgage lender verifies your financial information and decides if you qualify for a loan, even if they’ve already pre-qualified you.

These are all of the steps in the process to help you better understand where underwriting comes into play:

  1. Borrower submits a mortgage application.
  2. Borrower obtains a preapproval/pre-qualification from the lender.
  3. Borrower shops for a home.
  4. Borrower makes an offer on a home.
  5. Lender handles final loan processing.
  6. Lender underwrites the loan.
  7. Borrower closes on the loan/makes settlement.

It’s crucial for medical professionals to know that underwriting a physician mortgage tends to be more complex than underwriting a conventional loan.


Because physician loans require borrowers to submit many different types of documents for verification that aren’t applicable with a conventional mortgage.

Credit Verification

During the mortgage approval process, the underwriter will look at various factors to determine your creditworthiness. One of them is your credit score. Your lender will obtain your credit report and examine your credit history.

Potential homeowners typically need a credit score of at least 720 in order to qualify for a physician loan.

It’s a good idea to check your credit score on your own before applying. If your score falls beneath 720, you should work on raising it before submitting a loan application.


Because credit scores affect interest rates, too.

Higher credit scores can get you lower mortgage rates, while lower credit scores may require you to pay a higher rate (or preclude you from getting approved at all).

The lower your score, the more risky you’ll be to lenders, who prefer to lend to low-risk borrowers.

Income Verification

Income verification during underwriting mortgage process

As part of the mortgage loan approval process, your lender must verify your income. This is standard practice for all mortgage companies, regardless of the type of loan you seek.

If you are currently working under an employment contract, your lender may require you to submit W2 forms, pay stubs, and/or tax returns as proof of your current income. But for medical residents, fellows, or doctors about to start a new position, a signed employment contract is all you need.

For a doctor loan, most lenders find an employment contract to be sufficient proof of how much income you’ll earn over the next few years. Keep in mind that most lenders require your contract to begin within 90 days of the date you close on the home.

Debt Analysis

Your debt-to-income ratio (DTI) is a key determining factor in whether or not the lender will approve your loan. DTI is calculated as a percentage of how much you earn per month and how much you currently owe on your existing monthly debt payments, such as:

  • Auto loans
  • Credit cards
  • Student loans

When physicians with student loan debt apply for a conventional mortgage, they often don’t qualify, as their med school debt usually puts them above and beyond the qualifying DTI of about 45%. Traditional lenders actually prefer borrowers with a DTI of 36% or better, but younger doctors with large amounts of medical school debt rarely fall into this range.

This is one of the key reasons why a physician mortgage is a popular option (and sometimes the only option) for medical professionals just beginning their careers.

When a lender underwrites a doctor loan, they look at student loan debt differently, giving physicians a pathway to homeownership without having an ideal DTI. Instead of looking at fully amortizing payments and total debt amount, doctor loan underwriters will look at your minimum monthly debt obligations based on your income-driven repayment percentage.

Asset Considerations

In addition to your income and current debts, the underwriter will consider other assets that you have, such as:

  • Cash you have in savings accounts
  • Investments and other property holdings
  • Secondary forms of income

Underwriters need a clear and complete picture of your finances to determine if you can afford your monthly mortgage payments. Don’t be shocked if your lender asks you to submit bank statements or provide additional documentation that shows your total assets.

Lenders like low-risk borrowers, and more assets mean less risk.

Home Value Verification With a Home Appraisal

During the underwriting process, your lender will hire a third-party inspector to appraise the home. It usually takes the lender less than a week to schedule an inspection and obtain the results, but waiting can be stressful for many buyers.

Here’s why this is such as important part of the process:

Lenders will not approve real estate financing if the value of the home is less than the selling price or the amount you’re willing to finance. No matter how much “over ask” you’re willing to pay, the lender won’t shoulder the financing if the home price surpasses its reasonable market value.

Mortgage companies are not in the business of losing money.

They are in the business of extending reasonable loan amounts based on fair market value to reasonable buyers who can pay off their home loan. If your home appraises for less than the loan amount you’re seeking, you’ve got an issue.

With a conventional mortgage, lenders require you to make a 20% down payment or pay PMI until your loan-to-value ratio reaches 80%. That’s because lenders don’t want to go underwater financing a loan higher than the property’s current market value.

But the physician mortgage works differently.

Doctor loan lenders typically offer 90%, 95%, and sometimes even 100% financing, meaning the lender holds all the risk. While your lender might willingly finance a property with an LTV of 100%, they certainly still will not extend a loan that exceeds the appraisal value.

If your home appraises for less than you’re trying to finance, one or three things may happen:

  • The lender may choose not to finance the loan.
  • The lender may request that the seller lower the price.
  • The lender may require the borrower to make a bigger down payment.

Some borrowers opt to pay for an independent appraisal before making an offer on the home, just to ensure that the price they’re willing to pay is reasonably aligned with the current real estate market.

While there is a cost associated with hiring an independent inspector, this can save you from getting your loan rejected during underwriting or having to make a larger down payment than expected.

Learn more: How Much Doctors Spend on Homes

Title Search

Title search during the mortgage underwriting process

The underwriter will also perform a title search to check that the property itself doesn’t have any of the following against it:

  • Claims
  • Unpaid taxes
  • Zoning issues
  • Legal issues
  • Liens

The borrower has no role here, other than paying for the title search and title insurance. These costs are usually added to their closing costs at settlement.

This is standard in every home purchase, whether you choose to finance with a physician mortgage, a conventional mortgage, or any other type of home loan.

How Long Does Underwriting Take?

The loan underwriting process can take as little as a few days or as long as a few weeks. Most lenders complete the process within 3-6 weeks, varying based on:

  • How complex your financial situation is
  • How much scrutinizing your financial history requires
  • How many other loans that lender is processing at the same time

When the process is complete, you’ll receive one of the following underwriting decisions:

  • Approved: Congratulations, you can close on your property!
  • Denied: You cannot proceed with the purchase of this home at this time.
  • Suspended: The loan is neither approved nor denied. It is on hold until the borrower can provide the underwriter with more detailed documentation or additional information.
  • Conditional Approval: You’re almost approved, but there’s one more document or additional piece of information the borrower must provide to the lender in order to finalize the loan.

The underwriting process doesn’t always go as expected, but homebuyers shouldn’t get discouraged.

You may simply need to start the process over again, find a new property to purchase, find a new lender, or improve your personal finances or credit score to make you eligible for approval.

All options are possible, so don’t let one “denied” decision derail your dream of purchasing and owning a home.

How to Make the Underwriting Process Run Smoothly

As we’ve already said, the underwriting process can be a bit stressful, particularly because you’re not driving the car. However, there are some steps that you can take that can speed up the underwriting process, make the underwriter’s job easier, and walk away with the approved financing you need.

Be Transparent

Underwriters will uncover the details of your finances — all of the details. It’s crucial that you be 100% honest and upfront about your finances, income, and debt. If you’ve concealed or eliminated any important information on your loan application, the lender will discover it.

Don’t Apply for More Credit

Every time you apply for a line of credit — be it a credit card, auto loan, or personal loan — your credit score will get dinged. Don’t apply for any additional lines of credit during the underwriting process, as this could negatively impact your score and put you below the threshold for qualification.

If you need to tap more lines of credit, wait until your loan is approved.

Provide all Documentation in a Timely Manner

The underwriter will request documentation regarding your current debt obligations, income, assets, and other aspects of your finances. Whatever they need, provide it ASAP. This can speed up the process and help avoid delays when closing on your new home.

Read more: 5 Best Physician Mortgage Loan Companies of 2023


The underwriting process can be daunting, but it’s a necessary step in the physician mortgage approval process.

If you’re ready to apply for a physician mortgage, contact LeverageRx now. Our physician mortgage specialists can help you navigate the process, compare loans and lenders, and submit documents and applications to lenders that want to work with you.