Mortgage Loans Designed Specifically for Dentists
Maybe you have heard the term “Doctor Loan” at a recent gathering with colleagues or maybe it was mentioned in an online article or finance magazine. Below, I will explain to you why the “Doctor Loan” exists, what makes it unique, and what to look for and consider when pursuing a “Doctor Loan” for your home financing.
Why do Doctors/Dentists have a special loan?
Historically, the lowest mortgage loan default rates come from those employed in these fields. Banks and other financial institutions immediately recognized this and in doing so, the “Doctor Loan” was born. The “Doctor Loan” term will often comprise Residents, MD, DO, DDS, DMD, DPM.
What makes a “Doctor Loan” unique?
The loan typically requires little to no down payment with no private mortgage insurance (PMI).
What are the loan specifics that I need to look for?
Down payment – Most “Doctor Loans” will allow no money down. Most other mortgage programs often require a 3.5%, 5%, 10% or even a 20% down payment.
Private Mortgage Insurance (PMI) – In most cases, mortgage loans with anything under the traditional 20% down payment, will require an insurance to the bank. It covers the bank should the customer default. This is charged on a monthly basis as part of the payment. There are “Doctor Loans” available that do not require PMI.
Fixed rates – Most banks and financial institutions are offering the “Doctor Loans” as an adjustable rate mortgage (ARM) only. This means that the loan is fixed for a shorter period of time (3 years, 5 years, 7 years etc.), then the interest rate can adjust thereafter. There are, however, institutions that offer a fixed-rate option. Do your research and try to lock in a fixed rate in this currently rising rate environment.
The mortgage industry is ever-changing and there are several versions of the “Doctor Loan” out there. It is important as a customer to know what to look for, and to verify that the proposed financing offer you receive is the best option available.
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Ryan J. Childress is the Co-Founder and CEO of the Dental Network Group. As the acting First Vice President of Mortgage Sales for Independent Bank, Ryan has been offering Doctor specific loans for over 10 years. If unsure of where to begin your search, start with Ryan.