Physician Mortgage Loan

[Edward Kanive]

I am a resident physician and my wife is a medical student. We currently live in a 1BR condo that we currently have a mortgage for. The place sold for 59 grand and now we owe right around 50 grand and have since renovated the bathroom and did a lot of fixes to the place.  We have been blessed with a child and now found out we have another on the way. Obviously we won't fit in a 1 BR. I was going to re-do the kitchen and then begin renting our place if possible. The way to make this possible is to use a physician loan for the next property. We have a lot of student debt (750k) and that is not calculated for physician loans in D/I ratio is my understanding.

Has anyone used these? Can you use it on your second home? This might not be a bad idea to buy homes with 0 down? Anyone have qualms with this? It could really expedite my purchases each time as to allow me to not have to save for down payments and instead could put that money to renovations.  Income is limited to 65 k/year until June 2020 and then wife will be in residency and I will be attending where the jump in salary will be 5-6x that number.  Curious if a physician loan is a possibility for me right now or for multiple properties? Anyone have success with these in the past?

Any help is appreciated,

Eddie

[Christopher Phillips]

@Edward Kanive

Physician loans are a good option if you're a new resident or less than 7-10 years outside of residency.

The loans stay on the balance sheets of the banks as portfolio loans. So, they can ignore student loans for the DTI calculation and they can accept as little as 0-10% down and no PMI. The interest is usually slightly higher and credit score should be 700 or better.

Since the bank isn't going to sell the loan to Fannie Mae, they are a little more flexible in what they can do for a borrower.

There really are no downsides to the loans. Only downside is if you think you might move within a year or two of finishing your residency. It might be hard to build equity in the first 1 to 2 years. Usually takes 5 years depending on the area you live in.

Before you decide to do anything with your current condo, speak to a lender to see what's the best possible scenario might be.

Congrats on the new baby...