4 Doctor Mortgage Loan

After the housing bubble burst, securing a mortgage loan became a difficult task. Many people no longer qualify for the mortgage loans they desire without putting money down or offering proof of adequate income. In recent years, however, some banks have begun to tap into a new corner of the mortgage loan market: doctors. With several thousand doctors graduating from medical school and residency each year, banks have begun looking to this section of the population for offering mortgage loans.

Doctors begin with lofty debts, no income, and nothing to offer for a down payment. However, with the high future potential of their earnings and a very low risk of default as compared with the general population, doctors have become a notable resource for banks to do business with. Despite the lack of income when doctors begin practicing medicine, banks realize that the future potential of doctors' earnings represents not only opportunities for mortgage loans, but also for doctors doing other business with banks in the future, such as investing.

A doctor's loan is made to new resident doctors or doctors a few years out of residency, although such loans may be made to specialized doctors, dentists, and veterinarians as well. The loan typically requires very little money down since new doctors have little money to spare, and the doctor's potential future earnings are considered when the loan is made. Additionally, the doctor's student loans are not calculated into the loan-to-income ratio. In exchange for not needing a down payment for the loan, the interest rate tends to be higher than that of a typical loan.

The loans are typically tailored for use in purchasing single occupant homes, such as garden homes or town homes. As part of the deal, the doctor often must open an account at the bank, as the bank hopes for the doctor's continued business and referrals in the future.

Well known banks, such as Bank of America, Regions Bank, Compass Bank, and Suntrust Bank are among the increasing number of banks to offer special loans for doctors, and the loans are available in many of the fifty states. Banks that offer doctor loans do not always advertise these services, so it is advised to check with each bank to make sure whether or not this type of loan is available.

For doctors considering these special loans, there are many aspects of mortgages and home-ownership to consider. A doctor in residency will not make as much as a doctor who is established and practicing. Therefore, a higher interest loan may not be in a new doctor's best interest. As a doctor's income rises over the years, the prospect of staying in small beginner's home may not be very appealing. Homes require maintenance, which will cost time and money that a new doctor may not have. Taking out a doctor loan bigger than one needs and then investing the difference could also yield some financial benefit.

An alternative to a doctor loan is to save up for a down-payment of twenty percent or so and then taking out a normal loan so as not to incur higher interest. Renting a home or an apartment is another alternative. A doctor loan is best for doctors who are serious about home ownership or doctors who are most likely to stay in the area, especially after their residency is finished.