So, you've been spending years training in medicine. You got your Bachelor's, you studied for your MCAT, you took out a massive loan for medical school, and you finally finished your residency.
What's the logical next step?
Maybe you've been planning to buy a home all along. So, you should probably take some time and think about it a bit more because as profitable and promising as a medical career typically is, some elements of your chosen professionput you at a disadvantage.
First, if you're on the younger end of the spectrum for doctors, chances are you've spent most of your life in school rather than working which doesn't put you in theright place to earn money. No matter how good your saving habits may have been, you probably don't have that much money in your account, so most down payments are out of the question.
Secondly, you've got a lot of debt, which means your credit score is probably not where it should be for a favorable rate. And that makes you quite unattractive to potential lenders, who don't want to waste their money on investments that are unlikely to pay off.
Even if a family member or other benefactor gives you some money to cover the down payment or pay off your debts, this won't make things any easier since such a significant gift suddenly deposited into your account will set off red flags in most banks that this may cause its own set of problems.
No! Don't Run Away Yet!
If you're panicking and wondering if you didn't make a huge mistake with your career choice, relax for a bit and finish reading through this beginners guide to physician home loans. Making it through med school and a residency means that you're cut out for the medical world, and that means you're anything but incompetent. You're not out of options here.
So, what can you do?
First, try lowering your expectations a little. There's no easy road to riches. You're used to the sacrifices of medical school, so what's a little more? Try living in a lower-risk property, like a single-story house.
Also, you could consider taking out a physician's mortgage. It's a specialized loan for people in high-paying, highly-educated jobs. They tend to have no insurance requirement, low down payments, require little previous income, and are often bigger overall.
However, these do come with some obvious downsides, like lower equity, meaning that if your house's value declines, you'll end up paying more for the mortgage than it's worth, which can be made worse by the fact that such loans usually have higher interest rates.
Physicians' mortgages typically come in 15- or 30-year packages. 15-year packages typically have lower interest rates but higher payments, so if you plan to move in the future, this would be the better option. What's also worth noting is that up to a point (which varies year by year, so check with a tax preparer) you can deduct mortgage payments from your taxes.
What Should I Do?
In the end, what you decide to go with is up to you. Everyone's situation is different. Plan out your finances and meet with local bankers to discuss options. There's bound to be a package that works for you.
