What are the Monthly Costs of a Physician Mortgage?
What are the Monthly Costs of a Physician Mortgage?
What are the Monthly Costs of a Physician Mortgage?
  • Deferred student loans (or loans in good standing, aka on an Income-Driven Repayment plan)
  • DTI ratio of 45% or less (not including your full student loan amount)

Every lender will have slightly different requirements. Make sure you shop around to see if you meet the requirements for different lenders.

  1. Principal
  2. Interest
  3. Taxes and insurance
  4. HOA fees (if applicable)

Principal: This is the total amount that you've taken out for your mortgage or the purchase price of your home. A percentage of your total mortgage payment goes toward your mortgage principal every month. Paying down your principal should be your primary goal. The sooner you can pay off your principal, the less you pay in total interest.

Interest: Depending on your mortgage rate, you'll pay a percentage of interest over the life of your loan. The longer you pay on your mortgage, the less interest you owe because the total principal amount of your mortgage slowly decreases.

Taxes and insurance: Your homeowner's insurance and property taxes can be rolled into your total monthly mortgage payment. This is referred to as escrow; however, you can also pay these items separately, too. Just be sure to be saving for those bills since they will be larger. Be aware that this number can fluctuate from year to year!

HOA fees (Homeowner's Association Fee): Depending on where you buy, you may pay HOA fees as a monthly payment. These won't be part of your mortgage payment, but they are something to keep in mind as part of your total housing costs!

Where Can You Find a Physician Mortgage?

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There are a variety of lenders in every state who offer physician mortgages. For more information on realtors and lenders, check out the resources page from The White Coat Investor for a state-by-state breakdown and the Physician on FIRE. Financial Residency also has a nice state-by-state resource.

Is a Physician Mortgage Loan Right For You?

For many young physicians, a doctor mortgage loan seems appealing. They effectively make it possible to purchase a home in spite of high student loan debt and a low starting salary. However, just because you can take out a physician's mortgage doesn't necessarily mean you should. For many new physicians, continuing to rent and live beneath their means can help them to boost their savings and net worth in the long run. Renting has several benefits, including:

  • Location flexibility. When you first get started in your career, there's no telling where you'll live in 1-5 years. Renting makes it notably easier to relocate for advanced career opportunities.
  • Lower responsibility. As a new physician, your primary focus will be growing your career. The last thing you need is unnecessary responsibility, distraction, or expense. Owning a home means the responsibility and expense of maintenance and repairs, and the distraction of ongoing upkeep. Renting means that large repairs are covered by your landlord and, in some cases, landscaping and aesthetic maintenance are also covered.
  • Cash flow. An adjustable-rate physician's mortgage might make it challenging to budget for monthly cash flow as your mortgage payment changes. Renting means a consistent payment that makes budgeting and cash flow strategy much easier.

Unfortunately, the decision to rent or buy isn't usually as cut and dry as choosing the best financial option. Homeownership is an emotional marker of success, and for many people, the emotional security it provides is worth the financial cost.

If you're considering buying a home with a physician mortgage loan, especially as a new medical professional, you should speak with your financial planner and mortgage broker to weigh all of your options. Together, you https://worldpaydayloans.com/payday-loans-de/ can determine whether homeownership fits within your long-term financial strategy - and which mortgage makes the most sense given your unique financial needs.


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