A Doctor Mortgage Loan Comparison
How Does a Doctor’s Mortgage Loan Compare to Other Mortgages?
How does a doctor mortgage loan compare to other mortgages is a great question that we get asked all the time. Here is simplistic list to help you see if a Doctor’s Mortgage Loan is right for you.
1. Conventional 20% down mortgage
Often the best choice for a mortgage as it generally offers the most options (30 year fixed, 15 year fixed, ARMS etc), the lowest fees, and the lowest rates. It does require proof of earnings and a substantial sum of money to put down. That money, of course, becomes unavailable to invest elsewhere.
2. 80/20 and 80/10/10 loans
These have essentially disappeared from the scene since the real estate meltdown. The theory was that you would get an 80% loan at a slightly higher rate than on a 20% down loan, then get a 20% loan at a much higher rate. You would avoid PMI, replacing it instead with more interest. The 80/10/10 and 80/15/5 were variations on the theme, with a downpayment required.
3. Conventional mortgage with less than 20% down
These loans have higher rates and fees than a 20% down mortgage. They also require you to purchase PMI. It is rare for you to find one that is 0% down (in fact the best you can find since 2014 is 3% down for a first time homebuyer program through Fannie Mae or Freddie Mac), but 5% and 10% down are common.
4. FHA Loan
This loan has higher rates and fees than a 20% down loan. Most notably a 1.75% up-front mortgage insurance premium financed on top of the principal loan amount. A 3.5% required downpayment, and, since 2012, requires a monthly mortgage insurance premium (0.8-0.85% of the loan balance annually) for the life of the loan. FHA requires the lender to use the credit report amount of the student loan payment, or if none listed, 1% of the outstanding balance unless the borrower can provide documentation that the loan is in deferral. This makes this loan tricky for indebted residents to qualify for. The rates are generally, however, slightly lower than a doctor loan, but may not be when you add in the PMI costs.
5. VA Loan
This loan requires that you qualify for VA benefits, which disqualifies many.
Who qualifies for a doctor mortgage loan? Find out here