What Clients Should Know About Physician Mortgages

Physicians can face unique circumstances when buying a home. Those who’ve just come out of medical school often haven’t started earning income yet or haven’t started saving for a down payment. Most of their focus has been on completing an education. And both established physicians and new graduates may have a significant amount of student loan debt.

Fortunately, Fifth Third offers a mortgage product designed to provide solutions specifically for doctors. The mortgage offers up to 100% financing, which enables physicians to purchase homes with little or nothing down. The program also views student loan debt differently than other mortgages for new doctors. Another key feature is that the loan doesn’t require physicians to carry mortgage insurance.

For physicians, this mortgage option can help them buy a house as they settle into a new job, while structuring payments for their future income. "The loans are especially helpful as residents look to settle down in new towns as they begin their first jobs," says Stan Schultz, Fifth Third's Director of Mortgage Development.

Here are some commonly asked questions about the Fifth Third Physician Mortgage Loan.

Who Is Eligible for a Physician Mortgage Loan?

The mortgages are available to individuals who are licensed as a MD, DO, DPM, DDS, DMD, DVM, and OD. "The product is for both new graduates of medical school and established physicians," Schultz says. The loans aren’t specifically for first-time home buyers, though many new medical school graduates are purchasing their first house. Physicians can use the loans to buy a home or refinance a home they already own.

The New Physician Mortgage Loan is ideal for licensed interns, residents, or fellows who are in a medical residency or scheduled to begin within 90 days of closing on a new home. Physicians who have just completed their residency within the last 12 months and have started working in their field are also eligible.

What additional enhancements have recently been made to the Physician Mortgage Loan?

Fifth Third Bank is excited to announce The New and Established Physician Mortgage Loan is designed not only for physicians and dentists, but most recently expanded to optometrists and veterinarians. This expansion to our product line is an exciting opportunity for eligible physicians, dentists, optometrists and veterinarians to take advantage of all of these features.

How can ARM loan enhancements also benefit Physicians?

Fifth Third offers both fixed loans of 30, 20, and 15 year programs as well as the offering of ARM loans. The 5/3 ARM and 15/6 ARM are additions to the robust mix of existing ARM options. The 5/3 ARM originates from the name Fifth Third Bank. It’s a way to have a fixed term of 5 years and a possible adjustment every 3 years after. The 15/6 ARM is a loan that is fixed for 15 years and can adjust every 6 months after. Adjustable rate mortgage generally offer initially lower interest rates giving the customer potentially more buying power. Statistics show that typically homeowners move every 8 years. If this holds true, ARM programs add additional solutions for physicians to review to determine their best overall financial option; making their dream of homeownership become a reality.

Benefits of a Physician Mortgage

"The key feature is the high loan-to-value ratio," Schultz says. New and established physicians can borrow up to 100% of the value of the home they want to purchase, up to $750,000. That means they can obtain a mortgage with very little or no down payment. For homes valued above $750,000, the loans require small down payments—typically much less than a traditional mortgage. New physicians can borrow up to $1 million, while established doctors can borrow up to $2 million.

What’s more, borrowers aren’t required to purchase mortgage insurance. Typically, lenders require that borrowers who put down less than 20% purchase insurance, which increases the monthly payment. This advantage makes a mortgage payment even more affordable. The mortgages also provide special treatment for medical degree student loan debt for residents and new doctors. If a resident or new doctor has student loans that are in deferment or forbearance, those are excluded from their debt-to-income calculation. This advantage helps to increase qualification for the mortgage loan.

How Can the Loans Help Newly Graduated Physicians?

In addition to the high LTV and treatment of student loan debt, the New Physician Mortgage Loan allows borrowers to obtain a mortgage with an employment contract. Most mortgages require the borrower to already be working at their job, but for both New Physician and Established Physician Mortgage, the borrower just needs to begin their job within 90 days of the close of their home. Schultz notes that this is especially helpful for new graduates who tend to relocate to new cities before they begin their residency. This advantage allows a family to get settled in even before they start at a new employer.

The Physician Mortgage program aims to reduce the stress doctors face in home buying due to their unique employment circumstances. Let your clients know about Physician Mortgages, and you can put them on a path to homeownership that much sooner.

What other benefits are offered to physicians utilizing this specialty product?

Fifth Third Bank is a full service relationship bank. Physicians utilizing this specialty program are automatically qualified for Fifth Third Preferred Banking. Preferred Banking offers our customers premium rewards and complimentary services, safety and security built in with identity theft protection, enhanced convenience, tools and partners to reach your goals, all with a dedicated Preferred Banker.