Physician Mortgage Loan Eligibility — Complete Guide

Physician Mortgage Eligibility at a Glance

Physician mortgage programs have specific eligibility criteria that differ substantially from conventional loans. These programs are designed to accommodate the unique financial profile of medical professionals — high future earning potential combined with significant student debt and limited savings early in their careers. The table below summarizes the key qualification tiers.

All physician mortgage programs waive PMI regardless of LTV ratio. This is a defining feature that applies at every financing tier.

Eligible Medical Designations

Physician mortgage eligibility is designation-based, not specialty-specific. The following medical professionals typically qualify for physician mortgage programs:

Residents, Fellows & Interns

Residents and fellows are fully eligible for physician mortgage programs and represent a primary target demographic. These programs specifically accommodate the financial realities of medical training, where income is modest but future earnings are substantial.

The most powerful feature for trainees is projected income qualification. Rather than qualifying based on a $60,000 to $75,000 resident salary, physicians with signed employment contracts can qualify based on their future attending income. Requirements include:

• Signed employment contract or official offer letter from the hiring institution
• Letter must state position title, start date, and guaranteed base salary
• Start date must be within 150 days of the Note date
• Verbal offers or conditional offers with contingencies are not sufficient

For residents remaining in training who don't yet have an attending offer, qualification is based on current program documentation and training salary. Fellows transitioning to practice follow the same offer letter requirements as residents. First-year interns are eligible with residency program verification.

Employment & Income Requirements

W-2 Employed Physicians

Standard employment verification applies: recent pay stubs (typically 30 days), W-2s from the most recent 1-2 years, and an employment verification letter. Physicians recently out of training may only need one year of tax returns if currently employed in their first attending position.

Physicians with Offer Letters

The offer letter must include position title, start date within 150 days of the Note date, and guaranteed base salary. Many programs do not require prior income history when a qualifying offer letter is provided, making this path ideal for residents transitioning to practice.

1099 / Independent Contractor Physicians

Qualification is more complex for independent contractors. Requirements typically include:

• Executed employment contract with a guaranteed base salary component
• Hospital or practice group letter confirming the physician will not be responsible for business expenses
• Cannot qualify on 1099 income alone — a guaranteed salary component is required
• Some programs require 2 years of 1099 income history for additional documentation

Group Practice Owners

Generally eligible if they receive W-2 income from the practice entity. Pure profit distributions or K-1 income may be treated differently and require additional documentation.

Credit Requirements

Physician mortgage programs have specific credit standards that, while more flexible than some conventional requirements, still establish clear minimums:

• Minimum FICO score: 680 — This is the floor for most physician mortgage programs. Below 680, these programs are generally not available.
• 720+ FICO for best terms — Scores at or above 720 unlock 100% financing (0% down), the lowest rate tiers, and the highest loan amounts.
• Credit history: 24+ months — Borrowers must have at least 24 months of established credit history.
• Housing payment history — No late payments (0x30) on any mortgage or rent obligation in the past 12 months.
• Derogatory events — Must be at least 4 years from any bankruptcy, foreclosure, short sale, or deed-in-lieu of foreclosure.
• Collections and charge-offs — Generally must be resolved or have documented payment plans in place.
• Student loan status — Current status required. Past delinquencies on student loans are evaluated on a case-by-case basis.

Debt-to-Income (DTI) Limits

The debt-to-income ratio is calculated as total monthly debt obligations divided by gross monthly income, expressed as a percentage.

• Standard maximum: 50% — Most physician mortgage programs allow up to 50% DTI ratio.
• Reduced limit of 45% applies when any of the following conditions exist:
  • LTV exceeds 95% (including 100% financing)
  • ARM products (any adjustable-rate mortgage)
  • 15-year fixed loan terms
  • Any combination of the above

DTI includes the proposed housing payment (PITIA), student loan payments (with physician program exceptions for residents), car payments, credit card minimum payments, personal loans, and all other installment debts. For residents and fellows with deferred student loans, those payments can be excluded entirely from the DTI calculation.

Property Requirements

Physician mortgage programs are exclusively for primary residences with specific property type restrictions:

• Primary residence only — The property must be the borrower's main home
• Single-unit properties — Single-family homes, townhomes, and warrantable condos

Ineligible property types include:

• Investment properties and second homes
• Multi-unit properties (2-4 units, even if owner-occupied)
• Manufactured or mobile homes
• Mixed-use properties (commercial and residential)
• Condotels, co-ops, and non-warrantable condos
• Properties with deed restrictions affecting marketability or resale

Properties must be in an eligible state (most programs are available in all 50 states plus DC). A standard appraisal is required, and the property must meet program condition standards.

Important Program Parameters

Physician mortgage programs have several structural requirements that differ from conventional loans:

• Minimum LTV: 90.01% — This program is designed for high-LTV borrowers. If you want to put down more than approximately 10%, a conventional loan may be more appropriate.
• Escrow/impound required — Tax and insurance escrow accounts are mandatory for all physician mortgage loans.
• No secondary financing — Second mortgages, HELOCs, or other subordinate liens are not permitted at the time of closing.
• Manual underwriting — All physician mortgage loans are manually underwritten (no automated underwriting system). This means an actual underwriter reviews your file, which can be an advantage for borrowers with complex financial profiles.
• Non-permanent resident aliens — Eligible at a maximum of 95% LTV with at least 24 months of documented U.S. employment history.

Reserve Requirements

Reserves are liquid assets that must be available after closing. The required amount varies by LTV and loan amount:

Eligible reserve sources include checking and savings accounts, investment and brokerage accounts (60% of retirement account balances are typically counted), and gift funds from family members. Reserves cannot be borrowed funds, credit card advances, or unsecured personal loans.

Student Loan Treatment in Detail

The treatment of student loan debt is where physician mortgages deliver their greatest advantage over conventional lending:

Residents and Fellows with Deferred Loans

If you are currently enrolled in a residency or fellowship training program and your student loans are in deferment, forbearance, or income-driven repayment with a $0 payment, physician mortgage programs can exclude these loans entirely from your DTI calculation, provided you are qualifying on your current residency or fellowship income. This is the single most impactful feature for training physicians. Documentation requirements include proof of current training program enrollment and loan statements showing deferment or forbearance status.

Practicing Physicians with Active Payments

For physicians out of training who are actively repaying student loans, the lender will use the most favorable of these options:

1. Actual payment on credit report: If your credit report shows a specific monthly payment amount, that exact amount is used.
2. IBR/IDR documented payment: If you provide documentation from your loan servicer showing your income-driven repayment plan payment, that amount is used.
3. 1% of outstanding balance: If no payment is documented, 1% of the total outstanding balance is used as the monthly payment figure.
4. Fully amortizing payment: The standard repayment amount over the remaining term. Rarely the most favorable option.

The critical difference from conventional lending: physician mortgage lenders actively work to use the lowest legitimate payment figure. Conventional lenders typically default to the highest calculation method, often using 0.5-1% of total balance regardless of actual payment amount.

Example: A physician with $350,000 in student loans and a $2,500/month IBR payment:

• Conventional lender: $3,500/month counted (1% of $350K balance)
• Physician mortgage (resident, deferred): $0/month counted
• Physician mortgage (attending, IBR): $2,500/month counted

Ineligible Borrowers

The following borrower types do not qualify for physician mortgage programs:

• Chiropractors (DC)
• Foreign national borrowers without permanent residency
• DACA recipients
• ITIN borrowers (no Social Security number)
• Borrowers with diplomatic immunity status
• Borrowers purchasing through an LLC or trust entity
• Non-medical doctoral degrees (PhD, JD, EdD)
• Physician assistants (PA) without a doctoral degree
• Nurse practitioners (NP) without a doctoral degree

Down Payment Options

• 0% down (100% financing): Available for borrowers with 680+ FICO on loans up to $1.5M, 720+ FICO up to $2M
• 5% down: Available for borrowers with 680+ FICO
• 10%+ down: Further expands loan amount limits and improves rate pricing

No PMI is charged at any LTV — this is standard across all physician programs. Eligible down payment sources include personal savings, gift funds with a gift letter, proceeds from the sale of an existing home, and employer relocation assistance. Down payment funds may not come from borrowed funds, credit card advances, or unsecured loans.

ARM Options for Physician Mortgages

Adjustable-rate mortgage products are popular among physician borrowers, especially residents who plan to relocate within 5-7 years:

• 5/6 ARM: Fixed for 5 years, adjusts every 6 months. Caps: 2% first adjustment, 1% subsequent, 5% lifetime. Index: SOFR + 3.5% margin. Qualifying rate: greater of fully indexed rate or note rate + 2%.
• 7/6 ARM: Fixed for 7 years, adjusts every 6 months. Caps: 5% first adjustment, 1% subsequent, 5% lifetime. More favorable qualifying rate than 5/6 ARM.
• 10/6 ARM: Fixed for 10 years, adjusts every 6 months. Same caps as 7/6. Best for attendings wanting ARM savings with extended stability.

Important: DTI limit is reduced to 45% for all ARM products. ARM products require a minimum loan amount of $350,000. The overall physician mortgage loan range is $100,000 minimum to $2,000,000 maximum.

Refinance Eligibility

• Rate and term refinance: Eligible under physician mortgage programs
• Cash-out refinance: Not eligible under physician mortgage programs
• Delayed purchase refinancing: Available if the original purchase was all-cash within the past 12 months

Refinance LTV and credit requirements generally match purchase requirements. For cash-out needs, physicians can refinance into conventional programs once they've built sufficient equity.