Every lender will have slightly different requirements. Make sure you shop around to see if you meet the requirements for different lenders.
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!
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.
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:
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 can determine whether homeownership fits within your long-term financial strategy – and which mortgage makes the most sense given your unique financial needs.