Physician Loans: Why Doctors Skip the 20% Down Rule

Physician loans are one of the most underused advantages in the mortgage market. They let qualifying medical professionals buy with 0-10% down, skip mortgage insurance entirely, and exclude income-driven student loan payments from debt-to-income calculations. For a resident with $200,000 in student loans buying a $425,000 home, the difference between a physician loan and conventional financing can be the difference between qualifying and getting denied.

The catch: these loans are not federally backed like FHA or VA. They are portfolio products offered by specific lenders that have decided medical professionals are an excellent default risk. Each lender has its own rules. This guide covers how the programs work generally, the major lenders to consider, and the specific scenarios where physician loans dominate or fall short.

Who Qualifies for a Physician Loan

The eligible occupations vary by lender, but the core list is consistent across most programs: Medical Doctor (MD), Doctor of Osteopathic Medicine (DO), Dentist (DDS or DMD), Veterinarian (DVM), and Doctor of Optometry (OD). Some lenders include Doctor of Podiatric Medicine (DPM), Doctor of Pharmacy (PharmD), Physician Assistant (PA), and Nurse Practitioner (NP) under expanded programs — Bank of America's Doctor Loan, for example, includes PAs and CRNAs.

Career stage matters. Most physician loan programs accept residents, fellows, and attending physicians. A few accept medical students within 60-90 days of starting residency, using their signed contract as proof of income. The further into your career you are, the more flexibility you have with loan size and down payment terms — attendings typically qualify for higher limits than residents at the same lender.

How Student Loans Get Excluded From DTI

This is the magic of physician loans. With conventional financing, lenders count 1% of your total student loan balance as a monthly payment for DTI purposes — even if you are on an income-driven repayment plan paying $200/month, they count $2,000/month on a $200,000 loan balance. That alone can disqualify a resident earning $65,000 from buying a $400,000 home.

Physician loan underwriters accept your actual income-driven payment instead of the conventional 1% calculation. If your IBR or PAYE payment is $300/month, that is the figure used for DTI. Some lenders go further and exclude student loan payments entirely if they are in deferment for the next 12 months. This treatment is the single biggest reason physician loans work for residents who would otherwise be locked out of homeownership.

Use our [DTI calculator](/tools/dti-calculator) to model what your DTI looks like under both scenarios. Most physicians see their DTI drop by 10-20 percentage points when switching from conventional treatment of student loans to physician-loan treatment.

Down Payment and PMI Math

Physician loan down payment structures vary by lender and loan size, but the most common tiers are: 0% down up to $1 million (rare, but a few lenders still offer this for attendings with strong credit), 5% down up to $1-1.5 million, and 10% down for jumbo loans up to $2-2.5 million. No PMI is required at any of these tiers — that is the second magic feature of physician loans.

On a $500,000 home with 5% down, the PMI savings alone are roughly $150-$250 per month compared to conventional financing. Over a five-year hold before refinancing to drop PMI, that is $9,000-$15,000 saved. Combined with the lower down payment, a physician loan often lets a buyer preserve $50,000-$75,000 in cash for emergency reserves, residency relocations, or investment opportunities.

The trade-off: slightly higher rates

Physician loans typically carry rates 0.125-0.375% higher than conventional loans for the same borrower profile. On a $500,000 loan, that is $30-90 per month more in interest. The math still favors the physician loan in almost every scenario because the PMI savings exceed the rate premium — but it is worth running the numbers in our [mortgage calculator](/mortgage-calculator) at both rates to see your specific breakdown.

Major Lenders Offering Physician Loans

Bank of America's Doctor Loan is one of the most accessible programs. Available in all 50 states, 5% down on jumbo loans up to $1 million, no PMI, and accepts MDs, DOs, residents, fellows, and PAs. BMO Bank's Physicians' Program goes up to $1.5 million with 5% down and accepts a wider professional list including dentists and veterinarians. Citi's Doctor Loan focuses on attending physicians with 0% down available up to $1 million for very strong applicants.

Other notable programs: Huntington National Bank Physician Loan (10% down up to $2 million), Truist Doctor Loan (5% down up to $1.5 million), Fifth Third Doctor Loan (10% down up to $1 million), and a long tail of regional banks and credit unions with physician programs. SoFi, Laurel Road, and several online-first lenders also offer physician loan products with competitive rates and faster closing timelines.

Resident vs Attending: Different Income Treatment

Residents earning $55,000-$70,000 with a signed attending contract can sometimes use future attending income for qualification. The lender will need a fully executed employment contract with a defined start date, typically within 60-90 days of closing. The future-income exception is not universal — Bank of America does it readily, while others require you to actually be earning the higher income before qualifying.

Attendings are easier to qualify. Bonus and incentive income (RVU-based pay, productivity bonuses, signing bonuses) is typically counted at a 24-month average if you have that much history, or excluded if you have less. Locum tenens income gets treated similarly to self-employment income — see our [self-employed mortgage guide](/blog/self-employed-mortgage-guide) for documentation requirements that apply.

When Physician Loans Are NOT the Right Choice

If you can comfortably put 20% down without depleting your emergency fund, conventional financing is usually cheaper because of the lower rate. The PMI advantage disappears at 20% down, and you are left paying a 0.25% rate premium for no benefit. Run the math in our [mortgage payment calculator](/mortgage-calculator) — at 20% down on most loan sizes, conventional wins by $50-150/month.

If you are buying a small home well within your budget — say $200,000-$250,000 — the marginal benefit of a physician loan over an FHA or conventional 97 loan shrinks because the student-loan-exclusion benefit matters less at smaller loan amounts. FHA at 3.5% down might give you a lower total monthly payment if you have strong credit and a smaller mortgage. Run both options before committing.

If you plan to sell within 2-3 years (common during residency for couples chasing fellowships), the closing costs and slightly higher rate on a physician loan may eat the savings. Renting can be cheaper in that scenario. See our [rent vs buy calculator](/rent-vs-buy-calculator) for an honest comparison.

Frequently Asked Questions

Can I use a physician loan for a second home or investment property?

Almost never. Physician loans are designed for primary residences only. Lenders take on the risk because they assume you will live in and protect the property. A few specialty lenders offer physician-friendly programs for second homes, but they tend to require 20% down and look more like conventional loans. Investment properties are not eligible at any major lender.

Do I need to use a specific physician-loan loan officer?

Strongly recommended. These programs have nuances that general loan officers miss — student loan IBR documentation, future income contracts, training-period income calculation, and how to package an application that flies through underwriting. Ask your lender for an officer who has closed at least 50 physician loans. They will know the gotchas.

What's the rate difference between physician loans and conventional?

Typically 0.125% to 0.375% higher than conventional for the same credit/down payment profile. The PMI savings almost always exceed this premium when you are putting less than 20% down. At 20%+ down, conventional usually wins on rate alone.

Can my spouse co-borrow on a physician loan?

Yes. Most programs allow non-medical-professional spouses to co-borrow. Both incomes are used to qualify. The medical professional must be on the loan and on title — you cannot have a non-medical spouse take the loan alone using the physician program.

Will the lender count my residency stipend as income?

Yes, with documentation. Your residency contract, paystubs, and W-2s (if you have them yet) document the income. Most lenders treat the residency income as stable employment income, even though it is time-limited — the assumption is you will continue earning at residency rates or higher as you progress in training. If you have a signed attending contract starting within 60-90 days of closing, that higher income can sometimes be used instead.