A dentist mortgage loan or a “doctor loan” is a specific type of mortgage loan aimed at assisting dental industry professionals achieve their dreams of home ownership. Unlike other mortgage loan options, a dentist loan requires zero down payment and is flexible in ways a conventional mortgage may not be. Additionally, other loan types may require that borrowers pay a Private Mortgage Insurance (PMI) if a down payment of less than 20% is made. In short, a dentist loan offers a zero down payment and the ability to skip PMI. Read on for more information about a dentist mortgage loan and how we can help you qualify.
Dentist Loan v Traditional Mortgage
Dentist loans are a specialty mortgage loan created to assist individuals new to the dental field the opportunity to quality for a home loan. Conventional mortgages have clearly defined rules regarding debt to income ratios, proof of long term employment, a sizeable down payment, and without that down payment a private mortgage insurance.
Long-Term Employment
Significant income and long-term employment are often requirements to qualify for a mortgage loan. Dental professionals have the potential to earn more money in the future and are less likely to default on their loans. Lenders keep this in mind and are willing to compromise on a few key points.
How a Dentist Loan Works
Compared to a conventional mortgage loan, a dentist loan offers a way for new dentists and dental professionals to quality for a home mortgage loan earlier than they would with other loan options. With a down payment of 0-10%, no PMI, and flexibility with DTI and employment history, dentists can qualify with ease and afford to buy a home. A dentist loan doesn’t usually offer fixed interest rates, among other differences. Here’s how some of the other elements of a mortgage loan are different in this specialty loan type compared to conventional mortgage.
Private Mortgage Insurance (PMI)
When individuals purchase a home and make a down payment of less than 20% lenders require that borrowers purchase private mortgage insurance in the instance that the loan is defaulted. PMI typically costs between 0.5-1% of your loan amount per year, but is based on insurance rates. This can amount to hundreds of dollars extra on a monthly payment, based on the size of the loan. As new doctors have hefty school debt, lenders waive the need for PMI, even if no down payment is made at the time of purchase.
Debt To Income (DTI)
An important measurement of qualifications for a conventional mortgage. However, in a dentist’s mortgage loan the amount of money you owe compared to your income isn’t as big of a factor. In a conventional loan the DTI is required to be 50% or lower. Lenders check this to ensure that borrowers are able to easily manage their monthly payments without defaulting on the loan. The higher the DTI the more risky the loan. In the case of a newly certified dentist this may be impossible as dental school debt accrual is typically quite high. Dentist home loans take this into account and are far more relaxed when it comes to DTI restrictions. Other debts are still scrutinized, like credit card debt, car loans, and other expenses are examined, but the higher DTI associated with dental professionals is not necessarily a disqualifier.
Mortgage Solutions for Dentists
Dentists—whether DDS or DMD—often face a unique combination of high income potential and complex financial structures, especially when practice ownership is involved.
Tom Payne provides mortgage solutions tailored to dental professionals that accommodate both W-2 and 1099 income scenarios.
Key Benefits
- Up to 100% financing
- No PMI
- Loan amounts up to $3,000,000
- Primary residence focus
- Purchase and refinance eligible
Eligibility
- DDS or DMD degree required
- U.S.-based employment (24-month expectation)
- Residents, associates, and practice owners eligible
Credit Guidelines:
- 720+ → up to $2M at 100%
- 680+ → up to $1.5M at 100%
Loan Features
- 1099 contractors accepted without 2-year history
- Student loan flexibility
- Projected income allowed
- Minimal tradeline requirements
Why Dentist Loans Are A Good Idea
While the earning power behind a dentist is high many doctors and dental professionals can’t qualify for a conventional loan. Some things to consider when qualifying for a conventional loan. A dentists loan will most likely be an adjustable rate mortgage, allowing you to pay a lower, fixed interest rate for the first few years of your loan. In some instances a fixed rate mortgage may be available. In either instance your mortgage loan will most likely have a slightly higher interest rate than the prime. Nonetheless, many dentists and dental professionals find the loan to be advantageous.
Apply Now
You can get answers to more of your questions, and speak to a dentists mortgage loan officer today.
