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  • Writer's pictureNathan Zarcaro

Nurse Practitioner Home Loans: Take or Avoid a Physician Mortgage?

Updated: Dec 20, 2023


Many healthcare experts believe that nurse practitioners are the way of the future. Not only can they perform many of the same services as physicians, but they can also make positive impacts on the lives of their patients.


As a highly qualified healthcare provider, NPs also have access to a number of perks that doctors do, namely physician/professional mortgages.


Here are the arguments both in favor and against NPs taking these loans.




What are nurse practitioners?


Nurse practitioners, NPs for short, are an advanced class of nurses that have advanced education and training beyond that of traditional RNs.


As highly qualified healthcare providers, nurse practitioners can:


  • Diagnose and treat illnesses

  • Order/read diagnostic and other tests

  • Prescribe medications (may depend on location)


Similar to many physicians, NPs may choose to specialize in a certain field, like geriatrics, pediatrics, or women's health.


NPs may be identified by a number of degrees or credentials, including an APRN, MSN, or DNP.



What are physician mortgages?


Physician mortgages, also known as doctor home loans or professional mortgages, are a special type of home loan designed specifically for qualifying healthcare providers.


Each lender opens up eligibility to different types of providers, though some lenders may also offer the program to others' career paths, like accountants, CFAs, and others.


Here are three of the key details of physician mortgage loans:


  • Low/no down payment options: Since many doctors have $100,000 and potentially far more student loan debt, physician mortgage programs help doctors to purchase their homes without any sort of substantial cash down.


  • Flexible underwriting requirements: Conventional mortgage underwriters evaluate a buyer's debt-to-income ratio to help determine whether they should qualify for home financing or not. But given the student loan debt that most physicians have, these special mortgage programs tend to focus on earning potential, rather than current debt load.


  • No PMI requirements: Many physician mortgage programs waive private mortgage insurance requirements, which can add $50-$100, or more, per month to your payments if your down payment is under 20%.




Why nurse practitioners shouldn't take physician mortgages


We don't believe that nurse practitioners should pursue special medical professional mortgage programs. Rather, they should opt for a more traditional home loan.


Here are 3 reasons why:


  • NPs may buy too much home

  • Less flexibility in term options

  • Fewer lender options than doctors or dentists



1. May buy too much home


Physician mortgages were initially intended to help doctors with large amounts of student loan debt to afford homes years before they otherwise could have. But nurse practitioners, on average, carry a percentage of the debt that physicians, dentists, and anesthesiologists do.


For example, the average medical school debt in 2023 is $202,453.


Meanwhile, the typical nurse practitioner carries somewhere between $50,000 and $150,000 in student loan debt, depending upon the study or survey. While still a lot of debt, it is more on par with non-medical careers like accountancy, finance, and more.


Having access to these same programs, with less debt, could lead nurse practitioners to buy more home than they originally intended to, which could be a bad financial decision.


Of course, this risk can be mitigated by sticking to your original budget.



2. Less flexibility in term options


Oftentimes, one of the cons of physician loans is that participants don't have quite as much flexibility when it comes to the loan terms available to them. With traditional mortgages, borrowers usually have their pick of not just fixed rate and adjustable-rate options, but the number of years on the loan.


This is not always the case with these loans. Sure, there are exceptions, like with BMO Bank, but many lenders offer one or two options for borrowers to consider.



3. Fewer lender options to consider


Since physician mortgages are tailored towards physicians, nurse practitioners won't have quite as many lenders to consider. This means that NPs across the country may not be able to participate in those professional mortgage programs offering the perks they're truly interested in.


We have aggregated this list of our favorite nurse practitioner mortgage loans, though:


  • First National Bank of Omaha

  • Flagstar Bank

  • U.S. Bank



First National Bank of Omaha (FNBO)


FNBO offers NP borrowers the ability to borrow $750,000 with 95% financing and $1 million with 90% financing. Available to buyers in CO, IA, IL, KS, MO, NE, SD, WY, and certain counties in Texas, the bank offers both fixed and variable rate options to choose from.



Flagstar Bank


Available to NPs in all 50 states, home buyers may choose from a variety of adjustable-rate loans and borrow up to $1 million, complete with a 100% financing option.



U.S. Bank


While NPs do not qualify for U.S. Bank's special medical professional loan program, they can opt to participate in another low-down payment program: 80-10-10. 80-10-10 will provide you a home loan for 80% of your home's purchase price and 10% as a second mortgage, while you'll make a 10% down payment.



Why nurse practitioners should take physician home loans


Here are a couple of arguments to support nurse practitioners taking physician loans.



1. Additional perks


In addition to the perks we mentioned earlier, borrowers may also benefit from:


  • Higher loan limits than with a conventional loan (capped at $647,200 in most cases)

  • More lenient underwriting and acceptance criteria

  • A focus on future


This means that indebted NPs rejected for conventional loans could be accepted by a physician mortgage. And even though NPs may not need these special perks, they are still nice to have!



2. Potentially lower interest rates due to autopay


Sometimes, physician mortgages come with slight interest rate discounts for borrowers who make their payments on autopay. And it makes sense why. Medical professionals tend to be among the highest educated members of society, which is directly correlated to lower default rates on mortgages. This fact could lead to other slight rate variances as well.


As of late Spring 2023, mortgage delinquency rates hovered around 3.4%. And while this was an all-time low reading, it still represents a seismically higher delinquency rate than physician home loans, which average about 0.2% default rates.


If you can use one of these programs to secure a below market rate on your mortgage, it can absolutely be worth it, as you may save thousands over your loan's life.


It is worth mentioning that you can sometimes get these autopay discounts on conventional loans as well.



Conclusion


Nurse practitioners nationally may be eligible to take a home loan through a physician mortgage program. And while there are arguments both in favor and against NPs taking these loans, it is a good thing that each NP may make this decision for himself/herself.


What do you think? Are these special mortgage programs right for nurse practitioners? Why or why not? Let us know in the comments below.



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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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