Homes in California are among the most expensive in America. As of the end of July 2022, the average home in CA was worth $788,679. This can pose an immense challenge for physicians and other healthcare professionals just out of medical school. Most doctors collect well over $100,000 in student loan debt, and don't complete their education and residency until age 30, or later.
Cumulatively, all of this makes homeownership really hard for physicians to achieve. Luckily, lenders recognize this challenge and have come up with a solution: physician mortgage programs.
Keep on reading to learn about the best physician mortgage programs in California.
What are physician home loans?
Physician home loans, oftentimes known as physician mortgages or doctor home loans, are a type of low (or no) down payment mortgage available to doctors, dentists, and other healthcare professionals. The potential to finance up to 100% of your loan is a draw for those without a substantial down payment saved up, especially in states like California where the cost of living is so high.
It is common for physician mortgage loans to waive private mortgage insurance requirements as an added perk, since doctors are high earning professionals and are more likely to be trustworthy borrowers.
These loans also carry relaxed acceptance criteria for requirements like maximum debt-to-income ratios. Since doctors are more likely to carry lots of student loan debt, it is nice to see lenders make this adjustment. Physician home loans also carry higher loan limits than what you'll typically find on conventional mortgages. Depending on what lender you use, it is not unusual to see maximum loan limits at $1.5 million, though high cost of living states could see this amount boosted to the $3 million range.
Related: Are you prepared to pay California closing costs?
The best doctor loans in California
Now, let's explore our favorite lenders offering physician mortgage programs to those looking to buy a house in California. Our list will note which types of healthcare providers are eligible, as well as maximum loan amounts, eligible property types, and other important details.
Truist's doctor mortgage program is one of our favorites out there. Created by the merger of BB&T and SunTrust, Truist's program offers 100% financing up to $750,000 for those that hold the following degrees:
Additionally, residents and fellows may participate, as long as they have a job offer to start their careers within 90 days of closing. Those already practicing can participate as long as they are less than 10 years removed from their residency or fellowship. Finally, those looking to buy more expensive homes are subject to the following financing guidelines:
5% down payment for loans up to $1.5 million
10.01% down up to $2 million in financing
You'll be able to pick from a variety of fixed- and adjustable-rate loans with a variety of terms. Truist offers fixed rate options of either 15 or 30 years, and ARMs with terms of 5, 7, or 10 years.
2. Fairway Independent Mortgage Corporation
Founded in 1996, Fairway also offers doctor loans across California. We're ranking Fairway so highly in part because the program is available to an array of healthcare providers. In addition to those with an MD, DDS, DO, DMD, or DPM, Fairway has also opened their program up to:
Medical residents and fellows
They'll exclude your eligible student loan debt from their debt-to-income ratio throughout the underwriting process, and offer the following financing limits:
5% down payment up to $1 million
10.1% down payment up to $1.5 million
To be eligible, you'll need to be less than a decade removed from your final training, and buying a single-family home, condo, or planned unit development (PUD). Those borrowing under $550,000 can close 90 days prior to beginning employment - otherwise, you'll need to wait until the 60 day mark.
3. Flagstar Bank
A smaller bank, Flagstar is actually the country's 6th largest mortgage originators in the United States, and is also one of the only lenders in the entire country that offers 100% financing with no PMI. Flagstar's program is available to many different types of healthcare providers across the country, including:
Of course, this list indicates that Flagstar's physician mortgage program is open to far more than just doctors and dentists.
They also offer incredible financing perks. Even residents can qualify for 100% financing up to $650k. Those already practicing for at least a year can take advantage of 100% financing up to $1.5 million and 90% financing up to $2 million. You'll also need to purchase a single family home as your primary residence, as the program does not support condo, townhome, or second property purchases.
The only notable downside to using Flagstar is that they only offer adjustable rate mortgages, so there is no fixed-rate option.
But this combination of incredible flexibility and high loan amounts makes Flagstar a near perfect lender for physicians in California willing to take an ARM.
4. U.S. Bank
U.S. Bank also offers a great program for Californians to consider. Though it is only open to those with an MD or DO, those that qualify can buy a lot if house, if they can afford to. Only open for purchasing primary residences, you can opt for the following financing options:
90% financing up to $1.25 million
85% up to $1.5 million
80% up to $2 million
75% up to $2.5 million
And while there is no option that will finance 100% of your home purchase, those in California can opt for a wide array of fixed and adjustable rate options:
Fixed rate loans of 15, 20, or 30 years
5 and 7 year ARMs
Like the other lenders on this list, PMI is waived, and certain borrowers may qualify for a $1,000 relationship credit that can be applied towards closing costs.
5. Citizens Bank
Headquartered in Providence, RI, Citizens' physician mortgages offer up to 95% financing on loan amounts up to $850k, 89% financing on loans up to $1 million, and 85% financing up to $1.5 million.
Borrowers must be licensed, less than 10 years removed from residency, and have a DO, MD, DDS, or DMD. Qualifying healthcare workers can pick a fixed-rate option or opt for an ARM with terms of 3/1, 5/1, 7/1, or 10/1.
Perks to using Citizens include:
No private mortgage insurance requirement
No prepayment penalties
Closing 90 days before you start practicing
Citizens ranks a little lower on our list because only doctors and dentists are eligible, but the program itself is still solid.
How to pick a lender
This is the million dollar question, and one that we hear every single day. And the question gets a little more complicated when talking about physician mortgages. To find the lender that works best for you, we recommend that you proceed through the following checklist
Decide how much home you're looking to buy: Lenders offer all types of physician mortgage loan limits with different financing structures, so you'll want to be sure that the lenders you are considering will loan you the money you need with a financing structure that works for you. You may not even need to come up with a down payment.
Rate shop for competitive rates: In today's real estate market, it is unusual for your rate offers to be vastly different between lenders, but it absolutely can happen. Your primary objective here is to make sure that you don't pay more than you need to.
Consider any other factors that are important to you: For most of us, our required down payment and our interest rate are the two most important factors in picking a physician mortgage. But you may be looking for something unique, like an adjustable-rate mortgage with a specific term, for instance. If you want something unique, make sure to prioritize it in your lender search from the onset to avoid disappointment later.
Following these steps in this order will help you to find the exact doctor loan that you are looking for.
Is a physician mortgage right for you?
Before you select one of the lenders that we mentioned above, you’ll want to be sure that a physician mortgage loan is in fact the right course of action for you. Here are a couple of insider tips you should consider as you contemplate whether a doctor home loan is right for you.
First, we always recommend that our readers consider whether they are likely to qualify for any other mortgage programs, Conventional, FHA, and USDA among them. If you are likely to qualify for a Conventional loan and have a sizable down payment saved up, for example, then there may not really be any large benefits to you taking a doctor loan.
Second, you’ll likely need to consider the cost of living in your area. It is no surprise to anybody that California has some of the most expensive real estate costs in the country. And while it varies drastically by county, a young doctor in Southern California may need to take a physician loan for no reason other than to secure the financing needed to purchase even a modest home. Since many areas of California have average home prices of around $1 million, a Conventional loan‘s borrowing limit of $647,200 may not be enough.
These are just two of the questions that you should ask yourself.
Download our mortgage payment calculator
It is great to be able to choose from so many different and great lenders. But before you buy your house and need a lender, you need to understand:
How much home you can afford
What your monthly payments will look like
We've created our own mortgage calculator for you to download below, no email registration needed. We'll show you what your total monthly payments will look like under any fixed-rate mortgage, and you only need to provide us with six data points:
Your house's purchase price
Your projected down payment
Your mortgage's interest rate
Your mortgage's term (in years)
Your annual property tax and homeowner's insurance expenses
After you answer (or estimate) these six basic questions, we'll show you your projected monthly mortgage payments.
Download the calculator now.
Conclusions about California physician mortgage
Doctors and other healthcare professionals that are expecting their income to rise should feel very comfortable with the programs talked about here. That said, don't be afraid to evaluate all of of your options, including with other lenders and other programs altogether.
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