Physician Loans vs. Conventional Mortgages

Are You a CRNA Weighing Your Home Financing Options?

Understanding the differences between physician loans and conventional mortgages is crucial for making the right choice as a Certified Registered Nurse Anesthetist (CRNA). Let’s break down both options to help you make an informed decision for your unique situation.

Quick Comparison Table

Key Differences Explained

1. Down Payment Requirements

Physician Loans:

• As low as 0% down payment
• Some lenders offer 100% financing
• 5-10% down for higher loan amounts

Conventional Mortgages:

• Typically 3-20% down payment
• 20% down preferred to avoid PMI
• Higher down payment often means better rates

2. Private Mortgage Insurance (PMI)

Physician Loans:

• No PMI required regardless of down payment
• Significant monthly savings
• Built-in cost offset in interest rate

Conventional Mortgages:

• PMI required with less than 20% down
• Monthly PMI costs range from $100-500+
• Can be removed once 20% equity reached

3. Student Loan Consideration

Physician Loans:

• Student loans often excluded from DTI
• Income-based repayment plans accepted
• More flexible debt ratio requirements

Conventional Mortgages:

• Full student loan payment included in DTI
• May limit borrowing power significantly
• Stricter debt ratio requirements

4. Loan Limits

Physician Loans:

• Higher loan amounts available
• Often up to $1.5-2 million+
• Jumbo limits with minimal down payment

Conventional Mortgages:

• Conforming limits ($726,200 in 2024)
• Jumbo loans require larger down payments
• Stricter qualification for high loan amounts

When to Choose a Physician Loan

Consider a physician loan if you:

• Have limited savings for down payment
• Carry significant student loan debt
• Are early in your dental career
• Need a higher loan amount
• Want to avoid PMI
• Have an employment contract but haven’t started

When to Choose a Conventional Mortgage

A conventional mortgage might be better if you:

• Have 20% or more for down payment
• Have been practicing for several years
• Have limited student loan debt
• Want potentially lower interest rates
• Plan to purchase within conforming limits

Interest Rate Considerations

Physician Loans:

• Slightly higher rates (0.25-0.5% more)
• Offset by PMI savings
• Rate premium covers lender risk

Conventional Mortgages:

• Generally lower base rates
• Best rates with 20%+ down
• Rate increases with lower down payments

Qualification Requirements

Physician Loan Requirements:

• Dental degree (DDS/DMD)
• Credit score 700+ typically
• Valid dental license or contract
• Student loan documentation
• Proof of future income

Conventional Loan Requirements:

• Proven income history
• Credit score 620+ minimum
• Standard debt-to-income ratios
• Two years’ employment history
• Tax returns and W-2s

Making Your Decision

Consider these factors:

1. Available down payment
2. Student loan burden
3. Career stage
4. Desired loan amount
5. Long-term financial goals
6. Current interest rate environment

Next Steps

To make your best choice:

1. Calculate total costs for both options
2. Get quotes from multiple lenders
3. Compare total monthly payments
4. Consider future career plans
5. Evaluate long-term financial impact

The Bottom Line

Both physician loans and conventional mortgages offer unique benefits for CRNAs. Physician loans are ideal for those early in their careers or with limited savings, while conventional mortgages might provide better terms for established professionals with significant savings.

Ready to explore your mortgage options? Connect with our loan experts who specialize in both physician and conventional loans tailored for CRNAs.