For doctors, dentists, and other medical professionals, finding the right home financing can be a unique journey. Doctor Mortgage Loans, also known as physician loans, are specifically designed to meet the needs of those in the medical field. These specialized mortgages often come with benefits that recognize the unique financial situations of doctors, especially those early in their careers.
Understanding Doctor Mortgage Loan Eligibility
Doctor mortgage loans are not for everyone. They are tailored for actively practicing medical professionals in specific roles. Eligibility typically extends to:
- Interns
- Residents
- Fellows
- Doctors
- Dentists
- Clinical Professors
- Researchers
- Managing Physicians
To qualify, applicants generally need a current license and a degree such as:
- Doctor of Medicine (MD)
- Doctor of Osteopathic Medicine (DO)
- Doctor of Podiatric Medicine (DPM)
- Doctor of Dental Surgery (DDS)
- Doctor of Dental Medicine (DMD)
It’s also worth noting that some programs, like the one offered by KeyBank, may allow for an Employment Start Date up to 90 days from the loan note date, offering flexibility for those starting new positions. However, it’s crucial to remember that additional conditions and restrictions will apply, and these loans are not available in all states.
Key Benefits: Interest Rate Reductions
One of the attractive features of doctor mortgage loans can be interest rate reductions. For example, KeyBank offers potential interest rate reductions through different avenues:
Relationship Benefits
Borrowers may receive a 0.25% interest rate reduction by having a qualifying “Relationship Account” with KeyBank. To be eligible, this account must have been owned at any point during the mortgage loan application process, but no later than seven business days before closing. A “Relationship Account” can be:
- An Eligible KeyBank Consumer Checking Account with five or more Qualifying Transactions in a calendar month. Qualifying Transactions include point of sale, bill payments, ATM transactions, deposits, and electronic funds transfers (exclusions apply, such as adjustments, transfers between accounts, interest, and fees).
- A Key Private Bank Checking or Key Private Bank Personal Checking account.
An “Eligible KeyBank Consumer Checking Account” encompasses most personal checking accounts at KeyBank, excluding health savings accounts and Laurel Road branded deposit accounts.
Automatic Payment Discount
Alternatively, a 0.25% interest rate reduction might be available by setting up automatic monthly mortgage payments from a Laurel Road branded checking account or an “Eligible KeyBank Consumer Checking Account.” This requires completing and submitting a Monthly Automatic Payment form at least seven business days prior to closing.
How the Reduction is Applied
For fixed-rate mortgages, the 0.25% reduction is directly reflected in the interest rate on the loan note. For adjustable-rate mortgages (ARMs), the reduction applies to the initial fixed interest rate period and the maximum interest rate increase over the loan term, subject to any minimum interest rate terms.
It’s important to note that these interest rate reductions may not be combined with all other discounts or promotions and might not be available for all home lending products.
Important Considerations and Terms
While doctor mortgage loans can be advantageous, it’s essential to be aware of certain terms and conditions:
- Loan Approval: Doctor mortgage loans, like all home lending products, are subject to credit and collateral approval. They are not guaranteed and are not FDIC insured.
- Insurance Requirements: Hazard insurance, and flood insurance if applicable, are mandatory on the property securing the loan.
- Rate and Fee Changes: Actual rates, fees, and terms are based on those offered at the time of application and are subject to change without notice.
- PMI Alternative: In some instances, a conventional loan with Private Mortgage Insurance (PMI) may offer better terms for down payments less than 20%. It’s wise to compare all available options.
- Product Availability: Not all home lending products are available in every state.
Making an Informed Decision
Doctor mortgage loans can be a powerful tool for medical professionals looking to buy a home. They recognize the unique financial profiles of doctors and often offer benefits like no or low down payment options and the elimination of Private Mortgage Insurance (PMI). However, it’s crucial to thoroughly understand the eligibility requirements, terms, and conditions associated with these specialized loans.
Always compare offers and consider your individual financial situation before making a decision. Contact KeyBank Home Lending or Laurel Road for detailed information and to explore whether a doctor mortgage loan is the right choice for your home buying needs.
*Disclaimer: This is not a commitment to lend or extend credit. Conditions and restrictions apply. All home lending products, including mortgage, home equity loans and home equity lines of credit, are subject to credit and collateral approval. Not all home lending products are available in all states. Hazard insurance and, if applicable, flood insurance are required on collateral property. Actual rates, fees, and terms are based on those offered as of the date of application and are subject to change without notice. Mortgage and Home Equity Lending products offered by KeyBank are not FDIC insured or guaranteed. Laurel Road is a brand of KeyBank National Association. All products offered by KeyBank N.A. Member FDIC. NMLS
