Nicknamed the Yellowhammer State after its state bird, Alabama is home to a diverse collection of wildlife as well as over 5 million Americans. In addition to being emblematic of the South, it has also been the scene of some of the country’s most pivotal historical moments, such as the Selma march for civil rights in 1965.

Alabama is also growing in popularity as a residence for many professionals, including medical doctors. The latest numbers from the American Association of Medical Colleges indicate that Alabama is home to 10,614 active physicians. Those physicians are spread across the state from Huntsville to Dothan.

For many, Alabama is a great place to settle down and purchase a home. With median prices around $318,000, according to the Alabama Association of Realtors, many professionals in the Yellowhammer state may find themselves well positioned to afford a home. 

Doctors and dentists who practice in Alabama (and certain other high-earning professionals) can take advantage of physician mortgage loan programs, allowing them to purchase a home without a down payment to get their start in healthcare and homeownership. Like other home financing, you’ll need to review terms for loan repayment and interest rates, but your job reference is also very important considering it’s the proof that you have the future income to make monthly payments later.

Pros/Cons of Alabama physician mortgage loans

While physician mortgage loans provide many professionals with the help they need to purchase a home, it is always worth it to weigh the pros and cons when making such a serious financial commitment.

The pros that come with Alabama physician loans, include:

• No down payment
• Higher mortgage limits
• No PMI
• Student debt does not impact eligibility

What are some of the cons involved? Those considering applying for an Alabama physician loan should consider that they can involve:

• Additional debt / possibility of buying too much house
• Potentially higher rates
• Bank expects you to become a customer (e.g. open a checking account, possibly moving direct deposit).

In some scenarios, applicants could also purchase more house and incur more debt than they should, tempted by the higher limits on these financial products. 

Is an Alabama physician mortgage loan right for you?

Deciding whether or not an Alabama physician mortgage loan is right for you means asking a few questions about where you are in your life and career. 

Is it the right time to buy? This can depend on a number of factors, including where you are in your professional career. Do you foresee yourself staying in the area in the long term, or will your career take you in a new direction? Are you sure that your job is the best fit? If you are less than 2 years into a position, you may want to wait and confirm that you will stay in that job in the long term before committing to a house. When you find the right property on NMLS and are offered a great new position through a recruiter, for example, you can get that dream home on the line before you start the job.

Consider, too, that with 0% down on a home, it can be quite easy to buy too much house. As a general rule, it is advisable to keep a purchase to around 2x your salary. Only enter into an Alabama physician mortgage loan if you are confident that you will adequately scale it to your income and not get underwater with your loan. 

If getting the lowest rate possible is a priority for you, you may want to forego a doctor mortgage, save up 20 percent and take out a conventional loan. 

Finally, consider that Alabama lenders offer physician loans because they covet long-term relationships with high-income professionals. By taking out an Alabama physician mortgage loan, you are establishing a financial relationship that could very well benefit you throughout your life and career. 

Examples of doctors who take out physician loans in Alabama

It might help when making a decision about a physician loan to consider some scenarios that illustrate how these financial products benefit professionals and why certain professionals choose them. The following are some common scenarios under which a doctor might apply for a physician loan. 

Doctor who doesn’t have down payment

Shannon has just graduated from the Heersink School of Medicine at UAB. She has already secured a residency at Children’s of Alabama and she’s looking forward to establishing a base nearby. Given the size of her student debt, however, and her full-time commitment to her studies, she has not been able to save enough for even a 3.5 percent down payment on an FHA loan. 

Fortunately, she has heard about doctor mortgages and is ready to take advantage of the opportuning. The time is right for her to establish roots and she plans on building her career in the area in the long term. A doctor mortgage is a great option for her, allowing her to finance a starter home without cash in hand. 

Doctor who wants to maximize leverage

Rick has been running a successful local practice in Birmingham for several years now. He has a solid patient roster and reliable income, and he has even been able to invest money in a portfolio that is doing quite well. He and his wife recently spotted a home they love for sale down the street from his practice. 

Rick considered liquidating some of his investments to use the cash as a down payment on a conventional loan. With the investments doing so well, however, he’d prefer not to do that. Applying for a physician loan makes sense for Rick, as he can access a loan with little to no money down. 

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