Flagstar Bank Physician Loan Program


An overview of the Flagstar Bank doctor mortgage program and its features

TL:DR

  • Medical program graduates interested in buying a home can get a loan of up to $1 million with 100% financing for first-time homebuyers with Flagstar Bank. (First-time homebuyers are those individuals who have not owned a home in the past 3 years).
  • This program won’t hinder your credit score with multiple inquiries.
  • FYI: Flagstar Bank has comprehensive loan services that include both adjustable-rate mortgages (ARMs) and fixed-rate products.

Buying your first house can be an exciting milestone. You can settle into a place to call home and truly make it your own. If you’re saddled with overwhelming amounts of student debt, however, experiencing this moment can be difficult, if not impossible, to do.

Research shows many medical school graduates have between $200,000 and $300,000 of student loan debt in the US, which can be crippling when it comes to moving forward financially. In the past, for example, NYU’s 450 medical students paid $25 million in tuition combined. As an individual, your share of this staggering amount could be preventing you from obtaining a traditional mortgage that requires a substantial amount of money down.

By taking advantage of specialized loan programs such as the Flagstar Bank Physician’s Mortgage, you can potentially get started faster after graduation by investing in your own home with little, or even no, money down. Get ahead of skyrocketing tuition fees and place yourself first with a positive financial move.

Flagstar Bank Physician Loan Details

A summary of the Flagstar Bank physician mortgage loan program.

Compare Doctor Mortgage Rates

Term
Details
Minimum down payment
0% down up to $1,000,000 (first time homebuyer - have not owned in last 3 years)

5% down up to $1,500,000 (first time homebuyer - have not owned in last 3 years)
Residency/fellow allowed
Yes
Construction loans
No
How they treat student loans
Certain deferred student loan payments are excluded from your debt-to-income ratio
Fees
The total reported lender fees as of the date of this article were $1395 ($550 processing and $845 for underwriting)
Degrees that qualify
Medical physicians, including residents, fellows, lawyers

Pros/Cons of Flagstar Bank physician mortgage loans

Flagstar has several options to choose from for medical school graduates to help you get started in home ownership. With a Flagstar Bank Physician’s loan, your student debt doesn’t need to prevent you from establishing your future. Here’s an analysis of what each program has to offer, the potential drawbacks, and how you could benefit.  

Pros

Establishing a physician’s mortgage with Flagstar Bank presents numerous benefits for medical professionals. We weren’t able to independently verify that the program includes dentists (DDS and DMD), veterinarians (DVM) and others, but we suggest that you contact a loan officer to discuss what type of loan products are available to you.

Access to special credit allowances for first time home buyers

With this lender program you can potentially have access to special credit allowances under both adjustable rate (Arm) and fixed rate mortgage products. Flagstar’s 5-, 7-, and 10-year Arm products offer 100% financing for a loan of up to $1 million for first-time homebuyers who have not owned a home in the past 3 years.

If you do have some money to put towards a down payment, you can also get a loan of up to $647,200 with a down payment of just 3% with a fixed rate mortgage as a first-time home buyer.  

You can also access a larger jumbo loan of $1.5 million as a first-time home buyer with a down payment of 5%.

Lower potential monthly mortgage loan payments

With Flagstar, as a medical school graduate, if you’re not a first-time home buyer, you can access a mortgage to the county limit with a down payment of 5% without the need to pay for private mortgage insurance (MPI). This benefit can lower your monthly payments, which can add up to thousands of dollars saved over time.  You can also potentially qualify for a maximum loan amount of up to $1 million with no PMI by providing a down payment of 10%.

Approval without a purchase contract

Unlike applications made with conventional programs, Flagstar submits your full file into underwriting for doctor loan approval. This means they skip the pre-approval process and you don’t need to sign a purchase contract. As a consequence, your credit score won’t be hindered by multiple inquiries and it stays good for up to 90 days. This can make your offer stronger and render the mortgage application process less stressful, overall. You can search the NMLS for real estate knowing that you’re competitive with the cash homebuyers or others with conventional loans.

Lower interest rates

Flagstar offers borrowers several ways to access lower interest rates on a home mortgage. These include the opportunity to access float-down, buy down, and recast mortgage options.

A float down option gives you the chance to take advantage of a lower interest rate by floating the rate down if you’re already locked into your mortgage rate, for added flexibility. A buy down option allows you to buy down the interest rate on your mortgage for the first few years by paying discount points at its initiation. 

A recast happens when Flagstar recalculates monthly payments on your mortgage based on your outstanding balance and the remaining term.

Each of these options can lower your interest rate and result in lower payments each month.

No application fee and no prepayment penalty

Another plus is the fact that Flagstar’s physician’s mortgages come with no application fees and no penalties for repaying your loan early (which makes refinancing easy if interest rates go down). There are also no origination fees unless you choose to pay points to reduce the interest rate on your doctor loan.

Available in all 50 states

Flagstar Bank has doctor loans in all 50 states, including the District of Columbia, which makes it an asset in states like California and New York, which can have a smaller number of available physician mortgage loan programs then you’d expect. For some reason, many providers choose not to lend in New York, which is double-trouble given the high cost of living in the state.

Cons

As with any program, Flagstar’s physician mortgage programs have a few drawbacks.

Fees

There are a few fees associated with these programs, which is a slight drawback. Your total lender fees at closing will be $1,395 (this includes $550 processing and $845 for underwriting). There is also often an  Appraisal of around $485. The low fees should free up cash for other expenses like closing costs or simply building additional home equity through a larger down payment.

Primary residence

Flagstar is typically only a good fit for those who want to purchase a primary residence. If you’re looking for a vacation home or an investment real estate property, you’ll want to try another mortgage lender.

Programs with the best deals are for first-time buyers

The lowest down payment options, and those offering loans with no down payment are only available to first time home buyers.

How to apply

Applying for a Flagstar Bank physician’s mortgage by clicking the “apply for a mortgage” button on the loan options page. The Flagstar system will walk you through easy steps online to do so. Just indicate what type of home loan you need and input your personal information such as your:

  • First, middle, and last names
  • Email address
  • Phone number
  • Date of birth

You’ll also need to indicate if you have already chosen a home to purchase or not.  Flagstar makes it easy to apply online and a mortgage consultant will then contact you. You will also need to provide additional information that may include:

  • A letter indicating an offer of acceptance for your residency/fellowship
  • Tax returns from recent years
  • Detailed information on your present debt
  • Proof of your education
  • Your social security number
  • Your most recent bank statements

Should you consider Flagstar Bank for a doctor mortgage?

A Flagstar doctor mortgage can be ideal if you’re graduating from a medical program with substantial debt and you’re interested in buying a home. With low potential interest rates, and the opportunity to be approved for a mortgage of up to $1M with 100% financing and low rates for first-time home buyers, this program can set you on the road to financial stability sooner than a traditional mortgage. The application process is easy to access online and can provide you with answers in just minutes.

Joshua Holt

Josh’s blog has become my one-stop shop for the latest in financial news, strategies, and tactics. There are plenty of other finance and investing sites, but nothing so squarely targeted at lawyers. If you’re a lawyer who wants to better understand your finances and the markets, it’s a must read! —Keith Lee

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