6 Best Physician Mortgage Loans in California

If you’re a doctor in California, a physician mortgage loan may make a housing purchase more affordable.

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Key Terms

  • Higher loan limits with potential 100% financing in some cases give borrowers more options.
  • Professionals with student loan payments get special consideration of this debt under physician mortgages.
  • Some programs allow you to qualify based on a signed contract or offer letter, even before you’ve started working.

California is the land of dreams, boasting great weather, tons of hiking trails and a diverse array of cultures and people. It is also the most populous state in America and home to the iconic Hollywood film and television industry.   

California does, however, have a reputation for having an expensive housing market. Rents in major metropolitan areas such as Los Angeles and San Francisco are sky high, and data from the California Association of Realtors shows that the average price of a single-family home in California is $898,980.

For many, California may seem too expensive to even think about purchasing a home. Doctors, however, along with dentists and certain other high-earning professionals can take advantage of the state’s physician mortgage loan programs. These programs allow any of the more than 100,000 medical doctors in California to purchase a home with minimal or no down payment. 

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Advantages and disadvantages of physician mortgages in California

With the California housing market the way it is, you may well want to consider a doctor mortgage, but weighing the pros and cons first is advisable. Personal finance is a challenge for medical residents on limited incomes. When many doctors finish their residency, however, their earning power increases tremendously. With an employment offer in hand, signing up for a mortgage payment through a physician home loan makes these purchases accessible. In the future, repayment is not as much of an issue when the higher paycheck kicks in, allowing doctors to find their dream home on the NMLS now and make an offer with the help of a lender.

To start, you can enjoy a wide range of benefits if you go with a physician mortgage loan, including:

  • Little to no money required for a down payment
  • Enjoying higher limits that will allow you to afford a California home
  • No PMI

Additionally, lenders who service doctor mortgages give special consideration to student debt. That means that even if you have significant debt left over from medical school or college, you can still qualify for physician mortgage loans. Much like veterinarians, doctors may enter their new career with a lot of student loan debt and other expenses after having lived on a limited income for years.

While those are significant assets, there are some cons you need to consider, including:

  • With higher limits, you may purchase a home that you cannot afford in the long term
  • Interest rates can be higher with these loans

Lenders who service these loans may also want to build a relationship with you and may require that you open an account with them. Of course, having a strong relationship with a bank can serve you and your career well in the years to come. As always, read through all details on disclosures and about details like interest rates to confirm that this is the right bank for you.

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6 Top California physician home loan lenders

If you’re in the market to purchase a home in California, consider these doctor mortgage loans that are available to state residents.

1. BMO Harris Bank

BMO Harris Bank is an established player in the mortgage industry that ranks 16th largest by total assets in the country. The bank offers a full range of financial products, including a physician loan to certain medical professions.

We spoke to a BMO Harris loan officer to get additional details about the doctor mortgage, many of which aren’t published. Here are some key terms and highlights:

  • Program is divided between Physicians and Dentists that are less than 10 years since their last training was completed (residency, fellowship, or medical/dental school, whichever ended last) and those over 10 years.
  • Less than 10 years practicing:
  • 0% down up to $1,000,000
  • 5% down up to $1,500,000
  • 10% down up to $2,000,000
  • More than 10 years:
  • 10% down up to $2,000,000
  • 10, 15, 20, & 30 year fixed rate or 5, 7, and 10 year ARM loans.
  • No rate premium, pricing premium, or interest rate increase for using the program.
  • No income history is required. They can use an offer letter or match letter that states your employer name, start date, salary, and job title. They can close the loan up to 89 days prior to the start date for the new contract. The contract can be for a W2 or 1099 pay structure as long as a guaranteed base salary/pay amount is listed.
  • Reserve requirements for loans up to $400,000 equal two months PITI for the new home, for loans over $400,000 the requirements is four months PITI.
  • The borrower is required to have liquid reserve funds at the time of closing, this would be required on top of any cash to close due.
  • Seller credits are allowed to assist with closing costs but cannot exceed the total of closing costs and cannot exceed the amount you, as the buyer, are contributing to the purchase.
  • Gift funds from a family member are allowed for any cash due at closing or down payment as well as the reserve requirements.

If you have a credit score as low as 680, BMO Harris can offer you $0 down up to $1,000,000 but it will take a credit score of 720 to get access to the full program.

When you’re ready to connect with a loan officer experienced in doctor mortgages, use our form to quickly match with eligible loan programs based on your specific circumstances.

2. Flagstar Bank

Flagstar Bank was chartered in 1987 and holds around $23 billion in assets, making it a medium-sized bank. However, they punch well above their weight when it comes to mortgages and operate as the sixth largest bank mortgage originator nationally. Not surprisingly, a big part of their success has been a doctor mortgage program.

We contacted Flagstar Bank to learn more details about their physician loan. Here are the key terms that you need to know?

  • 5, 7 & 10 year ARM  products
  • 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)
  • If not a first-time home buyer
  • 10% down up to $1,000,000
  • 15% down up to $1,500,000
  • 20% down up to $2,000,000
  • 25% down up to $2,500,000
  • Fixed products
  • 10% down on the jumbo fixed to a max loan amount of $1,000,000 with no PMI
  • 20% down on the jumbo 30 year fixed with a max loan amount of $3,000,000
  • For first time home buyer (have not owned within last 3 years):
  • 3% down up to $647,200
  • If not a first time home buyer:
  • 5% down up to county limit (with and without PMI)
  • Medical doctors and lawyers are eligible. We weren’t able to confirm that the program is available to dentists and other (non-doctor) medical professionals, but encourage you to contact them to confirm.

The total reported lender fees as of the date of this article were $1395 ($550 processing and $845 for underwriting).

Another benefit of Flagstar is that they can submit a full file to underwriting for an actual loan approval (not pre-approval) without having a purchase contract signed, which makes your competitive with all cash offers and the process less stressful for you. There is no application fee or prepayment penalties. They also offer a float down, buy down, and recast option.

When you’re ready to connect with a loan officer experienced in doctor mortgages, use our form to quickly match with eligible loan programs based on your specific circumstances.

3. Citizens Bank

Citizens Bank is one of the largest banks in the Untied States. I bet you didn’t know that it’s headquartered in the smallest state: Rhode Island. With over $160 billion in assets, it’s no surprise that Citizens offers a full range of financial products, including a physician loan.

We contacted a loan officer at Citizens Bank to learn more about their doctor mortgage loan program specifically. Here are details you won’t find anywhere else:

  • 5% down up to $850,000
  • 10% down up to $1,000,000
  • Practicing licensed medical doctors (MD and DO), dentists (DDS and DMD), residents and research physicians are eligible
  • Licensed residents, fellows and interns can borrow a maximum of $600,00 (or $400,000 if unlicensed)
  • No more than 10 years out of residency
  • Self-employed professionals are eligible with a two-year history of self-employment income
  • New medical professional graduates who are under contract for residency within 60 days of closing and have not yet obtained a license are eligible
  • No private mortgage insurance
  • 40% max debt-to-income ratio
  • Student loan debt that’s deferred for more than 12 months from the date of closing can be excluded from DTI calculations
  • Construction-to-permanent loans available with a maximum of 89% financing
  • Fixed rate or adjustable-rate mortgage options
  • Interest-only option on certain adjustable-rate mortgage options (max financing at 89%)

When you’re ready to connect with a loan officer experienced in doctor mortgages, use our form to quickly match with eligible loan programs based on your specific circumstances.

4. City National Bank of Florida

City National Bank of Florida is a medium-sized bank with over $22 billion in assets. Although they are headquartered in Florida, they offer a physician loan in all 48 contiguous states and are eager to find physicians and other professionals as new customers.

We spoke with a loan officer at City National Bank of Florida to gather details on the doctor mortgage program. Here is what we learned:

  • Physicians, Dentists, Attorneys and CPAs are eligible
  • 3% down up to $650,000
  • 5% down up to $850,000
  • 10% down up to $1,250,000
  • 10.51% down up to $2,500,000
  • 15.51% down up to $3,000,000
  • Primary residence and vacation homes are available (higher down payments required for secondary houses)
  • Can finance condos but only with a 20% down payment
  • Minimum credit score required is 660 but better rates/options require 720 credit score
  • Self-employed individuals need to provide 2 years of income verification

When you’re ready to connect with a loan officer experienced in doctor mortgages, use our form to quickly match with eligible loan programs based on your specific circumstances.

5. Keybank

Keybank has over $170 billion in assets and is the 24th largest bank in the Untied States. They operate throughout 39 states but can originate mortgages in nearly all 50, making them a popular choice among medical doctors throughout the country. One of their key financial products is a physician loan.

While Keybank doesn’t post a lot of information about their doctor mortgage online, we were able to get in touch with a loan officer at the bank to get all the important details. See below for an overview of the program details:

  • 0% down up to $1,000,000
  • 5% down up to $1,500,000
  • 15% down up to $2,000,000
  • No private mortgage insurance
  • Gifts permitted for down payments
  • Can close on the strength of an employment contract up to 90 days prior to the start of employment
  • Minimum credit score is 700
  • Student loan debt can be calculated based on income driven student loan payments
  • Fixed loans offered in 10, 15, 20, 25 or 30-year terms
  • Adjustable-rate mortgages offered in 5/6, 7/6 and 10/6 options
  • No minimum or maximum years in practice for eligibility
  • Reserve requirements are: 2 months (loans under $500K), 4 months (loans between $500K – $750L), 6 months for loans over $750K plus an additional 2 months if closing prior to start date. Retirement accounts count toward reserve requirements.
  • US Citizens, Permanent Residents and H1B Visa holders are eligible
  • California loans require a minimum of 5% down

When you’re ready to connect with a loan officer experienced in doctor mortgages, use our form to quickly match with eligible loan programs based on your specific circumstances.

6. Bank of America

Bank of America is one of the original lenders (if not THE original lender) in the physician mortgage space. With over $3 trillion in assets, it’s one of the largest banks in the United States and chances are good that you are familiar with the company. Not surprisingly, they still offer a doctor mortgage product.

We reached out to a Bank of America mortgage officer to get more details about their program and this is what we learned:

  • 5% down up to $1,000,000
  • 10% down up to $1,500,000
  • Residents and fellows with a job lined up can close on a home 90 days before they start.
  • You can often exclude your student debt from your total debt when you apply for a mortgage.
  • Eligible medical professionals include salaried medical students and medical doctors who are about to begin their new employment/ residency for fellowship within 90 days of closing. Those employed in research or as professor are not eligible. 

While they may not have the most competitive program, they are a solid choice for a physician looking for a doctor mortgage, particularly if you’re already banking with Bank of America.

Of course, if you aren’t already a current Bank of America customer, they will require you to have, or open prior to closing, a checking or savings account. Applicants with an existing account with Merrill or Bank of America Private Bank prior to application also satisfy this requirement.

When it comes to reserves, Bank of America requires PITIA (Principal, Interest, Taxes, Insurance, Assessments) reserves of 4 – 6 months, depending on loan amount.

If applicant’s employment does not commence until after closing, in addition to the minimum cash reserves required, sufficient reserves to handle all debt obligations between closing and employment start date up to an additional 90 days must be verified.

When you’re ready to connect with a loan officer, use our form to quickly match with eligible loan programs based on your specific circumstances.

Is a California physician mortgage loan right for you?

If you are asking yourself whether a physician mortgage loan is right for you, first check in with yourself about where you are in your career. When purchasing a home, you want to make sure that you are in a job you believe you will stay committed to for years to come. If you are at the start of a job and have not put in enough years to know whether it will continue to work for you, maybe committing to a home should wait. 

If you’re confident that you’re staying in California, a physician mortgage loan may make a housing purchase more affordable. Unlike a refinance or traditional borrower scenario, these loans are specifically made for doctors and helps healthcare professionals like you who are looking for real estate property to buy on the NMLS.

Once you take out a loan with one of these lenders, future monthly payments will apply like a regular mortgage. Unlike traditional homeownership loan options or refinancing, these loans are specifically available to medical providers to purchase a new home. For medical residents, this is a viable option for someone who does not yet have the employment history or substantial down payment to cover a more traditional loan. Likewise, residents might have relied on a credit card to get through medical school or residency, but are now focused on improving their personal finance as they start their new job offer.

Another thing to keep in mind? Doctor mortgages do often come with a higher rate. If you prefer to wait and see if you can qualify for a conventional loan that might offer a lower rate, then do so. It can save you over the life of the loan and may be worth the temporary delay in buying a home. 

Examples of doctors who take out physician loans in California

Now let’s take a look at some examples of the physicians in California that are taking out doctor mortgages. You may find that their narratives line up directly with yours and may add some clarity to your decision making process. 

A resident with a high student loan debt balance

Myra is on top of her game. Not only did she graduate at the top of her class from the David Geffen School of Medicine UCLA and sail through her residency, she’s now starting a new position in plastics at Cedars Sinai. Her career is more than on track and she is set to become a high earner in due course. 

She knows she wants to stay in LA for the rest of her career and she is ready to purchase her first home. The problem is she still has a significant amount of student debt to pay off, and this has skewed her DTI ratio to the point where banks won’t approve her for a conventional loan. Given Myra’s contract with Cedars and her earning potential, a doctor mortgage is a perfect choice for her. 

A dentist who finds a doctor mortgage lender with the best rate

In some situations, a doctor mortgage can come with an interest rate that is as much as 0.25% higher than the one available on a conventional loan. That being said, there are some scenarios in which banks can extend offers to physicians and other high-earning professionals that actually offer a better rate than conventional options. 

That’s what has just happened to Randy,  a dentist with an established practice in Alameda. A regional bank looking to attract new and long-term business is offering a doctor mortgage that is actually a better deal than the conventional loan he was considering. With the student debt-friendly terms and the other benefits that come with a physician loan, Randy has decided to go with a physician loan and bypass the conventional mortgage. 

If you’re looking to explore physician mortgage loans in other states, check out our national overview of physician loans as a starting point in your search.

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Joshua Holt

Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.

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