- Student loan payments typically receive favorable treatment with a doctor loan, making it easier to qualify for a mortgage.
- A Iowa physician mortgage loan comes with higher loan limits and options for up to 100% financing.
- Benefits of these loans include no private mortgage insurance.
Iowa is a classic part of the American Midwest, offering a number of things for people to see and do, including the Grout Museum and the Des Moines Art Center. Known as the “Hawkeye State,” this landlocked state is bordered by Wisconsin, Illinois, Missouri, Nebraska, South Dakota, and Minnesota, and was the 29th state to join the Union on December 28, 1846.
Doctors comprise a good section of the Iowan population, with almost 7,000 doctors currently living and working in the state. For many physicians and professionals, owning a new home in Iowa may seem out of reach for various reasons.
Data from the Iowa Association of Realtors shows the average sales price for single-family homes is $224,000. At this time, homes in Iowa are averaging 32 days on the market which means that they are being sold at a 20% higher rate than last year.
The Iowa doctor loan program may help doctors, dentists and sometimes veterinarians planning to buy or refinance a home in the state to qualify for easier terms. That may include minimal down payment requirements and, in some cases, none at all.
Pros/Cons of Iowa physician mortgage loans
Why do doctors in Iowa decide to take out physician mortgage loans? These financial products offer a wide range of “pros” in their favor, including:
- Little to no money down required
- No PMI payments
- High loan limits
Lenders that offer doctor mortgages also often give special consideration to student loan debt. Student loan repayment is a common issue with highly-trained healthcare professionals and can prevent them from getting conventional loans.
What are some “cons” working against physician mortgage loans? Higher limits on a loan can drive a borrower to spend more on a house than he or she should. These products also often require that a borrower open an account with the lending bank. Finally, in some cases, a doctor mortgage can have an interest rate that is higher than those offered with conventional mortgages.
5 Top physician home loan lenders in Iowa
If you’re ready to learn more about the best physician mortgage lenders in Iowa, here are the top options we’ve found through our research.
1. First National Bank of Omaha
First National Bank of Omaha may sound like a community bank but they are able to lend to many states in the Midwest and Texas. With $17 billion in assets they count as a medium-sized bank, perfect for your needs as a lender. Their physician loan is also a competitive product.
We spoke to a loan officer at First National Bank of Omaha to learn more about their doctor mortgage. Here are the highlights:
- 0% down up to $600,000 (requires 4 months of reserves)
- 5% down up to $850,000 (requires 4 months of reserves)
- 10% down up to $1,250,000 (requires 6 months reserves)
- For non-doctor professionals: 5% down up to $750,000 and 10% down up to $1,000,000
- Minimum credit score is 720
- No private mortgage insurance
- Student loan deferment options
- Employment contracts that have been fully executed with no contingencies. Must start work within 90 days of closing
- 30 year fixed rate loans and 10/1 ARM loan options. 10/1 ARM loans offered at a discounted rate, fixed for the first 10 years.
When you’re ready to connect with a loan officer experienced in doctor mortgages, use our form to quickly match with physician 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 and fill out your contact information to quickly match with eligible loan programs based on your specific circumstances.
3. 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.
4. Huntington Bank
Huntington Bank is the 26th largest bank in the United States. Operating primarily out of the Midwest, their mortgage group can service a large part of the country. Huntington has a competitive physician loan product with no money down financing options.
We contacted a loan officer at Huntington Bank to gather information about the doctor mortgage and here’s what we heard back:
- 0% down payment up to $1 million
- 5% down payment up to $1.25 million
- 10% down payment up to $2 million
- Maximum financing up to $2 million
- Eligible degrees are: MD, DO, DDS, DVM or DMD
- Residents are eligible
- Minimum credit score is 700
- 2 months reserves required (6 months for jumbo loans) – reserves can be held in bank or investment accounts
- Gift funds for down payment are OK
- 30-year and 15-year fixed-rate mortgages
- ARMs available in 7/6, 10/6 or 15/6 terms
- Can close on the strength of a new employment contract without paystubs
- No private mortgage insurance, resulting in lower monthly payments
- No prepayment penalty
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 to determine eligibility.
5. Alerus Mortgage
Alerus Financial Corporation is a publicly traded chain of financial institutions headquartered in North Dakota. They offer banking, mortgage, wealth management and retirement services, including a physician loan for those doctors looking to buy a house.
We contacted a loan officer at Alerus to learn more about their physician loan program and here are the key terms that you need to know:
- Must be within your first two years of practice to qualify.
- 0% down up to $750,000
- 5% down up to $1,000,000
- ARM and fixed rate financing available
Alerus also has a special $20,000 closing guarantee with all mortgages. The $20,000 guarantee is paid to the seller if the loan does not close based on the conditions and expiration date of the approval as outlined in the Alerus pre-approval letter.
In other words, this $20,000 guarantee gives you extra negotiation leverage when competing with all-cash home purchase price offers. If your mortgage doesn’t close, the seller is compensated $20,000 for their trouble.
Of course there’s some fine print on the guaranty so keep in mind that it’s not available for new construction and isn’t applicable if:
- Borrower, seller or any third party cause the delay or elect not to close on the real estate sale.
- Borrower fails to sign required disclosures or provide key documents by the requested due date.
The $20,000 guarantee, if applicable, is available to the seller only and not any of seller’s agents, representatives or related parties.
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 an Iowa physician mortgage loan right for you?
If you are reading this, you may be at the point of considering whether a physician mortgage loan will be the right choice for you. What makes a doctor mortgage the right fit? These loans are a great fit for physicians and professionals who know they are in a job they will stick with in the long term and who are committed to staying in their current town.
An Iowa physician mortgage loan is also great for someone who understands that, while burdensome in some ways, a higher interest rate is a good price to pay for the wide-ranging benefits associated with these mortgages.
Examples of medical doctors who take out physician loans in Iowa
Who are the Iowa physicians who have decided that a doctor mortgage is the best option for them? They range from those who are starting out in their careers to established physicians looking to increase their options and maximize their leverage.
An internist who doesn’t have a down payment
As an in-demand Doctor of Podiatric Medicine (DPM) internist, Tom’s career is a fait accompli. He is guaranteed a good salary for the duration of his career and steady employment. Unfortunately, however, Tom doesn’t have cash on hand for a 20 percent down payment.
With the amount of student debt he is still carrying and his debt-to-income ratio (DTI), the lack of a down payment doesn’t make him the best candidate for a conventional loan, despite his earning potential and solid career. A physician mortgage loan gives him an easy way to finance a home, with the added bonus of requiring no money down.
A dentist who wants to maximize leverage
Sara started her family dental practice over a decade ago. In the years since, she’s established a great reputation and her income is steady and impressive. She has squirreled away a pretty substantial savings and also made various investments. Now that the time has come to upgrade her small family from a condo to a home in her neighborhood just outside Ames, Sara is exploring her options.
She could sell some investment or draw on her savings to make a 20 percent down payment on a conventional loan, but she prefers to maximize her leverage. Instead, she takes out a doctor mortgage offered by a popular regional lender and receives great terms with 100% financing.
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.
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.