Paging Dr. Homeowner: The No Money Down Medical Mortgage
It’s no secret that medical school can be expensive. While the delayed payoff can be rewarding, the price tag can often climb high. The average new medical graduate accrues over $150,000 in student loan debt. Though student loans can be deferred, the debt becomes cumbersome when looking to advance into homeownership.
Many people in the beginning of their careers cannot purchase a home in cash outright. Thus, they need a mortgage loan or help from loved ones. When it comes time to own, the mortgage lender’s requirements consider the entirety of the financial picture: credit, a recent record of employment, fulfilled tax obligations, debt-to-income ratios, and available assets. The borrower’s picture must meet all of the lender’s standards.
No Money Down Loan Options for Medical Professionals?
While many loans are granted with low money down options, very few offer no money down or no down payment programs. The popular Federal Housing Administration (FHA) loans require a low down payment of just 3.5%. However, the buyer must pay costly mortgage insurance every month. That amounts to thousands over time that could go toward living or housing expenses.
On the other hand, conventional loans can range from as low as 1% down to 25% down, and requirements fluctuate more depending on the bank.
Of the big 3 loan types, only Veteran’s Affairs (VA) loans offer a 100% financing option. But that’s for military veterans and active duty members. The vast majority of homebuyers have only local public-private partnerships and big banks to provide no money down loans.
For people in the private sector in general, and the medical field specifically, 100% financing for a home is just hard to come by.
Luckily, a local mortgage lender is offering the Medical Professionals Program (MPP) specifically for medical professionals. The program, provided by the Fulton Mortgage Company, provides 100% financing to anyone with a medical doctorate degree.
100% Financing?! Am I Eligible?
The mortgage is available for properties in DC, Maryland and Virginia. The only eligibility restriction for the program is that the buyer must have a medical doctorate degree and not have more than 10 years experience in the field. That includes doctors, pharmacists, dentists, and veterinarians. Unfortunately, nurses, or others without an advanced medical degree are not included.
What’s the Maximum Mortgage Loan Limit?
Unlike FHA loans where the 2017 maximum loan amount is $636,150, the MPP maximum limit is $1,500,000. The maximum loan amount is determined by the appraised fair market value of the property.
What About my Medical Student Loans?
One of the great things about the MPP program is how they treat student loans. Loans deferred for 12 months or more are not included in the credit approval process.
In a simplified scenario, let’s say a medical graduate can afford $3,000 worth of mortgage. They also have a $200 student loan payment. Without that payment, they could afford $3,200 when the payment isn’t included. This brand of loan forgiveness helps the buyer avoid having student loans take away from their mortgage affordability.
Is Other Financial Assistance Available?
As if 100% financing wasn’t good enough, the MPP program allows the seller contributions up to 6% for the buyer. Essentially, the buyer can own the property with their closing costs and prepaids covered. The bonus for the seller is their market of available buyers is widened, meaning a better price for them.
Aspiring homeowners can also receive gift funds from immediate family members–spouses, parents, and siblings only.
How do I Apply?
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