If you're a physician, dentist, or medical resident in Texas and you've been told to "just go to [big bank]" for a doctor loan — you might be leaving options on the table.
Physician mortgage programs are genuinely great. They're also not all the same. Here's what actually matters.
What a Physician Loan Does
Most physician loan programs offer some combination of:
- 0-5% down on loans up to $1.5M (some go higher)
- No PMI regardless of down payment size
- Flexible student loan calculation — uses your actual IBR/PAYE/REPAYE payment, not the phantom fully-amortizing one
- Close up to 90 days before employment starts — critical for residents/fellows
- No reserve requirements on some programs
The logic is simple: doctors are a low-default-risk population. Default rates for physician loan portfolios run under 0.5%. Lenders will trade the insurance cost (PMI) for the reduced risk.
Who Actually Qualifies
The "physician" in physician loan is narrower than some programs advertise. The professions that universally qualify:
- MDs and DOs — residents, fellows, and attendings
- DDS, DMD — dentists (general, pediatric, oral surgery)
- DVM — veterinarians on some programs (fewer)
- DO, OD, DPM, OD — depending on the program
Nurse practitioners, PAs, and pharmacists usually don't qualify — though a few programs have expanded to include them.
The Comparison That Matters: Physician vs Conventional
A 7-year attending making $280K buying a $700K home in Austin:
| | Physician Loan | Conventional 20% Down | |---|---|---| | Down payment | $0 - $35,000 | $140,000 | | PMI | $0 | $0 | | Monthly P&I (approx.) | ~$4,650 | ~$3,720 | | Cash at closing (approx.) | ~$21,000 | ~$151,000 | | Rate premium (vs conv.) | ~0.25-0.375% | Benchmark |
That's $130K in cash staying in your pocket — usable for student loan payoff, investing, or just not being liquid-tight the year you buy a house.
The physician loan "costs more per month" by about $900 in this example. But for most clients, that's cheaper than the opportunity cost of tying up $130K.
Three Mistakes I See
Mistake #1: Going straight to your personal bank. Your bank probably has a physician loan product. They don't necessarily have the best one for your situation. A broker can shop 6-10 physician lenders against each other — different rate structures, different max loan amounts, different student loan calculation methods.
Mistake #2: Treating student loans as a pure liability. If your student loans are on IBR/PAYE and your income is forgiveness-eligible (PSLF or similar), the long-term math on keeping the loans can beat paying them down. Your mortgage broker should coordinate with your financial advisor on this.
Mistake #3: Not pre-closing before the move. Residents and fellows can typically close 60-90 days before the first day at a new program. If you're moving cities, locking the loan and closing before your move saves you weeks of temporary housing cost and stress.
Texas-Specific Notes
A few things that matter if you're buying in Texas specifically:
- Property tax is high here (no state income tax). Physician loans don't change that math, but make sure your affordability number includes accurate Travis/Williamson/Harris/Dallas county rates.
- Homestead exemption cuts your property tax noticeably — apply the year you buy.
- Cash-out refinance laws in Texas are tighter than other states (Constitution Section 50). If you're thinking ahead to pulling equity for an investment, know the rules going in.
Physician Loan Underwriting Quirks
A few non-obvious things:
- Most programs require you to be within 90 days of a signed employment contract. Contract, not offer letter.
- Some programs don't allow gift funds for the down payment. Others do, no problem.
- 1099 income for new practice owners usually requires two years of history. W-2 employed physicians don't face this.
- Residency/fellowship programs vary in how "income" is calculated — some use base stipend, some use base + moonlighting.
What to Do Next
If you're:
- 6+ months from your first attending position — start the pre-approval conversation now. We can lock programs based on your contract.
- Currently in fellowship/residency and buying for a longer stay — physician loans work, but conventional with a modest down payment is sometimes smarter.
- Attending for 5+ years with significant equity building up — you may have outgrown physician loan programs. Jumbo conventional is often cheaper.
I close 3-4 physician loans a quarter and we've built relationships with the best physician lenders across the country. Worth a call before you pick a lender just because it's who your hospital HR pointed you to.