How to Get a Jumbo Physician Loan

When getting a mortgage loan, you might be trying to decide how much you can afford. However, as a medical professional, this calculation might be a little different.

As a doctor or dentist borrower, you might be able to get a higher loan amount, including qualifying for a jumbo mortgage with easier underwriting requirements and other loan terms. Let’s take a look at physician jumbo loans and how they work.

What is a jumbo loan?

First of all, a jumbo loan is outside the conforming loan limits set by Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Agency (FHFA).

Each year, the FHFA looks at different factors related to the housing market, including locations where home prices are generally higher. They set what is considered a conforming loan limit. These loans are sometimes called conventional mortgages when made by lenders not using a government-backed loan program.

For 2022, the conforming loan limit is $647,200 in most counties in the United States. In higher-cost areas, though, the conventional loan limit can be as high as $970,800 for a one-unit primary residence. A jumbo loan is any mortgage above the conforming limit set for a location.

In general, to get a loan guaranteed by Fannie Mae or Freddie Mac, or one eligible for loan programs administered by the FHA, it needs to be conforming. If you want an FHA loan, VA loan or USDA loan, you usually need to make sure it conforms to these loan limits.

How does a jumbo loan work?

Because a jumbo loan is used to buy real estate that costs more than the conforming limit set by the FHFA, there are usually additional underwriting requirements. You might need a higher credit score than you’d need for a conventional loan. Additionally, you might need a higher down payment to reduce the loan-to-value ratio. Student loans might impact your ability to get a jumbo mortgage.

Jumbo loans work similarly to other mortgages. You can expect to pay private mortgage insurance (PMI) if your down payment is less than 20%. Additionally, there might be higher closing costs, and you could end up with a higher monthly mortgage payment due to higher interest rates and a bigger sales price.

If you’re hoping to become a homeowner, getting a jumbo loan can be difficult, especially if you want an investment property. The good news for certain medical professionals, though, is that you might be able to buy a home with a higher purchase price with different loan options.

Can you get a jumbo physician loan?

Some lenders offer special loan programs aimed at professionals with certain degrees. Medical doctors, dentists, veterinarians and some others might qualify to get special loan terms based on their profession. These loans are often called physician home loans or doctor mortgages.

In some cases, depending on the lender, you might get a purchase price of up to $1.5 million or even $2 million or more. This is a jumbo loan since it doesn’t conform to the conventional loan limits or qualify for government programs. However, physician loan programs often have easier underwriting requirements and favorable loan terms.

Some ways a jumbo loan as part of a doctor loan program can differ include:

• No mortgage insurance premiums, even with a low down payment.
• No down payment options, depending on the mortgage lender and the home’s purchase price.
• Debt-to-income ratio (DTI) calculations might exclude student loan payments, making it easier to buy a home even if you have student loan debt.

After finishing medical school, many new doctors might have student loan debt and an income history that makes it hard to qualify for a conventional mortgage. With a doctor mortgage loan, it’s possible to bypass some of these requirements. Lenders assume that you’ll make good money in the future and be able to handle the monthly mortgage payments — along with other obligations like student loans.

In many cases, it’s possible to choose a fixed-rate or adjustable-rate mortgage, choose loan terms of between 15 and 30 years and even be eligible for refinancing.

What interest rates can you expect?

Generally, you can often expect to pay a higher interest rate on any jumbo mortgage. As a result, even though many mortgage lenders consider physicians and other highly-paid medical professionals as “good risks,” you might still need to pay a higher interest rate.

Using a doctor mortgage loan to qualify for a home loan is similar to qualifying for a conventional mortgage. You’re likely to get a better interest rate if you have a smaller loan rather than a jumbo loan.

Some of the factors considered when setting your mortgage interest rate include:

• Market mortgage rates
• Local factors
• Your credit score
• Amount of the home’s purchase price
• Your down payment
• Whether the rate is adjustable or fixed
• Your loan term or life of the loan

Shop around for the best rates before committing to a lender. Use a mortgage calculator to get an idea of how much you can afford, and be careful when budgeting for a home purchase.

How to qualify for a jumbo physician loan

As you compare jumbo loans for doctors, you’ll likely need to ensure you qualify. You can talk to a loan officer about what you need to qualify. Connect to lenders through their online banking portal to talk to someone. In general, though, you will need to provide the following information to qualify for a physician mortgage loan:

• Home purchase price and purchase contract
• Employment contract
• Identifying information (Social Security number, birth date, address, etc.)
• Income and asset documentation
• Credit information

When going through the home buying process, all this information is used to determine whether you qualify and how much a mortgage lender will lend to you.

When does taking out a jumbo loan make sense?

Homeownership can be difficult, and you should carefully consider whether getting a jumbo loan makes sense for your situation.

Getting a jumbo loan can make sense if you live in a high-cost housing market and want a home that you can stay in for a long time. However, you should carefully consider your budget and decide whether you can afford the higher payments that come with a jumbo mortgage. Look at the disclosures and closing costs before moving forward. Also, consider your ability to refinance later if you can get more favorable terms.

Just because you can qualify for a physician jumbo mortgage doesn’t mean you should move forward with the process. Combined with student loan payments, your monthly payment might be too high. You might be better off getting a smaller mortgage to start and then “trading up” later after your financial situation improves and repayment becomes easier.

Where to get a jumbo loan

If you decide to get a jumbo physician loan, look for an equal housing lender and a bank with a loan program that works for you. Check out our physician mortgage loan program reviews or use the form below to find a program that works best for you.