After the 2008 financial crisis, the government placed strict underwriting restrictions on mortgage lenders.
To qualify for a traditional mortgage today, you typically need to show two years of steady income. You’ll also need a 20% down payment to avoid paying private mortgage insurance (PMI), and for 2020, your mortgage loan amount can’t exceed $510,400.
These rules are intended to protect the average American. But, for some professionals, like doctors and attorneys, they can cause problems.
Medical and law school graduates often have very little savings to put toward a down payment due to their high student loan debt. Individuals in these fields may also have high debt-to-income ratios, especially if they’re in residency. And, due to their projected future income, they may want to buy a home that exceeds the conforming loan limits.
The good news is that many lenders offer professional mortgage loans that are specifically designed to meet the needs of doctors, lawyers and other high-debt, high-income-potential professionals. Let’s take a look at how these loans work and a few of the top lenders that offer them.
Why do lenders offer professional mortgage loans?
After traditional mortgages close, most lenders end up selling the mortgage to a government-sponsored lender like Fannie Mae or Freddie Mac, which is why traditional mortgages must conform to the standards that these lenders set.
Lenders keep professional mortgage loans in-house, however, allowing them to set their own underwriting standards. Lenders have a few reasons for going through all the trouble of creating and servicing professional mortgage loan products.
First, lenders target these loans to people in professions that have a reputation for high incomes. Banks know that while doctors, veterinarians and attorneys may not be making a lot of money now, each of these professions has a high average income and strong job security, which reduces their risk.
Second, lenders offer professional mortgage loans because they want to develop a long-term relationship with high-value customers and market banking products to them. Finally, banks can charge higher interest rates on nonconforming mortgages to offset their risk.
What are the pros and cons of professional mortgage loans?
The first major benefit of professional mortgage loans is that they often come with low down payment requirements. Some don’t require any down payment at all. For cash-strapped new graduates or medical residents, that’s a huge advantage.
With conforming loans, borrowers must pay for private mortgage insurance if their down payment is less than 20%. Yet professional mortgage loans like physician mortgage loans don’t require PMI, saving borrowers as much as hundreds or thousands of dollars per year.
Special mortgages for lawyers, doctors and other professionals can also help borrowers buy homes that are above the loan limits for conforming mortgages.
If there’s a downside to professional mortgage loans, it’s that borrowers may be tempted to overextend themselves and buy more house than they can afford. Even with strong income potential, buying a $500,000 home with no down payment might not be the best financial decision, for example. Also, borrowers are often charged higher interest rates for nonconforming loans.
6 lenders that offer professional mortgage loans
Currently, physician mortgage programs are most popular with lenders.
But there are several banks that offer mortgages to nonmedical professionals like attorneys, certified public accountants (CPAs), architects, engineers and more. Below are six professional mortgage lenders worth checking out.
|Bank||Amounts||Eligible Professions||Accepts |
|BBVA||$1.75 million||Doctors, Attorneys, Oral Surgeons,|
|Cadence Bank||$1.5 million||Doctors, Dentists, Attorneys,|
Architects, CPAs, Engineers,
Ophthalmologists, Nurse Anesthetists
|Flagstar Bank||$1.5 million||Doctor of Medicine (MD), Doctor|
of Dental Surgery (DDS),
Doctor of Dental Medicine (DMD),
Doctor of Optometry (OD), Doctor
of Ophthalmology (MD),
Doctor of Pharmacy, Doctor
of Podiatric Medicine (DPM),
Doctor of Osteopathy (DO), Physician's
assistant, Registered nurse,
Certified public accountant (CPA)
Attorney, Doctor of
Veterinary Medicine (DVM),
Nurse Anesthetist, Nurse
Practitioner, Clinical Nurse Specialist,
Airline Transport Pilot (ATP)
|Not published||Doctors (MD and DO), |
Psychiatrists (licensed as MDs)
|KeyBank||$3.5 million||Medical Doctors, Dentists, |
|Marathon Bank||$1.5 million||Physicians (MD, DO and DPM),|
Court administrators Paralegals
(as well as
BBVA provides professional mortgage loans to doctors, attorneys, oral surgeons, dentists and CPAs through its Professional Mortgage Loan program. The maximum amount that can be borrowed through this program is $1.75 million.
BBVA can expand the loan-to-value ratio on these mortgages and says that, in some cases, deferred student loans can be excluded from your debt-to-income ratio. In addition to new purchases, borrowers can refinance existing mortgages. Construction and home equity loans are available as well.
With Cadence Bank’s Early Professionals Loan program, medical professionals, attorneys, CPAs, architects, engineers, and PhD-level professors can qualify for mortgage amounts of up to $1.5 million.
If you belong to one of the qualifying professions listed above, Cadence Bank may allow you to borrow up to 100% of your home’s value with no down payment. There’s no PMI requirement and 5/1 adjustable-rate mortgages are available in addition to fixed-rate loans.
To qualify for the Early Professionals Loan program, you must have graduated or earned your professional license within the last five years.
Flagstar Bank offers professional mortgage loans to those who are licensed in a variety of medical fields. The bank also has professional mortgage loans for attorneys, CPAs, veterinarians and pilots.
With its professional mortgage loan program, Flagstar Bank offers loans of up to $1.5 million. Options with low or no down payment requirements are available. None of the loans require PMI, and the bank offers both fixed and adjustable rates.
To qualify for a Flagstar professional mortgage loan, you must be within the first 10 years of your career. Residents are eligible for the program.
George Mason Mortgage
George Mason Mortgage is a subsidiary of United Bank, and it has both a Doctor’s Mortgage program (that includes veterinarians) and a lawyer mortgage program. Both programs offer up to 100% financing with no PMI. And 5/1 and 7/1 adjustable-rate loans are available.
One problem you may run into with George Mason Mortgage is availability. Currently, its professional mortgage loans are only available to residents of the following areas:
- District of Columbia
- Kentucky (lawyer mortgage loans only)
- North Carolina
- Ohio (lawyer mortgage Loans only)
- South Carolina
- West Virginia
Additionally, for homebuyers in Kentucky, Ohio and Pennsylvania, the property you want to buy must be located within 90 miles of a United Bank local branch.
KeyBank provides special mortgages up to $3.5 million to doctors, veterinarians and dentists through its Medical Profession Loans program.
KeyBank Medical Profession Loans can have a loan-to-value ratio of up to 100%. In other words, you may be able to qualify for a zero-down mortgage. As is typical for professional mortgages, KeyBank doesn’t require PMI on these loans. Eligible properties include owner-occupied homes as well as second homes.
Marathon Bank has a Healthcare Professional Loan program as well as special mortgages for lawyers. The loans from either program come with the following terms and benefits:
- Loans of up to $1.5 million
- 95% financing up to $1 million
- 90% financing up to $1.5 million
- 15- and 30-year fixed-rate loans
- 5/1, 7/1 and 10/1 adjustable-rate loans
Qualifying professions for the Healthcare Professional Loan program include MD, DDS, DMD, OD, DPM and DO. Residents from those professions are eligible to apply as well. Professions that qualify for Marathon Bank’s lawyer mortgage loans include attorneys, judges, court administrators and paralegals.
Is a professional mortgage loan right for you?
If you work in a profession that requires a lot of expensive education, you’ve already had to wait longer than the average person to start your career. So, if you’ve recently graduated or earned your professional license, you may be eager to buy a home.
With conforming mortgages, you’ll need to wait until you get a couple years of work under your belt. If you’re just entering residency, you may need to wait even longer to qualify for a traditional mortgage. A professional mortgage can help you buy your first home much sooner if you’d rather not wait.
You’ll probably pay a higher interest rate for a professional mortgage loan, however. If you decide to go through with a professional mortgage loan, consider refinancing to a conforming loan after you’ve established a few years of income history.