Physician Mortgage Loan

[FarmerToDoctor]

Hey Everyone! I am a 2nd year medical student and I know that I am still quite a ways off before mortgages need to be on my radar and I have much more important things to focus on (classes, research, board exams, etc.), but I am curious to know what your thoughts are on the Physician Mortgage Loan program.

Is it worth it?
If you did it, did it work out for you?
What would you say are the Pros and Cons?
Who would you say benefits the most from this program?
In general, is it better to do a 30yr loan vs a 15yr loan and invest the difference?

---

Members don't see this ad.

 

[RangerBob]

I took out two physician loans.

First in residency (where buying typically doesn't make sense for most). Very low COL area (home cost $110k), but we had no money... Maybe that would mean we shouldn't have bought in the first place, but we did and working on the home is a hobby of mine and as a PM&R resident I had time to work on it. We have lots of great memories in the home so I don't regret it, but once again buying a home in residency typically isn't the smartest thing to do. When I ran the financials at best we broke even compared to renting in the area, considering closing costs, HVAC repair (had to replace heater/AC), landscaping projects/home improvement projects that I did on my own, etc. We sold the home two months prior to moving for fellowship--it would've been a pain to sell from afar. But it was a pain to find a rental for just 2 months as well!

I used a physician loan to buy our attending home. It's a coastal CA home, so the down payment would've been fairly sizeable but we could've done it. But with a rate in the 2's I took the 5% down so I could put more funds towards paying down student loans.

WhiteCoatInvestor has a quite a few posts about physician loans pros/cons. Main pro is you can buy a home with 0-5% down. Main con is typically the rates are a bit higher than a conventional mortgage.

I think most people recommend a 15y mortgage if you can handle it. I couldn't with CA home prices. I thought it best to do a 30 year mortgage and just try to pay more. In theory it sounds great to do a 30yr loan and invest the difference, but not many people actually invest the difference

 

[FarmerToDoctor]

Thank you for your response!

I have read the WCI book and learned a lot! I think it's a great book to get started, gain a basic understanding of finances, etc. I believe in that book he talks about physician loans and residency. I want to say the cutoff for everything to break even is 5 years. I'm from Central California and am thinking of using the Physician Loan if I manage to snag a residency spot in my hometown, because I know in my heart this is where I want to be.

Do you know why most people do not invest the difference when doing a 30yr loan? Is it because they want to have some extra cash on hand for unexpected emergencies, projects, trips, enhancing their lifestyle, the costs of starting a family, etc?